Step-by-Step Guide to Buying your First Home
Buying your first home can sometimes feel a bit intimidating. With so many things to consider, such as affordability, location, legal paperwork and finding the right property, it is always worth speaking to an expert in advance to find out what you need to know. As experienced estate agents, we know that the end results are rewarding and all worth the hard work that goes into finding your ‘forever home’. We have put together an overview guide to assist you on your journey and help you create a plan to get onto the property ladder.
Step 1. Speak to mortgage or financial advisor
Speaking to someone who can advise you will help you to create a steadfast plan around your finances and financial options. The advisor will want to discuss your savings, monthly budgets, debts, and make you aware of additional costs such as legal fees and the rules around stamp duty. This way, you can establish what you need to do in order to acquire your first property and know what you can afford, how much you might be able to borrow and learn more about the process you are about to embark on so you can take an organised approach.
Step 2. Browse the market to gauge house types and prices to see what is available to you
The property market is vast and ever changing. As a first time buyer, you will likely have a list of criteria that you would like your new home to cover. Do your research to get an idea of prices for the types of properties that you would like to investigate, as what you buy will largely depend on how much you are allowed to borrow. For example, different locations may vary in price and it may be the case that you need to compromise on your criteria to find the ideal home that also fits into your budget.
Step 3. Save your deposit
You may have already started saving. In order to know how much deposit you will need, it is important to follow steps 1 and 2 above to establish how much of a deposit and up front costs you will need to cover to not only get a mortgage but cover the costs involved in moving such as the conveyancing phase.
There are many different types of savings accounts out there, including things like ISA’s which sometimes even have an incentive from the government to top up your savings each year if you save a certain amount. You can find out more about how to save and manage your finances on the Money Advice Service website.
Step 4. Get an ‘Agreement in Principle’ from a bank or lender
An Agreement in Principle is a document which states that you are likely to be accepted on your mortgage application and define how much you are allowed to borrow, based on your current financial situation. Though you should be aware that some lenders do ‘hard search’ which could affect your credit score when they check your affordability. A ‘soft search’ goes on your credit score for 24 hours and then drops off following a check, so best to ask which method your lender will be using to provide the information you need. It is recommended that you work with a mortgage advisor to obtain an agreement in principle as they will be able to shop around for the best rates and let you know what the best type of mortgage might be for you.
There are different types of mortgages such as fixed rate or variable and some lenders will allow 10% deposits while others require at least 20% of the value of the property before they will lend you the rest. This could also affect how much you need to save or how soon you can move into your prospective home.
Step 5. Offer on a property
Once all your research has been completed and your finances are in order, you will be able to start viewing the properties that you might wish to purchase and live in. It is best to be prepared with all the above steps before you get to this stage as the process can often be quite quick once you have made an offer on the property of your choice. Your estate agent will be able to help you negotiate and advise you on what you need to do. This is where it all gets very exciting, though it is sometimes also worth being prepared for a sale to not go through which can happen for many reasons such as being out-bid, the seller’s plans falling through or being delayed or perhaps not getting your mortgage application approved (unlikely if you have followed all the right steps, but it can happen).
Step 6. Mortgage application gets submitted
Your mortgage advisor can help you apply for your chosen mortgage once you have chosen a property and know exactly how much you need to borrow. Sometimes people do this at the same time as instructing a solicitor but some people prefer to wait and see if their mortgage will be approved before spending out on conveyancing – advice should be sought for your situation, dependent on how likely you are to get your mortgage application approved. Your Agreement in Principle is not always a guarantee that you will definitely be able to borrow from a particular lender so unfortunately you
Step 7. Mortgage offer is accepted
Typically, no more than 2 weeks after you apply for your mortgage, you will be notified as to whether your application has been accepted or rejected. Everything will likely be fine, however if your application is unsuccessful, you can speak to your mortgage advisor about your options.
Step 8. Instruct solicitor to complete the conveyancing
It is usually a good idea to get quotes and make contact with a solicitor prior to making an offer on a property so that as soon as you need them, they are there for you to start the conveyancing process. As mentioned above, it is often the case that conveyancing starts alongside your mortgage application but in some cases, buyer’s may choose to be safe in the knowledge that their mortgage application has definitely been accepted before accepting.
You will have accounted for these costs in the initial stages of finding a property and if you communicate with a solicitor to get a quote before hand then there shouldn’t be any nasty surprises for your budget. Your solicitor will be able to advise you on the process and guide you through, alongside the help of your estate agent to get all the necessary things filled out and completed.
Step 9. Exchange of contracts
This is where your purchase becomes legally binding and is part of the conveyancing phase. Your deposit is transferred to the buyer as instructed by your solicitor and all the paperwork is completed such as transfer of the title deeds and agreeing upon a completion date.
At this point you will also look at getting life insurance to cover you and your mortgage payments in the event that something happens where you have difficulty paying in the future.
Step 10. Completion. Move into your new house!
Pending everything going to plan, your new home purchase is now complete. Your solicitor confirms the ownership is transferred to you and the seller’s will agree to vacate the property by 1pm that day so you may receive the keys and move in at your leisure!
Get help from Graham & Co
The experienced teams at Graham & Co in Andover and Whitchurch can help you through the process of buying your first home from start to finish. Call the office on 01264 356500 to speak to a member of our friendly team or our in-house mortgage advisor to start your exciting journey towards becoming a home owner.