Published: 05/07/2021Making the decision to buy your first home can wield a mixture of emotions. The excitement and sense of freedom that owning your first property can bring is a feeling like no other and is certainly one to be treasured. Nevertheless, for many it can be a daunting task trying to navigate the home buying process for the first time. Here are our top tips for anyone looking to become a homeowner!
Where do I start? (The first bit)
Save, save, save. That’s right – getting onto the property ladder needs to start with saving a suitable mortgage deposit for the property you wish to buy. This process can take time, especially for those already living in rented accommodation. Arrange to speak to a qualified mortgage adviser as early into the process as possible; the initial consultation is often free of charge and can be very informative. Based on your income(s) and outgoings, your adviser will be able to provide a realistic budget you will be able to purchase at, along with a guide on the associated monthly payments. The higher the deposit amount, the higher the likelihood of achieving a more favourable interest rate. Be sure to ask for a ‘Mortgage Agreement in Principle’ certificate, this will provide estate agents with the necessary proof of your affordability.
The cost of moving (The money bit)
Spend, spend, spend. Whilst it may take several years to save a kitty large enough to buy your first home, spending it is a little quicker. There are various costs involved when purchasing a property, all of which can vary depending on factors such as the value of the property and the ‘going rate’ of your local firms. To allow you to carry out your own research and budget effectively, you will need to account for the following costs:
- Mortgage deposit – a typical deposit amount for a first time buyer is 10% of the property price. For example, a property purchase at £200,000 means you will need to put down a deposit of £20,000.
- Mortgage fees – When applying for a mortgage, there will often be additional fees you will need to budget for – your mortgage adviser will be able to provide a breakdown during your consultation. These will include a mortgage arrangement fee, a booking fee, a broker fee and a mortgage valuation fee. In some cases, lenders will allow certain fees to be added to the mortgage.
- Surveys – In addition to the mortgage valuation carried out by the lender, you may choose to have a more in-depth survey, such as a Home-Buyers or a Building Survey which provide guidance on the overall condition and structural integrity of the property.
- Solicitors – your local solicitors will be able to provide a guide on the cost of conveyancing.
- Removals – there are a range of options available from self-hire to a full packing service.
- Stamp Duty Land Tax – at the present time, first time buyers purchasing a property up to £500,000 will pay no SDLT on the first £300,000.
Government Schemes (The helpful bit)
‘Help to Buy’ is a name given to several schemes that are all designed to help first-time buyers get on the property ladder. There is a Help to Buy ISA, Equity Loan, Shared Ownership and Mortgage guarantee, which are all worth looking into to see if they can help you.
Your property search (The tick-box bit)
Wants vs needs. Deciding on the type of property you wish (and can afford) to purchase can be a tricky process and driven by several factors. The size, situation and condition of a property can all sway whether it will be ‘the one’. As a starting point, we recommend making a list – in one column write down what you need from a property, this is the non-negotiable criteria, such as a specific number of bedrooms or perhaps an area of garden. In the other, note things which you would want, if possible, but could live without – perhaps the en-suite or utility room could be given up if the property was in the right location. This simple exercise can help to establish what you are prepared to compromise on when searching for your first home.
Viewings (the exciting bit)
Out and about. After shortlisting properties which might be of interest, we strongly recommend doing a ‘drive-by’ first to make sure the property and location is suitable. If so, contact the agent to arrange an internal viewing. Be sure to make the most of your viewing time, especially in a competitive market. Write down any questions you might have prior and consider whether factors such as the space, condition and proximity to schools, work etc. are right for you before making an offer.
Conveyancing (the legal bit)
Sign on the dotted line. The legal process for the sale a property from one person to another is called Conveyancing. Once you have sourced a solicitor (or conveyancer) to act on your behalf, they will liaise with the vendors’ own solicitor to carry out this process. It is important to remember that a conveyance can take time, often several months to complete. It is therefore crucial to keep in regular contact with your solicitor throughout, be available to take calls and complete and return any forms sent to you as soon as possible. The estate agent will also communicate with you during this process, providing a chance for both sides to share updates and address any concerns.
What can go wrong? (The nervy bit)
The risks. It is important to be aware that nothing is guaranteed until an exchange of contracts takes place. As a purchaser, being informed of potential risks upfront can minimise the chances of transactions being unnecessarily delayed or even falling through. As well as returning paperwork quickly, be sure to keep a close eye on any deadlines – for example, your Mortgage Offer will have an expiry date; completion of the sale will need to happen before this time lapses. If you intend to have a survey, we recommend booking this at the start of the conveyance to avoid any last minute issues. It is key to also be mindful that there could be an onward chain – the number of parties involved can have a notable effect on the reliability and timing of a property transaction.
Exchange and completion (The moving bit - eek!)
What do they mean? Exchanging contracts on your first time is a milestone that offers the peace of mind that the sale is now legally binding, with a completion date set. Your solicitor will ask for your exchange deposit (usually 10%) at this stage and you will be obliged to put the relevant home insurances in place. Completion means just that, moving day has arrived. The estate agent will call you once the funds have been cleared and you can collect the keys to your first home!
by Chris Hood - Branch Manager of Castle Cary