Finance Lifestyle

The Complete First Time Buyer Guide: How to Buy Your First House?

The Complete First Time Buyer Guide: How to Buy Your First House?

Purchasing a home for the first time can be an exciting yet daunting experience. As a first time buyer, it’s essential to understand the various stages of the home buying process to ensure a smooth and stress-free experience. This comprehensive guide will cover everything from assessing your finances to understanding the legal aspects of buying a property.

Being well-informed about the home buying process can save you time, money, and prevent unnecessary frustration. Knowledge of each step will help you make informed decisions and allow you to feel more confident in your choices. This guide aims to provide a solid foundation of understanding for first-time buyers, ensuring that you’re well-prepared for the journey ahead.

Table of contents

1. Preparing for the mortgage application

A. Assessing your finances and credit score

Before embarking on the home buying journey, it’s crucial to assess your financial situation. Start by reviewing your credit score, as it plays a significant role in determining your mortgage eligibility and the interest rates you’ll be offered. You can obtain your credit report from credit reference agencies such as Experian, Equifax, or TransUnion.

Ensure that your credit report is accurate, and address any discrepancies or errors as soon as possible. If your credit score is lower than desired, consider taking steps to improve it before applying for a mortgage. These steps may include paying off debts, ensuring timely bill payments, and avoiding taking out new credit.

B. Saving for a deposit

One of the most critical aspects of buying a home is saving for a deposit. Generally, lenders require a minimum deposit of 5% of the property’s purchase price, although a larger deposit may secure better mortgage rates and terms. It’s essential to set a realistic savings goal and create a budget to help you achieve it. Consider setting up a separate savings account specifically for your deposit to avoid dipping into it for other expenses.

When saving for a deposit, explore the various government schemes available to first-time buyers, such as the Help to Buy Equity Loan, Shared Ownership, or Lifetime ISA. These schemes can provide financial assistance to help you reach your deposit goal faster.

C. Obtaining an Agreement in Principle (AIP)

An Agreement in Principle (AIP) is a conditional offer from a mortgage lender that states how much they may be willing to lend you. Obtaining an AIP is a crucial step in the home buying process as it provides a clear indication of your borrowing capacity and demonstrates to sellers that you’re a serious buyer.

To obtain an AIP, you’ll need to provide the lender with some basic financial information, including your income, outgoings, and any outstanding debts. Keep in mind that an AIP is not a guarantee of a mortgage offer, and the final amount you’re offered may vary once you submit a full mortgage application. However, having an AIP in hand can significantly boost your confidence and credibility as a first-time buyer.

Most banks and building societies, such as Barclays, Lloyds, and HSBC, offer an AIP service online. You can use a mortgage calculator, like the one available on The Issue, to estimate your monthly mortgage payments and determine how much you can afford.

2. Choosing a mortgage advisor and solicitor

A. The role of a mortgage advisor

A mortgage advisor, also known as a mortgage broker, is a professional who assists in finding the most suitable mortgage product for your needs. They have expert knowledge of the mortgage market and can provide tailored advice based on your financial situation and property preferences. Mortgage advisors can save you time and effort by comparing various mortgage products and negotiating with lenders on your behalf.

Websites like MoneySavingExpert and MoneySuperMarket are excellent resources for finding mortgage advisors and comparing mortgage deals.

B. The role of a solicitor

A solicitor plays a critical role in the home buying process by handling the legal aspects of the transaction. Their responsibilities include conducting property searches, reviewing and drafting contracts, liaising with the seller’s solicitor, and handling the transfer of funds. A solicitor ensures that your interests are protected throughout the process and that the property transaction complies with all legal requirements.

To find a qualified solicitor, consider using websites like The Law Society or Reallymoving.

C. How to find a qualified and experienced professional

To find a qualified and experienced mortgage advisor and solicitor, start by seeking recommendations from friends, family, or colleagues who have recently purchased a property. You can also search for professionals through online directories or industry associations, such as the National Association of Estate Agents (NAEA) for mortgage advisors or the Law Society for solicitors.

When choosing a professional, consider their qualifications, experience, and any customer reviews or testimonials. It’s essential to select professionals who are knowledgeable, communicative, and have a proven track record in assisting first-time buyers.

Websites like Trustpilot and Checkatrade can help you find professionals with a solid reputation in your area.

3. Property search and viewing

A. Researching the local property market

Before you begin your property search, take the time to research the local property market. Familiarise yourself with average house prices, recent sales, and the types of properties available in your preferred area. This knowledge will help you identify suitable properties within your budget and give you a better understanding of the local market conditions.

