Buying your first property can be exciting but also confusing. To help de-mystify the process, here is a quick rundown of things to consider and key milestones along the way to owning your first property
1. Get your deposit together
Normally you need to save thousands of pounds before you can apply for a mortgage – at least 5% of the cost of your home.
The larger your deposit, however, the better deal you can get. Home buyers who put down a 15% deposit can find some great deals, while anyone who has 25% will get some of the lowest possible rates of interest.
Nevertheless, few first time buyers can afford as much as this so the government has introduced a temporary scheme for struggling buyers called Help to buy.
2. Check if you’re eligible for Help to Buy
The Help to Buy scheme is designed to help people get on the property ladder or buy a new home without a large deposit
To be eligible for Help to Buy, you must:
- Be a first time buyer and not own a property anywhere in the world
- Have a deposit of at least 5%
- Be looking to buy a home worth £600,000 or less
- Be purchasing a property you intend to live in most of the time (ie not a property you intend to let out or use as a second home)
3. See how much you can borrow on a mortgage
How much you can borrow will depend on your income, any debts you may have and planned expenditure for your new property. Speak to a mortgage advisor who will be able to complete an income and expenditure check and let you know how much you might be able to borrow.
4. Check your credit score
A worthwhile exercise before you start looking for your new home is to make sure there are no entries on your credit file which may affect your ability to obtain a mortgage. If you have a low score, you need to identify why that is and take steps to improve it. Remember, the higher your credit score the more likely you are to be approved for a mortgage and you may even be able to get a better deal.
5. Get a “Decision in Principle” with a Lender
Once you have a deposit, you know how much you can borrow and you have checked your credit file, you have two options:
- You can start the process of looking for a property in the knowledge that you should be able to get the mortgage but are prepared for the fact you could still be refused when it’s crunch time.
- You can apply for a mortgage with a lender and get a Decision in Principle, even if you do not yet have a property in mind. Your lender will do a credit search at this point in the process.
If you choose the latter, you’ll have some peace of mind that you are able to get a mortgage as long as the decision isn’t overturned due to problems along the way (such as issues raised in a property survey). You’ll also have a clear idea of exactly what you are able to borrow based upon your income and expenditure, as well as the size of the deposit you will need.
Your mortgage advisor will be able to arrange for this Decision in Principle to be completed.
6. Apply for your mortgage
Once you have found the property you want to purchase and an offer has been accepted, you will need to apply for your mortgage. Your lender or mortgage advisor will complete the application with you and ask for supporting documentation such as pay slips and bank statements. The exact list of documentation will vary from lender to lender.
During this application process your lender will instruct an independent valuation of the property you are looking to purchase. The lender will not meet the cost of this valuation, so you must plan to have money available to cover it.
7. Mortgage Offer
Once your new lender has assessed all the information in relation to your mortgage application they will be able to issue a mortgage offer. This is an agreement from a lender stating how much they are willing to lend to you to buy your desired property.
Once you have a mortgage offer you are nearly there.
8. Solicitors and Conveyances
Solicitors and conveyancers typically act as an agent between you, your mortgage lender and the seller. They will sort out all of the legal aspects of the transaction, including any stamp duty, transferring the money during the sale, dealing with Land Registry, arranging for the contracts to be drawn up and completing the purchase.
9. Completion (the time for congratulations)
Once all the legal checks have been undertaken and contracts have been exchanged, you will be given a date for the completion of the sale. This will be the date when you receive the keys to your new property and will be able to move in.
Please contact your mortgage advisor for further information on the process of purchasing a property or re-mortgaging a property you already own.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.