A simple, step-by-step guide to what can seem like a very complicated process.
1. Find out how much you can borrow
First things first! It’s important to see what you can afford, and leave yourself enough money to enjoy life.
Online mortgage calculators consider things like:
- Your monthly salary
- If you have any outstanding debt such as credit cards or loans
- How much money you have saved towards a deposit
To then give you a rough idea of:
- How much you can borrow.
- How much your monthly repayments could be.
2. Buying a home is an expensive business! There are a lot of fees to pay on top of the price of the property itself. Here’s what you need to consider before you consider moving forward:
- Repairs – will you need to spend money on the property the moment you move in?
- Removals – what is the cost of getting your stuff from A to B?
- Solicitors’ fees – what conveyancing fees will you be charged?
- Survey – what type of survey will you choose? A basic survey is the cheapest option, but will it pick up on any structural damage and/or other issues that may be costly to fix in the long run?
Then, when you’ve moved in, there are other bills to think about too:
- Ground Rent (if you’re buying a leasehold property)
- Service Charges & Management fees (if you are buying an apartment or in a new development)
- Buildings & Contents insurance (some mortgage companies will ask you to buy this before approving your mortgage) i. Life insurance (especially important if you have children – as above, you may be asked to arrange this before you’re approved for your mortgage)
3. Find your home
When you know how much you could borrow, it’s time to find a house.
Local property sites/apps such as Property Pal and Property News can help you search according to budget, number of bedrooms, postcode, and so on.
You can also register with local estate agents, check in the local papers, and watch out for ‘For Sale’ signs in the area. View as many properties as you can to get an idea of what’s available.
4. Make an offer
Once you’ve found the property you wish to buy, it’s time to make an offer. Most houses are sold through an estate agent, so make your offer to the seller through them.
The asking price is how much the seller hopes to get, so there may be some room for negotiation once you have considered how much you are willing to bid.
Remember to remind the estate agent that you are a first-time buyer with no home to sell.
5. Apply for your mortgage
Many providers offer exclusive mortgages for first-time buyers, offering things like a higher loan-to-value ratio of up to 95% (so you don’t need as big a deposit).
Be aware though, that if you want to buy a new-build home many (but not all) lenders will ask for a bigger deposit – at least 10%.
Whichever provider you choose, though, make sure you get information on all available products, then you can make a decision on the best option for you. Mortgages can seem complicated if you are unfamiliar with them, so ask your adviser or bank/building society to explain anything you don’t quite understand.
6. Appoint a solicitor (Us, McGale Kelly & Co.!!)
A solicitor is a vital part of the process and you will not be able to complete on a mortgage without one. They’ll prepare the paperwork and deal with the legal side of the purchase on your behalf, plus they’ll collect your deposit and pay it to the relevant parties for you.
7. Having the property valued
Your mortgage provider will appoint a local valuer to look at things like the age and condition of the property, prices of similar properties in the area (to confirm the purchase price is accurate), and check that the property represents adequate security for them; which is fair enough seeing as they’re lending you the funds to begin with.
Be aware that if you wish to assess the condition of the property in detail and check for any minor defects, as well as major ones, you’ll need to pay for a more detailed survey. You’ll usually find that mortgage surveys have three tiers:
- Basic Valuation – the most standard valuation and usually sufficient enough to get your mortgage over the line
- Home Buyers Report – a middle of the road survey which comprises more detail than a Basic Valuation, and less than a Full Structural
- Full Structural survey – the most detailed survey you can pay for
While more comprehensive surveys will cost you more, they’re certainly worth thinking about if you’re buying an older property, particularly where structural damage maybe (or can become) an issue. Your home is the most expense purchase you are likely to make, so it can be worth paying a little extra to have it checked over thoroughly and by a qualified professional.
8. Sign the contract
Once your mortgage is agreed, valuations and surveys are completed, and the solicitors have prepared all the documentation, you’re ready to sign the contracts.
After this there’s no turning back – both parties are committed to the sale and the date of completion will now be fixed. Start preparing to move!
Bear in mind that the current occupant of the property you’re buying may be in a property chain, and if so the sale’s completion will depend on when they can move on to their new home.
9. Get your insurance in place
You’ll need buildings insurance to protect your new purchase, and it’s a good idea to buy contents insurance too – how else will you insure what’s inside? What happens if you spill a cup of tea over your brand new television or drop an iron on the carpet?
Having a combination policy comprising both building and contents means that not only will your bricks and mortar (building part of the insurance) be covered, but depending on the features of your policy, your contents will be covered too. Consider adding ‘Accidental Damage’ to your policy too as this will (subject to claim approval, of course) cover the cost of a new TV or a new carpet (and maybe iron!) in the example shown above.
All insurance claims are all subject to application and underwriting approval, so it’s not a given that you will be paid out on every claim you put forward. Read your terms and conditions carefully and check your policy documents before your policy goes live to make sure that everything you want to be covered is covered.
Warning! You will not be able to complete on your mortgage until at least the ‘buildings’ insurance is live. Your solicitor will require evidence of this by asking for your policy documents as proof.
10. Move in and celebrate
You’ve done it – you now have your own home. Don’t forget to notify the relevant people of your change of address (e.g. electricity company, doctor, your bank and even the DVLA) and contact Royal Mail to arrange for your post to be re-directed.
And after all your hard work, invite your friends and family round for a house-warming party – and celebrate!