Buying your first house can seem like a pretty daunting prospect. There’s the deposit, the mortgage and the legal side of things to sort out, and it’s easy to get a little overwhelmed by it all. That’s why we’ve put together our handy first-time buyers guide, which takes you through the steps you need to navigate. Read on for information on what you can expect to happen at each step, and for some advice on how to help the whole process run as smoothly as possible.
What help can you get as a first-time buyer?
Before you get started with buying a house, it could be well worth your while to check if there are any government schemes or incentives available to you. There’s no harm in receiving a helping hand as a first-time buyer. Look out for things like the Help to Buy: ISA, where you can boost your savings with a government bonus of 25%, or the Equity Loan scheme, where the government lends you up to 20% of the cost of a newly built home.
How much deposit does a first-time buyer need?
For most first-time buyers, getting the deposit together is the toughest part of the process as saving thousands of pounds is never easy to do. You’ll need to check with your mortgage provider, however deposits are usually at least 5% of the purchase price, while they often amount to around 10% or 20%. For top tips to save towards your deposit, read our helpful guide.
Is it better to put a bigger deposit on a house?
The more you can put away towards your deposit the better. This is because you’re more likely to be accepted for a mortgage if you have a bigger deposit behind you. You’ll also have access to better mortgage rates, helping you to get off to a great start when it comes to paying off the cost of your home.
Do first-time buyers pay Stamp Duty Land Tax?
At the Autumn Budget in November 2017 the Chancellor announced relief from Stamp Duty Land Tax (SDLT) for first-time buyers. The relief applies to purchases of residential property for £500,000 or less, provided you intend to occupy the property as your only or main residence. As long as you and anyone you are buying with are first-time buyers you will pay 0% SDLT on the first £300,000 of the purchase price and 5% on the remainder up to £500,000.
Get your AIP in place
One of the best pieces of advice we can give you is to get your mortgage Agreement in Principle (AIP) sorted as early on in the process as you can. You might think that you need to have found a property before you can apply for a mortgage, but this isn’t the case. So get your finances in the best shape you can in the months leading up to applying for an agreement in principle, and check your credit history with a reference agency.
Securing a mortgage is often more difficult for first-time buyers, as you need to prove that you’re worthy of such a big loan. If you find a house that you love without the promise of finance in place, it can take a long time to supply all the evidence required by an underwriter. In the meantime, someone else might snap up the property you wanted.
Agree a mortgage in principal with a lender, and you’ll know that you’re credit-worthy. You’ll also know exactly the budget you can work towards when it comes to the houses you can afford. Plus, your agreement will also show to sellers that you’re a serious prospect when you come to submit an offer, and give you a position of strength when it comes to negotiating.
Find your dream home
Despite the stress that comes with being a first-time buyer, it’s worth remembering that this is a really exciting time in your life. If you can enjoy this part of the process without putting too much pressure on yourself at each house you visit, then you’re more likely to find that the experience goes smoothly.
When you’re ready to make an offer on a property with your deposit and mortgage AIP in hand, the fact that you’re a first-time buyer – and therefore not involved in a chain – should give you even more bargaining power. As part of your offer, make it a condition that the property’s taken off the market, which will help to safeguard you from being gazumped by another bidder.
Get your mortgage locked in and some legal help
When your offer’s accepted by the seller, it’s time to turn your mortgage in principle into a firm offer. This is also the point where you’ll need the help of a conveyancer who’ll guide you through the legal side of buying a home.
If you’ve already got your AIP sorted, then your full mortgage application should be quicker and simpler. The head start you’ve got will help you to secure the property you’ve settled on, as an underwriter verifies all of your information as you go through the loan processing stage.
When your mortgage offer comes in, your conveyancer will go through all of the small print to make sure everything’s in order. As your first mortgage is almost certain to be the biggest financial commitment you’ve ever made, it’s vital that all of the terms are suitable, and you can cope with any potential fluctuations in rates that may be reflected in your monthly payment.
Get your house survey done
Although they might not be the most exciting part of buying a house, getting any required surveys completed is crucial. Firstly, your mortgage provider will want to carry out a valuation on your new home to ensure that you’re paying the going rate. Then, your conveyancer will carry out property-specific searches which will reveal whether there are any important issues going on in the area that you should know about.
Finally, and perhaps most importantly, you should get a survey done on the state of the property you’re buying. As a first-time buyer, it’s likely that you’re going to be putting most of the finances that you currently have available into your new home. So if it turns out just a few months down the line that the property has major structural damage or requires major repair work, it can be pretty devastating.
Whether you have a basic home condition report or a full building survey should depend on the age and type of property you’re buying, but remember that paying a bit extra for the correct survey at this stage could save you a packet further down the line. Something that crops up on a survey could also help you to reduce the price you’re paying for your new house.
Exchange and complete
Once your mortgage is in place and you’re satisfied with the surveys you’ve had done, and your conveyancer has received satisfactory replies to all of their enquiries, it’ll be time to pay your deposit over to them so that they can exchange contracts with the seller’s lawyer. At this point, you’re legally obliged to buy the property, and you can lose your deposit if you back out after this. When you exchange, you set a completion date which is when your conveyancer will transfer the funds provided to the sellers lawyer, allowing you to pick up the keys to your new home.
Get your move sorted
This is where the excitement really reaches a head; and with your new keys in your pocket you can start moving into your house. Book your removal service or hire a van, and start making your new place feel like home. don’t forget to update your details for things like your bank account and driving license. Then pop the champagne and toast the euphoric feeling of owning your very own home!
Take a look at our handy moving house checklist when you have begun the conveyancing process to help you with all the preparations you will need to consider when moving into your new home!
Disclaimer: The article above is only a rough first-time buyers guide. It is important note that cases for first-time buyers may vary depending on individual circumstances.