Ultimate First Time Buyers Guide
Welcome to the exciting journey of buying your first home! It’s a big step and an important milestone, and while it might seem like a lot to figure out, we’re here to guide you every step of the way.
This guide is designed with you in mind, whether you're setting out to purchase your very first home or searching for the perfect family retreat. Think of us as your dedicated support team, ready to make the process simpler, smoother, and well-informed.
What Will This Guide Cover?
In this guide, we’ll outline 4 simple steps to getting a mortgage. We’ll cover key details like purchase fees, timelines, tips for improving your credit score, and the importance of securing a mortgage agreement early. Our goal is to help you navigate the home-buying process with clarity and confidence.
Why This Guide?
We’re committed to providing clear and practical information about homeownership. Buying your first home is a significant step towards shaping your future, and we’re here to support you throughout the process. Our goal is to equip you with the knowledge and resources you need to achieve your homeownership goals with confidence.
Your Journey Starts Here!
As you go through this guide, consider it a helpful resource for navigating the process of buying your first home. Each chapter is designed to give you the knowledge and confidence you need for this important step. We're here to make the journey as straightforward as possible. Welcome to a practical guide for first-time buyers, your starting point to securing your new home.
Table of Contents:
1. Obtaining a Mortgage in 4 Simple Steps
Step One - Mortgage Broker or Direct to my Bank?
Greater Choice:A mortgage broker helps by looking at a wide range of banks and building societies. They might even find special deals that your bank doesn't have. When going direct, they will only show you their own options.
Comparison Sites Are Great But…:
Comparison sites can show interest rates, but they can't tell if you can really afford a loan or how banks look at your application. A mortgage broker helps find the best rate for you whilst also ensuring you meet the lender's criteria.
Personalised Service:
A mortgage broker provides tailored guidance throughout the entire process. Unlike lenders, who pass your application between multiple people, brokers offer personalised support and work around your schedule to make the experience seamless.
Single Point of Contact:
A broker is your personal guide to securing a mortgage, helping you through every step of the process. On the other hand, going directly to a bank often means dealing with multiple people, making the process less streamlined and more impersonal.
Work out the numbers:
Online mortgage calculators are a helpful starting point, but the amount they show may not match what lenders actually offer you. Loan amounts vary between lenders, and a mortgage broker can provide a more accurate estimate using specialised tools and insights. For the best advice, it’s always worth speaking to a professional.
Be Organised:
Your mortgage broker will help you with the paperwork and tell you what to do next to get good results. They will make everything easy and make sure you have a smooth experience.
Save You Time: A mortgage broker understands which lenders are suitable for your application, saving you time and unnecessary credit checks.
Protect Your Mortgage:
Your mortgage broker can help you find the right insurance to protect your home. They have more choices than banks, so they can find the best options for you, like Income Protection and Critical Illness Cover.
Mortgage Broker Fees:
When looking for a mortgage broker, remember that most get paid by the lender, but some might ask for extra fees too. It’s important to learn about their fees. If you compare different brokers, you could save a lot of money!
Getting help from a professional mortgage broker is super helpful when buying your first home. They make the tricky mortgage process easier and give you great advice to help you through it.
Since buying a home is a big deal, it's smart to let someone who knows what they're doing help you instead of just guessing!
Step Two – Know Your Limits!
Owning a home is a big step in life! For first-time buyers, getting a mortgage can be tricky. A key worry is figuring out how much home you can afford. This can change a lot depending on the lender, so it's important to learn about it.
As a quick guide, banks usually lend a few times your income, anywhere from 3 to 5.5 times. The final amount you can borrow though will depend on how much money you earn and how much you spend. Sometimes, there are special programs that let you borrow more, but make sure you can pay it back without trouble!
Banks will view your income as follows:
Employed Income:
When lenders check how much you earn, they look at your yearly salary before taxes. If you just started a new job or are about to, some lenders might accept that, but others want you to be in the job for at least 3 months.
