By Amy Colton, Conveyancing Manager.
So, you’re thinking of buying your first home? Congratulations! It’s a huge step, and an exciting one. There are lots of steps you’ll have to go through before owning your own home becomes a reality. Read our guide to learn all about these steps, including deposits, mortgages and conveyancing, to make buying your first home run as smoothly as possible.
Step 1: Check what financial help you could get as a first-time buyer
Before you get started with buying your first home, it’s worthwhile checking 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 help to buy schemes such as, the Lifetime ISA, where you can boost your savings with a government bonus of 25%, or the shared ownership scheme, where you buy a percentage share of your home while paying rent on the rest
Step 2: Save up your house deposit
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 start from 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 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?
First-time buyers benefit from stamp duty relief. This means that, as long as you, and anyone you are buying your house with, are a first-time buyer, you will pay 0% stamp duty on the first £425,000 of the purchase price and 5% on the remainder up to £625,000.
Step 3: Get your mortgage in principle
One of the best pieces of advice we can give you is to get your mortgage in principle, also known as an Agreement in Principle (AIP), sorted as early on in the process as you can. You don’t need to have found your property before you can apply for a mortgage in principle, so get your finances in the best shape you can in the months leading up to applying for your AIP and check your credit history with a reference agency.
Agree a mortgage in principle 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 may give you a position of strength when it comes to negotiating.
Step 4: Find your dream home and make an offer
Try not to put too much pressure on yourself when looking at houses. It can be disheartening when you are not successful with your offer, however this is a really exciting time, and so you want to enjoy it as much as possible.
When you’re ready to make an offer on a property with your deposit and 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.
Step 5: Get your mortgage secured and appoint a conveyancer
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 (property lawyer) who’ll guide you through the legal side of buying your first home.
If you’ve already got your AIP sorted, then your full mortgage application should be quicker and simpler.
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.
Step 6: Arrange searches and book house survey
Arranging the required searches and surveys is an important stage of buying a house. Firstly, your mortgage provider will want to carry out a valuation survey on your new home to ensure that you’re paying the going rate. Then, your conveyancer will order property searches which will reveal whether there are any important issues going on in the area that you should know about.
Finally, you should get a home buyers 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 should get a basic home condition report or a full building survey will depend on the age and type of property you’re buying, however 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.
Step 7: Exchange and complete
Once your mortgage is in place, you’re satisfied with the results from the searches and surveys carried out, 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 first home.
Step 8: Moving into your new home
This is where the excitement really reaches a head; with your new keys in your pocket you can start moving into your first house. Book your house removals 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!
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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.