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A Guide to Buying Your First Home: What You Need to Look Out For

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If you’re looking to purchase your first home, you’ll understand that feeling of the unknown. After all, there are so many steps, tasks, requirements to fulfill and it can make you feel anxious that somewhere down the line you might make an expensive mistake!

Yet, as a first-time buyer, it is important to understand that you are in a brilliant position, and taking the time to get your head around the process the less likely you’ll be taken by surprise and the whole process will be de-mystified. 

Make sure to read below for our guide to buying your first home and what you should be on the lookout for.

Your Mortgage Deposit

More often than not, your first step will be saving for a deposit. This can be easier said than done, especially when you will need at least 5% of the purchase price of the property.

For example, if your dream home is £200,000, for a 95% mortgage, you will need to save £10,000 of your own money.

Yet we can suggest that waiting that bit longer and saving more can be worth it. Saving for a bigger deposit will allow you to apply for better mortgage deals with lower interest rates.

As a first time buyer, you will have the option to save your money into a lifetime ISA, meaning that when you come to purchasing your home, you’ll be entitled to a 25% top-up (up to £1000 a year) from the government on your savings. This is only entitled to those purchasing a property up to £450,000, however.

Similarly, you’ll also be eligible for other purchasing schemes, including Help to Buy and Shared Ownership.

A Help to Buy equity loan consists of you saving a 5% deposit and then the government will lend you between 15% and 40% of the property purchase price on a new-build home.

Shared ownership is where you purchase a share of 25%-75% in your property and then pay rent on the rest.

Find Out How Much You’ll Be Able to Borrow

To make sure that you’re viewing the right properties and that the process doesn’t end in disappointment, or similarly, you bite off more than you can chew when it comes to money, it is important that you seek some financial advice.

A mortgage provider will only lend you so much, depending on a variety of different factors. These include how much of a deposit you have, your income and your credit score.

Say you are seeking to buy your home with a partner or a friend, your mortgage provider will take into account their finances too, meaning that you will be able to borrow more.

It’s important, however, to be serious about this step, and take your time to consider the costs of buying a property, including conveyancing, surveys and other such steps involved.

Research Where You Want to Buy

Buying a home is a serious investment to make. It’s not like renting where if you are not happy with the area, you can simply just move away at the end of your tenancy.

If you’re exploring new areas or neighborhoods where you haven’t spent a significant amount of time before, we recommend spending a night or two in a local hotel or holiday home to make sure that you are happy with the commute, local shops, community and the general atmosphere.

Even if you’ve lived near the area for many years, you may still wish to do some research just to make sure that you are completely happy before you sign on the dotted line and commit yourself.

This can include school catchment areas, transport links, local infrastructure, flood zones, future development plans and crime levels.

Apply for Your Mortgage in Principle

Once you know how much you are able to borrow and therefore where you can/want to move to, the next step is applying for your mortgage in principle.

A mortgage in principle is a confirmation from the mortgage lender to confirm that they are willing to lend you a specific amount of money. You may have heard of this referred to as a decision in principle or a mortgage promise. 

Especially as a first-time buyer, having the reassurance of a mortgage in principle can appear incredibly attractive to a vendor and their estate agent.

Contact Estate Agents

Now, here comes the more exciting bit! Now you’ve got all of the money sides of things agreed, you can start contacting local estate agents. Taking the time to call them, or even visit them in-store if possible, and registering with them will help reassure them that you are serious about your search. At the end of the day, it is free and won’t create any obligations on your part, and you’ll be notified of any properties as soon as they arrive on the market.

This will help you to keep up to date and increase the likelihood of you finding your perfect home. In fact, some estate agents will contact their registered buyers before listing the property online, so it’s worth taking the time to register!

View Properties

Obviously, you’ll spend hours on end browsing through websites such as Rightmove and On the Market, but it’s important that when you find a property that catches your eye, you view it in person.

This will give you a much deeper understanding of the property and you’ll be able to gauge whether it is “the one” or not!

A viewing will also give you the chance to ask the estate agents all the questions you may have about the property and whether it is a good investment or not. 

For your peace of mind, many will have estate agents professional indemnity insurance. This insurance will cover you, should an estate agent provide you with incorrect advice. You’ll be able to rely on this cover and claim back a suitable level of damages.

Make an Offer

If you’re happy with the property, you’ll want to make an offer next. Look at similar properties online to gauge how much the property is worth. Property websites and the land registry can be helpful for this.

Once you’ve decided how much you want to spend, you’ll want to make an offer either over the phone or in person, and in writing too for your own records.

As a first time buyer, make sure to note this as it could stand in your favour!

Apply for Your Mortgage

Next, you’ll want to apply for your mortgage. There are various types so you’ll want to decide which will suit you best and how long you want your mortgage term to be.

Your monthly payments will depend on the interest rate, loan amounts and mortgage term.

Find a Property Solicitor

Conveyancing is the legal process that will take place once your offer is accepted by the vendor. In England and Wales, this includes searches, drawing up contracts, dealing with the land registry and paying stamp duty if required.

You can choose to either use a conveyancer or a qualified solicitor.

Arrange a Survey

A property survey will assess the building and ensure that there are no structural problems hiding, which will cost you a lot of money down the line.

A survey is optional, yet very much recommended so you can make an informed decision on how much you want to spend on the house.

Home Insurance

Don’t panic, you’re almost there! Home insurance is vital, in fact, it is actually usually a condition for many mortgage providers.

You’re legally bound once you exchange contracts, so should an accident occur such as a flood or a fire, you want to be covered financially.

Exchange Contracts

The final step of the process is exchanging contracts. This is when the buyer and seller’s legal representatives swap signed contacts and the buyer puts down their deposit.

You’ll want to prepare your mortgage offer, agree on a completion date and have your home insurance before you exchange contracts.

Then, once all of this is done, you can breathe a massive sigh of relief! Your purchase is now legally binding and there is a very low chance of the process falling through!

Moving Day!

Whilst it sounds much easier when it’s written down; when it’s all over and you’re in your new home, there’ll be no better feeling and it will all be worth it.

Your money will be transferred to the seller, you can collect the keys and move in! 

The whole process will be over before you know it, so make sure to enjoy it whilst it lasts, no matter how frustrating it is! You’re only a first-time buyer once, so use the powers this gives you wisely, and find the right first home!

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