For extra income like bonuses or overtime, they look at your last 3 payslips and find the average. They add this extra money to your regular salary.
If you get annual bonuses, most lenders want to see that you’ve received them for at least two years, but some might accept just one year.
Second Jobs:
Although this income can be used lenders like to see that you have been in your second job for a minimum of six months.
Self Employed:
Lenders will treat you as self-employed if you run your own business, are part of a partnership, or are a director where you own more than 20% (will vary) of the company. They usually like to see that you’ve been in business for at least two years, but some might help you if you’ve been running your business for just one year.
If you run your own business, lenders look at your profits from the last two years to decide how much money they can lend you. For partnerships, they check your share of the profits. If you’re a director, they consider your salary and dividends too.
Most of the time, lenders check your average income from the last two years. But, if you earned more money in the last year, they might use that instead. If you earned less, they will likely use that lower number.
Getting a mortgage when you’re self-employed can be tough, so it’s a good idea to talk to a mortgage broker. They can help you find the best lenders for your situation. Check out Guide To Mortgages For Self Employed and Self Employed For A Year, Can I Get A Mortgage? for more information.
Contractors:
Lenders are starting to help contract workers more. Whether you have a fixed term, zero hours, day rate, or work as a CIS contractor, they want to help. Here’s a simple guide:
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Fixed Term: You usually need to have worked for at least 12 months on existing contract
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Zero Hours: Most lenders want to see 12 months of pay slips to help with a mortgage.
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Day Rate: Some lenders will see you as self-employed, which might mean less money. But if you find one that uses your day rate, it could help you borrow more.
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Construction Industry Scheme (CIS): Usually, you need to have 12 months of working as a CIS contractor, but a few lenders might accept just 3 months.
These rules can change between lenders, with some showing greater flexibility than others.
Other Income:
Lenders can look at other steady income, such as state benefits, maintenance / child benefit, pensions, and money from renting properties.
Ongoing Commitments:
To find out how much money you can borrow, lenders will look at your regular monthly expenses. This includes things like personal loans, car loan / lease, credit cards, and childcare / school fees. If you have some fixed commitments the banks are less likely to offer what you would like to borrow.
Mortgage Term:
How long you must pay back your mortgage affects how much money a lender will give you. Most lenders want you to finish paying it off before you turn 70 or 75 years old. For example, if you’re 20-29 years old, lenders might let you borrow over 35 to 40 years, so they’ll offer you more. But if you’re 54 and want to pay it back in about 15 years, they might lend less because you must pay it off faster.
Knowing how much money you can spend on a house is super important! When you understand your income and expenses, you can find a home that’s just right for you.
Remember, it’s better to choose a house you can afford than to pick one that's too big and makes it hard to pay for. This way, you can enjoy your new home without worrying too much!
Step Three – Organise Your Documents
To avoid problems later, start by knowing how much money you can borrow and sorting your papers. No matter what job you have, make sure your address is correct across all your documents. Then, give these papers to your broker or lender:
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ID, like your passport or driving license
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Bank statements for the last 3 months showing how much money you earn and spend
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Proof of your deposit, like bank statements with your name and address
Depending on your job, you might need to show more papers too, as follows:
Employed:
If you've worked for your employer for over 6 months, have available your last 3 or 4 payslips and P60. If you're new or starting soon, share your signed contract, job offer, latest P60, and your final pay slip from your last job. If you earn different amounts, include payslips showing that extra money too.
Contractor:
The kind of job contract you have will decide what papers your bank will need. If you get paid by the day, some banks will just want to see your current contract. But if you have a fixed job or are paid under a special scheme, you need to show how much money you made in the last 3 – 12 months.
Sole Trader:
Some lenders might help you after you've been in business for a year, but you need to show them your tax papers from the last two or three years. You can get these from your accountant or log into the government site to download your tax calculations online.
Limited Company Director:
Most lenders want to see your tax calculations/tax year overviews and company accounts from the last 2 or 3 years. If you’ve only been in business for one year, some lenders can still help you. You can ask for your tax calcs/overviews from your accountant or obtain online using the above link.
