It's time to buy your first home, but where do you start? In a sea of news around stamp duty holidays and 95% mortgages, as a first-time buyer where do you start?
Knowing the rough outline of how the process works though will make the ride much smoother.
We've broken it down into a simple 12 Step Process to Buying your First Home.
Step 1: Decide if buying a home is right for you
The first step to buying your home is that you work out what you can afford to spend on buying a house or a flat and your monthly mortgage payments. Then decide whether now is the right time for you.
This mortgage calculator can help you paint a clearer picture of your affordability and how it will affect your lifestyle.
Speaking to a Mortgage Broker can give you an even clearer picture of your affordability, (and also start the relationship for further steps further down in this post.)
Remember, your savings will have to cover not just the deposit, but expenses such as mortgage fees, Stamp Duty, insurances, house surveys and solicitor fees. (The Joy!).
Step 2: Gather your deposit
The bigger your deposit, the more likely it is that you'll be able to get a large mortgage and a lower interest rate.
The size of your deposit is relative to the total cost of the home you might buy.
For example, a 95% mortgage will mean a 5% deposit or an 80% mortgage will mean a 20% deposit. Generally, the larger the deposit the better mortgage interest rate you will receive.
A deposit can be from your savings, (a lifetime ISA can help you with that), or gifted from a family member or friend who wants to help. You can read more about saving for your deposit here in our recent blog: Why Saving for your First Mortgage Deposit Doesn't Have to Completely Suck.
Step 3: Plan for other mortgage process costs
The third step to buying your home is to be prepared for other potential upfront costs in advance of starting your application. Running around last minute trying to save and scrape your pennies together to cover a property survey could really hold up the process.
Costs to prepare for:
- Solicitor fees - Legal fees are typically between £850 - £1,500 including VAT at 20%
- Surveys - A home survey in the UK will cost between £400 to £1,425 on average, depending on the type of house survey you choose, the level of detail you require, the property value, and the location of the property.
- Mortgage fees - This is a fee that your mortgage broker might charge, however, some brokers are completely free to use, and will take a commission from the bank
- Stamp duty - Find the latest news and stamp duty rates here
- Land registry fees - When you buy a property from someone else, the Land Registry charges a fee to transfer their register entry into your name. You can find the latest rates here.
For after the purchase, you may also want to factor in things like:
- Removal transport hire
- Priority home fixes such as insulation or damp removal
- Home improvements such as painting, curtains or blinds, furniture
- A raging house warming party (post-lockdown obviously)
Step 4: Getting your Mortgage in Principle
Now we're getting to the good parts! Step four to buying your first home, getting your Mortgage in Principle.
Think about a Mortgage in Principle a bit like a Mortgage Promise. A lender is giving you a promise that if your income, credit rating, and circumstances remain the same, you could receive a mortgage of X amount. And like many terms in the mortgage world, it can be referred to in many different ways and acronyms. Like...
- MIP - Mortgage in Principle
- AIP - Approval in Principle
- DIP - Decision in Principle
- MP - Mortgage Promise
- MP - Mortgage Principle
Before you start to view properties and make offers, it can help to have a mortgage in principle. The MIP will typically last between 60 and 90 days (plenty of time to find your dream home!)
Having a Mortgage in Principle will show estate agents that you’re a serious buyer, give you a competitive advantage over other buyers, and that a lender is happy to lend you what you need.
To get your MIP you could speak to your mortgage broker, they will find the best MIP for you by searching the full market of lenders, or you can go directly to the bank (if you're very confident).
Read the full blog on What is a Mortgage In Principle (MIP) and how long does it last?
You can start your mortgage journey online with Mortgage Propeller, and we can connect you to an expert FCA-approved mortgage broker in your area.
Step 5: House Hunting!
If you're anything like me, you've been doing this every night for the last 2 years! But the fifth step to buying your first home, is finding that home, now you know your affordability and it's backed up by your Mortgage in Principle.
Start seriously thinking about where you want to buy, what your priorities are, and what the market is like.
You can begin by looking online or in local papers. You can also start meeting estate agents to ask any questions you have and view properties before they reach the internet.
Step 6: Arranging to view your top properties
This is very very exciting stuff, just follow the call to action at the bottom of the property listing and start booking viewings. You may want to create a shortlist beforehand.
Get your checklist organised. Some things to look out for and ask about could be:
- Is there any damp?
- Is the building structurally sound?
- How much storage space is there?
- Which way does the house face? (South facing means long summery days in your garden!)
- Are the rooms big enough for your needs?
- Have you been fooled by staging?
- Do the window frames have cracking paint? Is the double-glazing intact?
- How old is the roof?
- Are there enough power points and what condition are they in?
- Is the plumbing up to scratch?
- What’s the attic like?
- Is the property adequately sound-proofed?
- What’s the area like? (Transport, bars, restaurants, schools, shops, traffic)
- Do other properties around you have extensions? (in the case that you might like to extend in the future)
- What has recently been replaced in the house (a new boiler etc)
- Is the seller leaving or taking their kitchen appliances
After you've narrowed your shortlist down to two properties, you should book to view them again, and take a fresh pair of eyes with you, someone you trust like a parent or close friend. Then make a final decision that you’re confident with.
Step 7: Put in your offer
If it wasn't feeling serious by now, this will hit you like a ton of bricks (pun unintended). Once you’ve found a home you want to buy, the next step is to make an offer, usually through an estate agent.
