10 steps to buying your first home
Buying your first home can be complex, stressful and scary.
It's hard to know where to start, there's financial and legal jargon to get to grips with and it is very expensive. As a result emotions can run high.
Our 10 steps to buying your first home should set you off on a firm footing:
1. Do your sums
If you've decided to buy your first home, you are probably desperate to start looking for properties right away. But it makes sense to do your sums first – otherwise you could be wasting your time looking at places that are beyond your means.
Firstly, work out what you can realistically afford to pay on a mortgage each month – and remember to factor in building and contents insurance and possibly life insurance, as well as council tax and all other bills.
Then check what deposit you can afford to put down, and don't forget to keep some back for Stamp Duty, mortgage fees and all the other moving costs you will encounter. This will give you a better idea of your position when you start to look for a mortgage.
2. Find mortgage finance
Getting a good idea about the type of mortgage you want, and can access, is another smart move before you go looking for your dream home. You can research the types of deals online, use comparison sites to compare products or seek independent advice from a mortgage broker.
One top tip is to get a Decision In Principle from a lender, which gives you a better idea of how much you can borrow. It's not a full mortgage offer but a useful gauge of your budget and it shows estate agents you're a serious buyer.
3. Go househunting
Now you are ready for the fun part – househunting. Most buyers start their search online, before arranging viewings.
Having a list of your priorities can help you compare properties, but the heart often rules the head when it comes to choosing a home. You will just know when you find it.
4. Make your offer
Making an offer can be scary, especially if you know there is a lot of interest in the home you want. If that's the case you might want to make your first offer a good one to try to bag it.
If the property has been available for months, it could be worth a cheeky offer. You might get lucky or there could be some negotiation before you agree a price.
Be aware of the Stamp Duty bands because if you tip over a threshold it could cost you thousands. For example Stamp Duty on property up to £250,000 property is 1% - £2,500. However, if you agree a purchase price of £251,000, your Stamp Duty bill shoots to 3% - £7,530.
5. Find a conveyancer
Once your offer is accepted it's time to instruct a conveyancer to handle the legal process of homebuying. A word of mouth recommendation is useful as this is an essential part of the process.
Don't be tempted to go for the cheapest quote as poor conveyancing can cost you dearly in the long run if they cut corners. You want the process to go through quickly, of course, but remember that a good conveyancer is also very thorough.
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6. Make your full mortgage application
As soon as your offer is accepted you also need to make your full mortgage application. If you already have a Decision In Principle (DIP), this might not involve much extra work, as the lender will already have all your details. You are not committed to that lender, so if a more suitable deal has been launched since you got your DIP, you are free to apply for that.
Whether you apply online, in branch or over the phone, ensure you have all your paperwork ready to save time, including 3 months' bank statements, and payslips, proof of ID and proof of your current address.
7. Choose your survey
Your lender will require that you get a valuation for mortgage purposes. This is essential, but you can also opt for a more thorough survey. The lender's valuation isn't designed to tell you about the state of the property so a Homebuyers Report or Building Survey is highly recommended.
If the property you are buying is old or unusual you should really consider the full Building Survey to reassure you that it has no major problems.
It's very common for the survey to find a few problems, and your surveyor will tell you which of these are urgent, and which can be dealt with as part of the ongoing maintenance of the property. This will give you a basis for renegotiation of the price if you feel that problems have been uncovered that affect the property's value.
Don't be scared to pull out if you can't agree a price you are happy with. You may feel committed after spending hundreds of pounds on a survey, but think of it as money well spent, not wasted, if you end up walking away from the purchase.
9. Exchange contracts
Once the solicitors have done their work, the mortgage lender is committed to the offer and both you and the seller are happy to seal the deal, it's time to exchange contracts.
Once this is done you are both legally committed to the deal – you're almost there.
It's important to note that if you are buying a freehold property you are liable for the buildings insurance from the date of exchange, not completion, so ensure you have this arranged.
Your completion date is usually set a week or so after exchange, to give all parties time to arrange removals and plan the big move, but it differs – it's up to you and the seller.
On completion day the monies will be transferred before the seller moves out and you collect the keys. Then you have made it. You are a homeowner!