Being organised with your papers is a key part of the mortgage process. Make sure you have everything ready, like your ID, proof of income and bank statements, and that your address is correct across all documents.
Keeping everything organised and tidy will significantly assist you in obtaining the funds you need!
Step Four – Secure an Agreement in Principle
What is an Agreement in Principle?
When getting a mortgage, you need to show that you can pay it back. This is called showing "credit worthiness" and "affordability." You usually do this with something called an Agreement in Principle (AIP) or a Decision in Principle (DIP). It’s like a note from a bank that tells you how much money you can borrow. You can get this from a mortgage broker or your bank.
What are the Benefits of an AIP?
An AIP is a key step when buying your first home. It helps you feel calm when you start looking and when you're ready to make an offer. Sellers and agents like it because it shows you are serious and can afford to buy a house.
AIP Confirmation:
Once you get the go-ahead for your mortgage, your broker or bank will give you a paper called a Mortgage AIP Certificate. This paper shows that you’re ready to buy a home and is useful when talking to an estate agent or seller.
Obtaining an AIP:
Share your personal details and documents with your mortgage broker or bank early on. Sending them before you start looking helps you get approved and avoids mistakes. If you send papers later that don’t match what you said before, it can change their decision.
How Long Will an AIP Last?
Most lenders give you an AIP that lasts 30 to 90 days. If it expires and your income or spending hasn’t changed, it can be easily updated.
Can an AIP be Withdrawn?
When you apply for a loan, an AIP shows how much money you might be able to borrow. But remember, things like having less money saved or changing jobs can change your loan application. Always keep your information up to date to have the best chance of getting the loan!
AIP Declines:
Don't worry if a bank says no to your loan. Each bank has its own rules for checking credit scores. If one bank doesn't help you, another one probably will!
Credit Rating:
Getting an AIP can affect your credit score. Lenders check your credit softly, which doesn’t show on your record. But if you apply a lot in a short time, it can hurt your score. Soft checks see if you can borrow without changing your score, while hard checks happen when you apply for a loan. Hard checks can make your score go down a little.
Credit Score:
Your credit score is not just a number; it shows how reliable you are with money. A good score can help you get a mortgage with better rates. It's important to keep an eye on your credit report. There are three companies that help with this: Equifax, Experian, and Transunion. You can get your credit report in different ways, but you want to make sure you check with all three companies. Check My File does just that, obtain yours by scanning below:
Improving Your Credit Score:
Your credit score shows how well you handle money. Doing good things like paying bills on time, being nice to banks, and voting can help your score. Closing old credit cards also helps. But if you miss payments or owe money, it can make getting a loan harder.
In simple terms, getting an Agreement in Principle (AIP) is like getting a permission slip from the bank that says you can borrow money to buy a home. This slip is important because it helps you feel confident when looking for your first house. It shows sellers that you're serious about buying, and it can help you avoid problems later.
Remember to share important information with your broker or bank early, so you have the best chance of getting your AIP!
👏Congratulations, now you are armed with your mortgage AIP & therefore ready to begin your search for your first home👏
2 - What Fees Will I Pay and When?
Buying your first home is exciting but can feel a bit confusing. It's important to know all the costs, like solicitor fees and stamp duty, as well as other charges. Understanding what to pay and when helps make buying a home easier. Let’s help you learn about these fees and what to expect!
Broker / Lender Fees:
Once you have secured a property, talk to your mortgage broker or bank to finish your application. Your broker might ask for a fee at the start, so ask about that. Lenders might also have a product fee, usually between £500 and £1000. You can pay these fees separately or possibly add them to your loan, which means you’ll pay more in interest. Visit our Fees Page now and see how we are now supporting more and more customers free of charge!
Legal Fees:
Once you find a house and your offer is accepted, you need a solicitor to help. Ask your mortgage broker or estate agent for suggestions. Solicitors, also referred to as a property conveyancer, usually charge around £1,800 for buying a house. This pays for important checks and property registration.
