What can I afford?
Thinking about buying a first home can be exciting, but before you jump in, you need to make sure you know what you can afford, this will keep your expectations realistic and help avoid disappointment. The best way to be sure for your financial situation is to visit a mortgage advisor.
When visiting your mortgage advisor, make sure you bring proof of ID, a passport or driving license should be fine, proof of your current address, and the last three months of your bank statements. You should also provide any other information about debts or earnings even if you don’t think they are applicable.
Saving a deposit to buy your first home
It can be difficult to save for a deposit especially if you’re renting and paying the household bills, but if you want to own your own home and benefit from lower monthly premiums and property investment, you will have to do some creative accounting. A deposit is typically between 5% and 20%.
Start by organising a tight budget that you can stick to consistently. Take your previous three months bank statements and work out your outgoings. Try to reduce your spending to needs instead of wants and set up a direct debit to go to high-interest savings accounts such as an ISA.
Finding the perfect home
Now the fun part! Once you have your financials organised and are saving for a deposit, you can start thinking about what kind of home you would like. You should know by this time what your budget range is based on figures from your mortgage advisor. This will help you filter your searches on websites like Rightmove and Zoopla.
When searching for a home, you want to find one that suits your vision of the future, but don’t forget to consider other aspects of the house. What area is it in? Is it a good postcode area with reputable schools, do you have a long commute to work? You might find the perfect home within your budget, but these other factors might be deal-breakers.
Getting a mortgage
Before you begin viewing houses, it’s worth talking to your mortgage advisor and agreeing a mortgage in principle. This means that based on your income, expenses, and debt levels, a lender will offer you a mortgage loan as and when you find a house. Agreeing the mortgage ‘in principle’ gives you some reassurance that you have something in place when you go to view properties.
An agreement in principle may take any number of forms based on your preferences and commitments. You will be offered the options of a repayment mortgage or an interest-only mortgage. A repayment mortgage is one where you pay back the capital on a monthly basis. With an interest-only deal, you only pay the interest, but payments are lower. At the end of the term, you pay the full amount.
Viewing the house
When it’s time to view the property, it’s a good idea to be aware of what to look out for. You don’t want to buy a property that has dampness or subsidence that could cost you money further down the line. To avoid this, and for moral support, take a knowledgeable person with you. This might be someone who has bought a house in the past or who has some experience with property.
Don’t forget to bring a camera and photograph everything. You can use your phone too, just remember to keep all the pictures in a separate file. The photos are useful for valuation and memory. Check the walls for cracks and use your nose to sniff out any dampness. If you’re keen in the house, train yourself to be particularly discerning to avoid confirmation bias.
Make a list of feature or things you like from each viewing, so when it comes to making a decision you know that you are buying the right first home.
Making an offer
When you’re happy with the property you’ve chosen, it’s time to make an offer and hope it’s accepted. To do this, contact the estate agent. You should have a good idea of the valuation of the property and your own financial possibilities. Try to aim higher than the market price to secure the house.
If your offer is not accepted, you will have to go back to your mortgage advisor to see if something can be arranged. Although you have a loan in principle that doesn’t mean it can’t be adapted to accommodate a new valuation. Continue to come back with new offers if appropriate. Once accepted, you will receive a written notice that states the property sale is subject to survey and contract.
Surveys and conveyancing
.Before the sale of the property is complete, it will have to be surveyed. You need to be fully aware of what you are buying, and so everything must be double-checked. There are different types of survey you can perform: a Valuation only, a Homebuyers report, or a Building survey. Your mortgage advisor can tell you which is most appropriate.
As you’re buying your first home you many not be familiar with surveys and what they mean, so it may be worth talking to someone you trust, or a builder when you receive the results
Following this, there is a process of conveyancing. This simply means transferring the property from one owner to another. The process is usually conducted by a middle person who will arrange the formalities between you and the seller. This will involve looking over any contracts dealing with land registry, and stamp duty.
Exchanging contracts and insuring the house
After your lender and the solicitor approve the mortgage is satisfied with the survey, it’s time to sign the contracts and hand over the deeds. The contract you sign will state that you are the legal owner of the property. The seller will sign their own contract, and these will be swapped. At this point, you will pay your deposit, and your lender will require you to take out home insurance, and possibly life insurance as well. You’re nearly done buying your new home!
The big move
It might sound like a lot, but if you follow the steps and stay in touch with your mortgage advisor along the way, it should be fairly straightforward. After the contracts are signed, and you have the deeds, you will be done buying your first home! And can move in. This is what you’ve been waiting for. It’s what you’ve worked hard for, so enjoy the process. If you need to furnish your new home, you might consider homeowner loans. As a homeowner, you can now borrow up to £50,000 for furniture or renovations.
Love Lilla xx