Nervous excitement is a good way of describing buying your first house! There's plenty to think about, and it's a lot to take in for first-time buyers. We'll walk you through:
- The finances involved
- What to look for and how to book viewings
- A clear timescale from the very beginning of the buying process to completion
- Useful tips and hints
What is the first step into buying a house?
Let's start at the beginning before getting the ball rolling. Your first step in buying a home is to calculate your financial situation and affordability. To do this, consider booking an appointment with a mortgage adviser. It's important to do this before you start viewing any houses.
Why? A mortgage advisor can assess details such as your income and profession, and give you an idea of what house you can afford.
You can search for an adviser online, on unbiased.co.uk It also won't harm asking friends and family for recommendations, they might've recently been through the same process!
Before you book, check what fees are applied by the adviser if you get a mortgage with them. It's easy to overlook, but fees can range quite a bit.
Saving for a deposit
Saving for a deposit is often the biggest barrier to buying a first home. But there is help available. It sounds fairly straightforward, but saving smaller amounts of money each month for a longer period of time is more manageable than trying to save too much at once.
The government offers first-time buyers a helping hand in the form of a Lifetime ISA. You can pay as much as £4,000 a year into the scheme. In turn you can receive a 25% bonus if you use it to buy a house, this could be up to a maximum of £1,000 a year.
You need to be aged 18-40 to open a lifetime ISA but you can carry on paying into it until you're 50. The house you buy also needs to be less than £450,000.
How much deposit do I need to buy a house?
The usual deposit is around 10-15% of the total value of the house. But the larger the deposit, the more favourable interest rates you should see.
Although some mortgage lenders will accept a 5% deposit and offer 95% mortgages, these tend to come with higher interest rates.
Getting a mortgage
You may be familiar with the term 'mortgage', but what does it actually mean? A mortgage is essentially a large long-term loan you agree with a lender (such as a bank) to help you buy a home. Getting a loan might seem worrying at first, but it's far more common than you think.
There's no limit on your initial deposit. You can of course buy a property outright if you can afford it, in which case, you don't need a deposit.
In terms of a mortgage, expect to borrow around 4 times the amount of your income, or combined income if you’re buying with another person.
Exactly how much you can expect to pay back each month depends on:
- The size of your deposit (how much money you initially put down towards the cost of the property)
- The length of the mortgage (this can range from a handful of years up to 40 years)
- The interest rate of your mortgage attached by the lender
The interest rate is set by the lender and varies according to whether you choose a fixed or variable rate mortgage. It's possible to compare mortgages between providers, this can help you find a lower interest rate.
A mortgage term is how long it should take to pay off the total cost of your home based on your agreed payments. Further down the line you'll have the option of remortgaging your home, but let's not get too far ahead of ourselves just yet!
What is a mortgage agreement in principle?
A mortgage agreement in principle is your first step in getting an actual mortgage offer. You can’t actually apply for a mortgage until you've had an offer accepted on a property. But you can arrange a mortgage in principle confirming how much you can borrow and what kind of house you can afford.
Having a mortgage in principle is both essential and a clear indication of your intention to buy.
This can be helpful and show your commitment when you do make an offer on a property. Most estate agents require proof of an agreement in principle before you make an offer on a property.
There are 2 main types of mortgage:
- Repayment: This involves paying off a small percentage of your mortgage each month in addition to the associated interest.
- Interest-only: You only pay interest every month instead of a contribution towards the mortgage. At the end of the term, you'll still need to pay off the mortgage capital. This type of mortgage is commonly used for buy-to-let properties.
What documents do I need to get a mortgage?
When you apply for a mortgage, you don’t have to use the lender that provided you with an agreement in principle. Instead, it's important to compare mortgages from lots of different lenders.
Your mortgage rate may vary depending on the type of agreement you choose with a lender. Your monthly repayment can be fixed, or you can choose a variable-interest mortgage. Both types of mortgages are usually offered with 2 and 5 year terms.
To get the best rate possible, it can pay to find a mortgage adviser. A mortgage advisor can find all kinds of mortgage deals, some of which you may not be able to find online. Mortgage deals are always changing in line with the Bank of England's interest rate
- Proof of ID (passport or driving licence)
- Proof of current address (council tax or utility bill)
- Last 3 months’ worth of payslips, or your last 3 tax returns if you’re self-employed
- Your most recent P60
- Details of any credit commitments, such as credit card statements, student loans or overdrafts
Get more information about mortgages
Finding and viewing a property
You may have already started to think about where you want to buy and the kind of property you’re after. But how do you actually go about finding a house?