Most conveyancers require a payment up front (maybe £250), and the rest when you finish. Check if they have a 'No Sale No Fee' option. For leasehold properties, fees will be higher because there’s more work to do.
If applicable you must settle any Stamp Duty upon completion. Check Current Stamp Duty Rates now.
Surveys:
Depending on the type / age of the property you are purchasing you might want a more detailed check on its condition. Most lenders now offer their own valuation at no cost to you but do bear in mind that the valuation is for their benefit and not yours. Choosing to upgrade this with your lender might seem cheaper, but getting an independent survey is usually smarter as it provides you with greater choice. The results are also not shared with the lender, something that could affect the outcome of your mortgage application.
After your mortgage is approved, you can hire a local surveyor to help you. A Homebuyers Report costs about £500 to £800, and a full Buildings Survey costs upwards of £800, depending on the house size and location.
Deposit:
If you want to buy a house, you usually need to save at least 5% of the price for a deposit, unless a family member is helping you. You’ll decide how much you want to provide at the beginning when you talk to your broker or bank. You don’t pay the deposit until your solicitor is ready to Exchange Contracts. Buying a house usually takes about 3-6 months.
3 – Understanding the Different Types of Mortgages
When you get a mortgage to buy a house, you must make choices about how much you pay back and what type you want. It's important for first-time buyers to know the different kinds of mortgages. Let’s look at the difference between paying back the money and only paying the interest, as well as fixed and changing rates.
Repayment Mortgages:
A repayment mortgage is the most common type of loan. Every month, you pay back some of the money you borrowed and then interest. If you pay on time, by the end, you'll have paid off everything and own your house completely.
Interest-Only Mortgages:
An interest-only mortgage means you only pay the interest, so your monthly payments are lower. But when the loan ends, you still owe the original amount. To pay it back, you might sell your house or use money from investments, your pension or savings. This can be good if you think you'll make more money later and can pay extra on the loan. It’s also helpful if you require greater flexibility with your mortgage payments.
Note - Repayment mortgages are generally available up to 95% of the property’s value whereas Interest Only mortgages are usually limited to 50%-60% - this is known as ‘Loan to Value’.
Loan to Value:
Loan to value (LTV) is how much money you want to borrow compared to how much the house is worth, shown as a percentage. A good LTV can help you get lower interest rates and make it easier to borrow money. But if the LTV is high, there is more risk to the lender if house prices fall, which might mean higher interest rates or less money to borrow.
Fixed-Rate Mortgages:
A fixed-rate mortgage means you pay the same amount of money each month for a set number of years, like 2 to 10 years. This helps you know how much money you need every month, making it easier to plan. But sometimes, this type of loan can cost more than loans that change with interest rates, and if you want to pay it off early, there might be extra fees.
Tracker Rate Mortgages:
A tracker mortgage is a special kind of loan for buying a house. It changes costs every month based on the interest rate set by the Bank of England. This is different from other loans where the bank decides the cost. Some banks might make you pay extra if you want to pay it off early, but many don’t, which is great if you want to be flexible!
Discounted Rate Mortgages:
This loan starts with a lower interest rate for a few years, usually between two to five. The rate is a ‘discount’ from the lenders standard variable rate (SVR). That means your monthly payments can change if the bank changes their rates. Unlike a Tracker rate that follows a set rate, this one can change whenever the bank wants. If you pay it off early, you might have to pay extra fees.
Variable Rate Mortgages:
A variable rate mortgage is a type of loan where the interest rate can go up or down whenever the lender decides. This means your monthly payment can change. It can be a little risky because if the rate goes up, you pay more. Sometimes it’s better to pick a fixed rate loan, where the payment stays the same, so you know what to expect!
Offset Mortgages:
Offset mortgages can save you money! If you have some savings, like £10,000, and you owe £100,000 for your house, you only pay interest on £90,000. This means you might pay off your loan faster!
When you want to buy a house and get a mortgage, there are different types to choose from, like paying back the amount borrowed or just the interest.
