Guide To Buying A First Home

Tiger.co.uk recommends eight steps to buying a new home.

1. Work Out What You Can Afford

Plan your budget. Add up all regular outgoings including food, travel, utilities and other payments. Do not forget things like how much might be spent on holidays and entertainment.

If you have a family you might want to consider life insurance. The good news is that it can be relatively cheap – typically around £15 a month for a 35 year old non-smoker. Similarly, it might be prudent to consider income protection which will provide a regular income in the event that the mortgage holder is unable to work through illness or after having an accident.

By analysing expenditure in detail, you can get a picture of what can sensibly be afforded in terms of monthly mortgage repayments. However, even though you may in theory be able to afford a large mortgage, it is unwise to not allow for a bit of breathing space. It is also necessary to find out how much the mortgage lender is willing to lend to you and what the monthly repayments might be.

2. Work Out The Deposit

Simple, this is just how much has been saved, right?

Not so. There are many fees and charges associated with buying a home, for example conveyancing fees; mortgage fees; valuation fees; and factor in stamp duty on properties over £175,000. These fees can add up to thousands of pounds.

Then there are the costs of moving house, any DIY that might be planned and the purchase of any new furniture.

Take these costs away from the savings and what is left could be the deposit.

3. Find The Best Deal

There are some options here. Either the leg work can be done yourself by using an online comparison service, or there is an option to speak to a mortgage broker and use their experience to help. If you speak to a broker, they can often advise on how much they think can reasonably be afforded given any other financial commitments.

4. Obtain An Agreement In Principle

Once a good deal has been found the next step is to arrange an agreement in principle with the mortgage lender. This will involve a credit search based on name and address and it will identify whether the lender will – in principle at least - agree to lend the applicant the money. It is important to bear in mind that multiple credit searches can have an adverse effect on a person’s credit rating – so avoid applying for too many.

You will normally get written confirmation to prove that the agreement is in place which can then be used to show estate agents and sellers that the necessary financing is arranged.

4. Obtain An Agreement In Principle

Once a good deal has been found the next step is to arrange an agreement in principle with the mortgage lender. This will involve a credit search based on name and address and it will identify whether the lender will – in principle at least - agree to lend the applicant the money. It is important to bear in mind that multiple credit searches can have an adverse effect on a person’s credit rating – so avoid applying for too many.

You will normally get written confirmation to prove that the agreement is in place which can then be used to show estate agents and sellers that the necessary financing is arranged.

5. Find A Good Property

It is always worthwhile registering with agents in the area that you want to buy in. A good agent will listen to the buyer’s needs and get in contact as soon as something suitable comes on the market.

Look at different house styles to get a good feel for the size and type of place that could both fit your brief and be affordable. It also worth looking at properties over budget as most owners will at least consider an offer.

If you like the look of a place, try driving by at night to check noise levels and parking facilities and, if possible, use an online resource like upmystreet.com to research crime rates and information about the locality.

6. Make An Offer

When you are interested in buying a property, find out what situation the sellers are in. If they have found a property, or are in a hurry to move, there may be an opportunity to make a lower offer.

It is also a good idea to research the previous prices that the property and neighbouring properties have sold for. This will confirm if the offer is reasonable.

Do not forget that, as a first time buyer, buyers are in a powerful position. Not being in a chain and armed with an agreement in principle means you can offer a speedy completion and this may lead to the acceptance of a lower offer.

Whatever the circumstances, remember your budget and never offer more than is affordable.

7. Buy The House

Once the offer is accepted, it is wise to have a quick shop around again – just in case a better mortgage deal has become available.

Once the application is received by the lender they will do a basic valuation of the property, which is normally paid for by the applicant. This is not a survey of the condition of the property, it is purely to establish the value for the lender. It is normally wise to commission a "Homebuyers’ report" which will assess the condition of the property and the cost of re-building it for home insurance purposes. The only exception to this is if the property is a new build which normally carries guarantees on workmanship and appliances.

A solicitor will need to be instructed. Estate agents will often recommend a solicitor but it is always worth looking around and asking for recommendations. There are many who will offer a "no sale, no fee" basis for business, which can be very useful in the event that the purchase falls through.

Set a timescale for the completion of the purchase and make a list of the phone numbers of the solicitor, mortgage broker/provider and estate agents and call once a week to check how things are progressing.

You should start to receive paperwork from the solicitor. As soon as it arrives, deal with it. House purchases can fall through because paperwork is not completed on time.

8. Complete The Purchase (applies to England and Wales)

Your solicitor will tell you when it is time to exchange contracts. It is at this point that the deposit needs to be paid. Up until the point the buyer and seller can alter or refuse the offer or pull out of the deal. After the exchange of contracts the transaction becomes legally binding.

After the exchange of contracts comes the completion of the purchase transaction, which is the same day that the keys become available to the buyer and they take ownership of the property. Make sure the home buildings insurance is in place for this, otherwise the lender will withhold the funds.

That concludes the path to getting your first home.

Happy mortgage hunting! Start your research now.

18/07/2013 15:22:30 Eren

Share this

comments powered by Disqus