It's exciting, even the endless browsing on online estate agents like Zoopla scoping out each home. This can actually help you decide on certain features you want in a home and what you might expect to pay.
Aside from the cost, there are lots of other factors to consider such as:
- The surrounding area
- How long your work commute would be
- Your proximity to parks and local shops
- How good nearby schools are
Once you’ve worked out your preferences, you can start browsing with intent to buy! It's easy to get distracted, but it's always worth assessing the boring stuff, so always look out for information such as:
- Floor plans
- The age of the house
- Storage space
- Energy efficiency rating
- Double glazing
- Council tax
- If it’s in a conservation area or it’s a listed building
You should get an idea of how much space you have in the property and get a rough idea on running costs.
It's worth looking to see if there are any local planning permission applications in place. If a giant supermarket is about to be built nearby, you'd ideally want to know about it before you buy.
What to look for when viewing a property
Once you have a deposit in place, the fun part begins. You can start viewing properties!
There are a fair few tips to run through, but as a general rule of thumb, here are some of the most important bits:
- Have at least one other person with you
- Photograph everything
- Turn up early
- Visit the local area to get a feel for the neighbourhood
- Feel the walls to check for any cracks
- Use your nose – does it smell damp?
- Prepare questions for the seller or estate agent
For more tips, read our house viewing checklist.
Making an offer and hiring a conveyancer
You've found the home you're looking for! To start the process, call the estate agent listing the property and make an offer.
If they accept, great news. But remember, nothing is final at this point, even if your offer is accepted.
If they don’t accept and you're keen to get the house, you can consider increasing your offer. At this stage, the estate agent may give you an indication of what sort of offer may be accepted. It’s important to think carefully about whether you can afford to do this, though.
If your offer is accepted, you should get a written contract entitled ‘Subject to survey and contract’. You'll also need to instruct a solicitor to handle the conveyancing step in the house buying process.
The conveyancer handles the transfer of ownership of the property to you. It usually involves them:
- Acting as the go-between for you, the mortgage lender and the seller
- Conducting searches on the property
- Making and handling enquiries
- Preparing and exchanging contracts
- Dealing with the Land Registry
- Organising stamp duty
- Transferring money during the sale
H3: How long does conveyancing take?
If everything runs smoothly, it’s possible to complete the conveyancing work within a month. But the time it takes depends on the property you’re buying and the length of the chain you’re in.
A chain refers to the seller of the property you're buying, organising their own purchase of another property. This can result in delays, especially if your own purchasing process is swifter than others in the same chain.
Taking everything into account, it’s realistic to expect conveyancing to take anywhere up to 16 weeks.
Conducting a home survey
Although your lender does a survey to assess the property’s value, this won’t alert you to any problems, like dampness in the home or a subsidence risk. So it’s a good idea to consider a comprehensive survey to ensure you know as much as possible about the property's condition.
If there are potential problems you then have the opportunity to either stop the purchase, renegotiate the price, or ask the seller to pay for repairs.
The Royal Institute of Chartered Surveyors offers 3 levels of survey.
- Level 1 (previously called a Condition Report) - the most basic.
- Level 2 (previously called a HomeBuyer Report) - suited to standard homes in good condition.
- Level 3 (previously called a Building Survey) - a full structural survey. This is recommended if you're buying an older, larger or significantly altered property or planning structural renovations.
How much is a home survey?
The cost of the survey varies according to the size of the property, its value, where it’s located and the surveyor doing it.
According to Home Owners Alliance, you can expect to pay roughly:
- Level 1 - £300+
- Level 2 - £400+
- Level 3 - £630+
Final steps and moving in
Towards the end of the buying process you may find yourself signing a fair few documents. You and the seller sign a contract to confirm you're the new legal owner of the property. After that, each person’s solicitor signs and swaps contracts, and you all sign each other’s contracts.
At this point you're legally committed to buying the property (and the seller is legally committed to selling). If you pull out after exchange of contracts, you're likely to lose your deposit.
Once the hard work is done and legal stuff is taken care of, you can start discussing a moving-in date. It's now worth thinking about how you’ll shift all your belongings to the new home with our moving house checklist.
Removal companies are great for packing and moving all your possessions in one journey, but they can be expensive. It depends on how much you're intending to move and the distance to your new home.
If you don’t have a lot of furniture, you could save money by hiring a van yourself. Or you could ask a few willing friends or family members to help you too.
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