It can be a bit confusing, and that's why it's important to talk to a mortgage broker. They can help explain everything to you clearly and show you all your options, so you can pick what works best for you.
4 – Improving Your Credit Score
Are you thinking about buying your first house but worried your credit score might stop you? Don’t worry! There are things you can do today to make your credit score better and help you get the mortgage you want!
Check Your Credit Report:
There are three credit agencies - Equifax, Experian, and TransUnion - that hold your credit reports. To ensure nothing is overlooked, where possible we recommend checking all three reports at least once a year. You can do so in one place using Check My File.
Prove Your Address History:
Be sure to sign up to vote at your home address. It doesn't matter if you live with friends or your parents; you can still take this important step. If you just moved, make sure to register at your new place as soon as you can.
Meet Your Commitments:
Paying your bills on time, like car insurance and phone plans, shows that you can be trusted with money. It helps your credit score, which is like a grade for how well you handle money. But remember, having credit cards you don’t use can cause problems which we’ll talk about that later.
Build up Your Credit History:
If you don't have a credit history, it can be hard for companies to trust you, and your credit score might be low. This often happens to young people and if you are new to the UK. But don’t worry, you can build a good credit history; for example by using a credit card wisely. Just remember to pay it off completely each month so you don’t owe any extra money!
Avoid Taking on Too Much Debt:
Knowing how much of your credit you use is important for keeping your credit status healthy. Credit usage means how much of your allowed money you spend. For example, if you can spend £10,000 on your credit card and you’ve spent £3,000, your usage is 30%. It’s better to use less than 30% because it can help your score. If you have more than one card, make sure together they stay below 30%.
Break Financial Association with Others:
If you share a bank account or money problems with someone, their bad credit can hurt yours. It might be tough, but breaking those money ties can help make your credit better in just a month.
Avoid Multiple Applications:
If you didn’t get approved for a loan or credit, it’s best to wait before trying again. Asking for too many loans too quickly can make it harder for you to get one later.
Comparison Sites Are Useful BUT:
Looking for prices on comparison sites can be helpful. Just know that asking for quotes might show up on your credit report, but that's okay, it’s called a "soft" search, and it won't hurt your score. Only you and the credit agency can see it, and it disappears after a year, so it won’t affect getting credit later.
However, car insurance you pay every month is like a loan. Paying on time can help make your credit score better. But if you’re late or miss a payment, it can make your score worse.
Avoid Payday Loans:
Say no more, just avoid using them!
Cancel unused credit & store cards:
It's important to take care of your credit. If you have credit cards you don’t use, think before closing them, especially if you've had them for a long time. Closing the wrong ones can make your score go down. If you have too many cards you won’t use again, you can close those. Also, remember not to spend all the money on your credit cards.
If you want to pay less for your credit card bills, try moving your money to an old card with better deals instead of getting a new one. This helps you use your money better and keeps your credit score happy.
Knowing about your credit score is key if you are planning to buy a house. It’s like a school grade for how you handle money. The better your score, the easier it is to get help with a mortgage. By taking care of your credit now, you’ll be ready for that big step in the future!
5 – Deposits Explained
What Is A Mortgage Deposit And Why Is It Required?
When you want to buy a house, you usually need a mortgage. To get this loan, the bank will ask you to give them some money first, which is called a deposit. They do this to make sure you can pay back the loan and to keep their loan safe.
How Much Mortgage Deposit Do I Need?
To buy a house, you need to save some money first. The more money you save, the more options you have for loans and better interest rates. Although from time to time lenders may offer a mortgage with no deposit, usually you need to save at least 5% of the house price. For example, if the house costs £200,000, you need to save £10,000. Then, you can borrow the rest to pay for the house.
If however you have £80,000 to put down, you only need to borrow £120,000 for a house. This means you’ll borrow 60% of the house price. When you save more money to pay upfront, you can choose from more banks and probably get a better deal.
Can My Family Help With My Deposit?
