Unless you’ve spent significant time researching the purchase of your first home, or have worked within the mortgage industry, the process of buying your first home can seem like a daunting one.
With so many different types of mortgages, all requiring different deposits, fees and legal obligations, it can be tough to know where to start.
In-fact, many of us will put off the idea of buying a home on the basis that the process seems to intimidating or arduous.
This shouldn’t be the case. Buying your first home is exciting and marks the start of a new chapter in your life. For many, it could mean independence from your parents, for others it could be the chance to finally build a home around your own personal tastes and requirements.
We’ve created this simple five step guide as a starter pack for those looking to get their foot on the property ladder. We won’t be using any technical jargon or industry terms, we’ll simply lay-out the basic steps required to help you understand the home-buying process.
Step 1 – Save for a deposit
On the basis that you’re reading this article, there’s a good chance you may have already made inroads into saving for a deposit.
It may be worth browsing property websites to get a rough idea of how much properties in your desired area are selling for. We wouldn’t recommend spending too much time on this at this stage as prices will be susceptible to change between now and then.
How much of a deposit will you need to save? Somewhere between 5% and 20% of the total cost of the home.
The government’s recent Help to Buy scheme is designed help first-time buyers get a foot on the property ladder. With this scheme you are only required to provide a 5% deposit, however it is currently only available on new build properties.
For example, if you wanted to buy a property for £150,000, you’ll need to save at least £7,500 (5%) before entering the mortgage application process.
It’s also worth mentioning that there will be other fees involved in the application process, so always be prepared for these before making the leap.
Step 2 – Find a property
Now that you’ve saved for a deposit, it’s time to start looking for properties.
It’s important to remember that your first home doesn’t have to be the home you live in for the rest of your life. With this in mind, it may help to accept that your first home may have imperfections or not be exactly as you wish, this is fine, and for many, part and parcel of the process.
Upon finding a suitable property you will need to arrange a viewing. On new build homes, this may simply involve popping into the show home, for older properties, you’ll probably need to arrange an appointment with the assigned agent.
Step 3 – Make an application
If, following the viewing, you’re happy with the property, it’s time to make an application. Nowadays, a good portion of the application can be completed online, however there will be some physical paperwork to complete.
At this stage, you will need to pay a reservation fee which will vary from one provider to the next. You will also need to provide a range of documentation such as proof of ID, income and address to support the application.
The mortgage lender will use the details of the application to run eligibility checks and present a mortgage proposal to suit your budget. Whilst it is in the lender’s best interest to provide you with a feasible mortgage solution, it’s also worth doing your own budgeting to ensure you’re fully comfortable with the agreement you’re about to enter.
Step 4 – Surveys and conveyancing
It’s no secret that there’s a lot of red tape involved in buying a house, especially when it’s your first home. This is where solicitors and conveyancers come in.
To buy a home you will need to appoint a solicitor to act on your behalf. Of course, there will be a cost to this, however it is absolutely necessary to ensure the legal handover of the title deeds.
Step 5 – Exchange of contracts and completion
Providing everything goes smoothly, a date will be diarised to exchange contracts. This usually happens within 2 to 4 months of the initial reservation of the property.
It is at this stage that the deposit payment is made, and the transaction becomes legally binding. If contracts are not exchanged on the agreed date the property may be placed back on the market.
Finally, there’s the legal completion of the purchase. This is when the mortgage lender releases funds to pay for your home.
On the completion date, a sales advisor will arrange to meet you at the property to give you the keys, provide the handover pack, take initial meter readings and answer any final questions you may have.
And that’s it, you are now the owner of your first home. Of course, there are several finer details that will be required as part of the process, but this is the 5-step framework to help you understand what’s involved.
Are you looking to get on the property ladder in the near future? We’d love to hear from you. Drop us a comment in the section below.