It’s important to research the local property market to avoid overpaying. As a starting point, compare the property you like with similar homes that have recently sold in the same neighborhood.
The estate agent should also give you an indication of whether your offer is realistic. But remember, the estate agent is there to work for the seller, not for you, but they can still be a very useful source of information. Some appropriate questions to ask them include:
- How long has the owner lived at the property?
- Why has the owner decided to sell?
- How long has the property been on the market?
- Has the owner found a property to move to yet?
- How many people have viewed the property?
- Have any previous offers been made? If so, were any accepted?
- What's the minimum price the seller will accept? (they may not know or want to share this, but it's worth asking just in case!)
Step 8: Get your mortgage
The next step to buying your first home, is to get your mortgage offer so that you can pay for that dream property.
It's tempting to go to your bank or existing lender for a new deal as it's familiar. But it could be better to explore your options by going to a broker who can scan the market for the best possible deal.
This is when you can go back to your Mortgage Broker, who got you that Mortgage in Principle and tell them... it's go time!
You can start your mortgage journey online with Mortgage Propeller, and we can connect you to an expert FCA-approved mortgage broker in your area.
Step 9: Get your Solicitor or Conveyancer
YAY, your offer has been accepted, and you’ve got a mortgage offer from a lender, the next step is to arrange for a solicitor or conveyancer to handle the legal process to transfer ownership of the property to you.
The solicitor or conveyancer will carry out searches with the local authority to make sure there are no fundamental problems with the property.
Many mortgage brokers will be able to arrange this for you. Or you can also find your own conveyancer, but make sure you ask your mortgage lender first - each mortgage lender has a list of approved conveyancers.
Conveyancing usually involves:
- Acting as the middle person between you, the mortgage lender and the seller
- Looking over any contracts that pass between you
- Dealing with the Land Registry
- Sorting out stamp duty
- Transferring money during a sale
- Checking for structural risks such as subsidence.
Your solicitor should be qualified in conveyancing. To speed up the process you could try and find one that specialises in this area.
Step 10: It's surveying time
The next step to buying your first home is to organise a survey of the house to highlight any structural issues. The lender will also carry out a survey to make sure it’s a sound investment but it's sensible of you to get a company to do a survey for you too.
There are a couple of different types of surveys:
- Valuation only
- Homebuyers report
- Building survey
The survey will tell you what you need to know about the property and any potential problems.
You can choose to have a private survey done once you make an offer and have a basic valuation done. You need to do this before you exchange contracts.
Step 11: Exchanging contracts and insuring the house
Time to breathe again. The lender has approved the mortgage, the solicitor is happy with the survey and the seller can hand over the deeds. (*Get's announcement post ready for social media...*)
Now you can start to negotiate any final details that need to be agreed. This could be the completion date or items such as white goods that the seller has said they’ll leave behind.
Your solicitor or conveyancer will put the terms of the transfer in writing. They'll then tell the land registry that they’re transferring the property’s ownership to you. They’ll also speak with the mortgage lender to ensure the mortgage is ready for completion.
Before exchanging contracts, you must pay the deposit on your new home. Which is less exciting haha!
The move-in date and the time between exchanging contracts and completion can take from a day to a few months. This all depends on what stage the people that you're buying the property from are at. This is often referred to as the ‘chain’.
Your lender is likely to insist on you buying home insurance. After all, it’s a big investment on their part. Although It’s not a legal requirement, it will provide you with peace of mind against issues like flooding, theft or damage.
Remember you don’t have to get insurance through your lender – it pays to shop around, and your mortgage broker can help you with this.
Step 12: You own a house! You're a real home-owner!
The final step to becoming a homeowner is completion. Completion is when the property officially becomes yours. They'll transfer the mortgage and deeds to your name and you’ll pick up the keys to your new home.
Now all that's left to do is pay your solicitor or conveyancer the fees and any stamp duty, but don't worry, they will arrange this.
Time to pack up your stuff and move into your new home! Congratulations.
How can Mortgage Propeller help?
Straight from step one, we can help you figure out your affordability, connect you with a broker so you can receive your Mortgage in Principle, and later down to line your mortgage!
1. Create your Mortgage Propeller account here. This means you can hop back into your application anytime, and share your details with a partner if you're completing a joint application.
2. Once you've created your account you'll be taken to your very own dashboard, this is where you begin filling in your application, you'll hear this referred to as the 'Fact Find'.
3. This is a much more refined and smooth process when compared to the 30 pager questionnaire usually supplied, it should take you 20 minutes to complete (depending on your circumstances).
4. Once you've completed all your information, you'll see a 'Select your Broker' button unlocked on your dashboard
5. Select your area and we'll start the match-making, in the meantime, you can grab yourself a cup of tea
6. You'll be connected with an FCA-approved Mortgage Advisor in no time. They'll review your details, request documents, and assess if you'd be eligible for a mortgage. They may also follow up with you by email, phone, or on the LiveChat feature.
7. From here it will all happen pretty quickly for you, your Mortgage Advisor will get your decision in principle, once you've found your dream home they'll be able to get you the best mortgage deal, and you'll have pure Mortgage Joy in no time!
Remember that if you’re having any trouble you can always reach out to us on Livechat or at hello@mortgagepropeller.com.
Get started on your mortgage journey or find out more about us here.