Yes, many banks let you use money from family or friends to help with your home deposit. But they should think about a few things first:
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Will they give the money as a gift and not want anything back?
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Perhaps they want to protect their money by putting a note, known as a ‘charge’, on your house?
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Would they like to use their own house to help you? In this case, they don’t give you money; instead, the bank takes a charge on their house until you can pay them back.
Can I Get A Mortgage Without A Deposit?
While most lenders require a deposit, it can be challenging to save up. However, on occasion lenders will offer a mortgage where no deposit is required, known as a 100% mortgage.
There are other ways to get around paying a deposit, such as:
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You can buy a house from a family member or your landlord for less money. If the house is worth £250,000 but they sell it to you for £225,000, the £25,000 you save can count as your deposit. (you’ll just need to pay your solicitors/mortgage fees)
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A family member can use their house to help you buy yours. The bank can take a charge on their house, so you don’t need to save up a deposit.
What Is The Best Way To Save For A Deposit?
Saving for your first home can be tough, but you can do it! The Lifetime ISA (LISA) helps you save money. If you're 18 or older, you can open a LISA and save up to £4,000 each year. The government gives you an extra 25% on what you save. So, if you save £250 a month, you can make £3,000 a year and get a £750 bonus. Just remember, you can only take the money out for your first home before you turn 60. You can even save with a friend to get more money together for a house.
Start saving for your first home with a LISA for homeownership and make the most of your savings with these additional tips:
Grab The Chance:
Whilst living with family, set up a plan to automatically save a little money every time you get paid. If you save it, you won't spend it!
Know What You Will Be Paying:
Again, if you are living with family, find out how much you need to pay every month for a mortgage. Then aim to save that same amount each month. This way, you’ll not only see your savings quickly grow, but you’ll also know buying your first home is affordable.
Polish Up Your Spending:
Save money by cutting back on extra spending. Instead of going to expensive restaurants, try having friends over at your house. And instead of buying new labelled clothes for special occasions, you can rent them or maybe visit your local charity shop.
Say No to Debt: Try not to borrow money if you can help it. If you do, it might make it harder for you to buy a house later and save up for the money you need.
My Deposit Is Not A Problem, How Can I Borrow More?
If you have a deposit saved but can’t borrow enough to buy a house, you can ask a family member to help you by including their income too. This is called a Joint Borrower Sole Proprietor (JBSP) mortgage, click here to read more on JBSP. It helps you borrow more money without making the family member an owner of the house nor contribute towards your deposit. Just remember to only borrow what you can afford to take on yourself in the future.
When Do I Pay My Deposit?
When you buy a house, you'll work with a solicitor who helps with important steps, like the Exchange of Contracts. This is when you pay some or all of your deposit and usually happens about a week or two before you move in, which is called Completion. It is imperative that you exercise caution and only transfer funds once you are certain that it is your solicitor who has requested them.
A mortgage deposit is like a safety net for the bank when they lend you money to buy a house. If you need help saving up your deposit, family members can pitch in, which can make it faster to reach your goal. You can also save money by spending less on things you don't really need and making some small sacrifices.
6 – How to Make an Offer on a Property
If you're buying a house for the first time, it can feel exciting but maybe also a bit scary. Choosing a good place is important—check out local amenities, transport links, and school quality.
So, you've found a property you fancy, but how should you tackle that first offer? Here's some handy advice to keep in mind:
Ask the seller how long the house has been for sale and why they want to sell it. If they need to sell fast, you can offer a lower price. But if they’re not in a hurry, you might need to offer a higher price to get the house. This could also be true for that perfect property in an ideal location, if you're keen then it's most likely others will be too!
Never make your best offer first when buying a house. Start with a lower number so you can talk and negotiate better. This way, you are less likely to pay over the odds.
Make it clear to the estate agent you already have your mortgage AIP in place. This shows you're a serious buyer who can buy a house quickly. As a first-time buyer, you might have an easier time than people who also have a property to sell.
Stick to your guns if the estate agent wants you to talk to their mortgage broker. Remember, the agent is working for the seller, not for you. They want to get the best price for the seller. If you already have a good mortgage broker, you don't need to use theirs. Your broker can even talk to the agent to show that you’re in a strong position.
Remember to share with them your mortgage Agreement in Principle!
Negotiate Smartly and don’t tell everything right away. It’s easy to say how much you want to pay but wait until you know what the seller wants. This helps you not pay too much and gives you a chance to get a better deal.
Making an offer on a property as a first-time buyer can present some challenges. It's crucial to do your homework by checking the property's history and understanding the seller's situation.
Remember to start with a lower offer to leave room for negotiation and always make it clear to the estate agent that you have your mortgage AIP.
Don't feel pressured to use the seller's mortgage broker and keep your negotiating strategy close to your chest until you understand the seller's expectations.
By following these tips, you'll be better positioned to make a successful offer and secure your perfect home.
7 – My Offer Has Been Accepted, What Happens Next?
Great news on your offer being accepted. Now, let's focus on finalising your purchase smoothly. Here’s what to do next:
Hire a Solicitor (Conveyancer):
Engage a solicitor / conveyancer immediately. They’ll manage paperwork, local searches, and communication with the seller's solicitor. Get recommendations from your estate agent, mortgage broker, or trusted friends and family—don’t just go for the cheapest option; quality matters. Expect to pay about £200-£500 upfront for local searches. Conveyancing ensures a secure transfer of property ownership, making the process smoother for everyone involved.
Submit Your Mortgage Application:
Once your offer is accepted, it's time to submit your mortgage application. If you are working with a mortgage broker they can help you with this.
You'll need to share your recent pay slips and bank statements, and also tell them about your solicitor, the house you're buying, and the seller's details.
Await your Mortgage Offer:
Typically, it takes between 2 to 4 weeks to receive your mortgage offer. While it can occasionally arrive sooner, there are times when it may take longer, so please keep this in mind.
If you have a mortgage broker, they'll keep pushing the bank for you. When you get the offer, look it over to make sure everything is right. If you're working with a broker, they’ll help you with that too. Even if you’re not moving for a while, a good broker will watch interest rates and tell you if you should change your deal to save money.
Organise a Survey:
Your bank will check the value of the house before giving issuing a mortgage offer, but it’s not the same as a home survey. Some banks don’t even visit the house anymore and just look up information online. If you’re buying a house, you might want to get your own inspection but wait until your loan offer comes through first. A few hundred pounds spent now could save you a few thousand in future repairs!
Arrange Your Mortgage Protection & Insurance:
Once you get your mortgage offer, it’s exciting because you’re getting closer to buying your home. As long as you stay healthy and keep earning money, paying your mortgage and bills will be easy. It’s smart to think about protection, to help if you get sick or hurt. Consider things like Income Protection and Critical Illness Cover. Also, remember to get Buildings Insurance in place ready to take effect when you Exchange Contracts, the point you become legally committed to purchasing the property.
Get Ready to Set Your Move Date:
After about 8 to 12 weeks, your solicitor will have completed their work. Then, you can get ready to sign papers and pick a moving day. At that time, you'll need to give some money to your solicitor, so make sure you have it ready!
Exchange Contracts:
It’s time to sign your contract. Everyone decides on a moving day called Completion. This is when you agree to buy the house and move in. Usually, people wait at least a week after signing before moving.
Start your Buildings Insurance to protect your new home and your Life Insurance to protect your mortgage. Your solicitor will give you a ‘Completion Statement’ and request your mortgage monies.
Completion Day:
On completion day, the seller will move out and give the keys to you through their estate agent. This happens after your solicitor gets the money from your bank and sends it to the seller's solicitor, and if needed, pays the stamp duty to HMRC.
To ensure a smooth purchase, hire a reputable solicitor to handle the paperwork and local searches. Submit your mortgage application and wait for your offer, while considering a home survey for added assurance.
Don't forget to arrange necessary protection insurance and prepare for your moving date. Finally, when all is set, you'll exchange contracts and complete the purchase, unlocking the door to your new home!
8 - Should I Arrange a Survey?
When buying a house, it's important to check how good it is, especially if it's an old house. A surveyor can help look at the property and highlight any areas that may need some attention.
Different areas have different rules. In England and Wales, surveys help buyers. In Scotland, sellers need to show a special report before selling their house. There are different kinds of surveys, which we cover further on.
Mortgage Valuation:
When you want to borrow money to buy a house, the bank checks how much the house is worth. This is called a Valuation. Sometimes they just look from the outside, and other times they take a closer look inside. Occasionally they may not visit the property! Most banks now do this for free, but make sure to ask if they charge.
Remember, this check isn't the same as a full inspection. If you want to be sure the house is in good shape, you might want to pay for a more detailed inspection later. Getting the bank's okay first is important, and then you can get another check if you need it after they say yes.
Homebuyers Report:
A Homebuyers Report is a special check-up for homes that helps you find out if there are any problems before you buy one. It looks at both what you can see and what you can't, like hidden issues that might make the house less valuable or need fixing. This report can tell you about things like dampness or cracks, so you can decide if you want the house. Getting this report usually costs between £500 and £800, depending on how big and where the house is.
Building Survey:
If you want to buy a house with a cool history or one that has changed a lot, it's smart to get a Building Survey. This special check helps you see if there are any problems and how much it might cost to fix them, so you can make good choices about your new home. A Building Survey usually costs between £800 and £1,500. The price also depends on how big the house is and where it is.
Buying a New Build, is a Survey necessary?
New houses often have a warranty that protects you for up to 10 years. For the first two years, the builder must fix any problems. But you want to make sure they really will! A survey can show if there are any issues to fix before you move in, so you feel better knowing everything is okay.
Whichever option you decide, it is advisable to shop around to establish what is most suitable to meet your needs & before signing on the dotted line.
9 - Conveyancing Explained
When buying a property, it's crucial to have a Solicitor (Conveyancer) to handle the legal stuff and ensure everything is in order. Here’s a quick overview of the process:
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Choose a Conveyancer based on recommendations from your estate agent, mortgage broker, family or friends.
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Your Conveyancer will send you initial paperwork to sign and return, along with ID verification.
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You’ll pay some fees upfront to cover property searches.
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The seller's Conveyancer will draft a legal contract for you.
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Property searches (like Local Authority checks) will be applied for.
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Your Conveyancer will review the contract and communicate with the seller’s Conveyancer.
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Once your mortgage offer is received, your Conveyancer will ensure all conditions are met.
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They will check the search reports and may raise further questions if needed.
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You’ll receive a detailed report on your property purchase to sign.
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Once you're ready, transfer your deposit to the Conveyancer.
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Agree on a completion date and exchange contracts, making it legally binding.
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On completion day, the seller vacates, and you receive the keys. Your Conveyancer will handle the payment to the seller and the stamp duty.
With a skilled Conveyancer by your side, the property buying process is much smoother!
Final Thoughts
Remember, buying your first home involves a number of key steps.
It starts with deciding whether to use a mortgage broker or go directly to a bank. Understanding your financial limits and organising the required documents is crucial.
Knowing about different types of mortgages and improving your credit score are important.
Being armed with your Mortgage Agreement in Principle is a must.
Making an offer on a property and organising a survey are significant stages. With good preparation and guidance, buying your first home becomes a manageable journey.
We hope you’ve found this guide helpful! For a deeper dive into these topics, don’t forget to check out the various links throughout this guide to our Learning Centre, where you’ll find detailed explanations and additional resources.
Related Resources
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if you need a hand, the Beechwood team will be delighted to help and provide our services free to first-time buyers when borrowing more than £225,000. This excludes both Shared Ownership and Right to Buy purchases, Buy to Let, Joint Borrower Sole Proprietor Mortgages, Product Transfers or if you are buying with two or more family members/friends)