Additionally, consider factors such as local amenities, transport links, schools, and crime rates when researching potential areas to live in. These factors can significantly impact the quality of life and the long-term value of your property.

Online property portals like Rightmove and Zoopla can provide valuable information about properties in your desired area, including photos, floor plans, and estimated property values.

B. Scheduling viewings and evaluating potential homes

Once you have identified potential properties, schedule viewings to assess their suitability. When attending viewings, take a thorough approach and make a list of essential criteria to help you evaluate each property. Factors to consider may include the property’s condition, layout, room sizes, storage space, and any potential for future improvements or extensions.

Don’t be afraid to ask questions and take notes during viewings, as this will help you remember key details and make informed decisions later. It’s also advisable to view properties at different times of day to get a better understanding of factors such as noise levels and natural light.

C. Making an offer on a property

Once you have found a property that meets your needs and budget, it’s time to make an offer. Discuss your offer with your mortgage advisor and solicitor to ensure it’s realistic and in line with current market conditions. They can also provide guidance on any conditions you may wish to include in your offer, such as making it subject to a satisfactory homebuyer’s report or mortgage approval.

When submitting your offer, be prepared to negotiate with the seller or their estate agent. Remember that being flexible and maintaining open communication can increase your chances of securing the property at a price that works for both parties.

4. The mortgage application process

A. Submitting a mortgage application

After obtaining an Agreement in Principle (AIP) and selecting a property, you’ll need to submit a mortgage application with the lender. This process involves providing detailed information about your finances, including income, expenses, and any outstanding debts. You’ll also need to submit supporting documents, such as payslips, bank statements, and proof of your deposit.

B. Mortgage lender fact-finding and product recommendation

The mortgage lender will conduct a thorough fact-finding process to assess your financial situation and determine the most suitable mortgage product for your needs. This may involve considering factors such as interest rates, loan term, and repayment options. Based on their assessment, the lender will recommend a mortgage product tailored to your requirements.

C. Basic valuation and homebuyer’s report

As part of the mortgage application process, the lender will carry out a basic valuation of the property to ensure it’s worth the amount you’re borrowing. However, this valuation is solely for the lender’s benefit and won’t provide you with any information about the property’s condition.

It’s highly recommended that you obtain a homebuyer’s report from a RICS qualified surveyor. This report provides a detailed assessment of the property’s structure, condition, and potential issues, such as dampness, wood rot, or infestations. A homebuyer’s report can help you make an informed decision and potentially save you money in the long run.

D. Mortgage offer and mortgage deed

If the lender is satisfied with your application, the property valuation, and any supporting documents, they will issue a mortgage offer. This legal document confirms that the lender has approved your mortgage. A copy of the mortgage offer will be sent to you and your solicitor, who may ask you to sign and return it.

You’ll also receive a mortgage deed, which you’ll need to sign and have witnessed. Ensure that you don’t date the mortgage deed, as this is typically completed by the solicitor. Once these documents are signed and returned, the mortgage application process is complete.

A. Instructing a solicitor

Once your mortgage application is underway, you’ll need to instruct a solicitor to handle the legal aspects of the property transaction. The solicitor will act on your behalf throughout the process, liaising with the seller’s solicitor and conducting necessary property searches.

B. Types of property searches and their importance

Property searches are a crucial part of the home buying process, as they provide essential information about the property and its surroundings. Some common searches include:

  1. Local authority searches: These cover various aspects, such as listed buildings, building control history, planning control history, nearby road schemes and motorways, and potential land contamination or radon gas risks.
  2. Water drainage search: This search confirms if the property is connected to a public sewer or septic tank and whether it’s connected to a public or private water supply. It also identifies any nearby water mains or public sewers that could affect the property.
  3. Environmental search: A specialist company carries out this search, examining the past land use in the area and assessing risks such as contamination, flooding, energy and infrastructure developments, and ground stability.
  4. Additional searches: Depending on the property’s location, other searches may be necessary, such as mining searches.

C. Reviewing search results and raising inquiries

Once the property searches are complete, your solicitor will provide you with the results, along with any other relevant paperwork, such as your mortgage offer and a draft contract. You should review these documents carefully and raise any inquiries or concerns with your solicitor.

Your solicitor will address any issues on your behalf and ensure that all necessary requirements are met before proceeding. During this stage, it’s crucial to communicate with your solicitor to ensure a smooth and timely process.

Looking for more guidance on mortgages and home insurance? Check out our detailed guides Mortgages in the UK & homeowners insurance.

6. Contracts and exchange

A. Draft contracts and final documents

The process of exchanging contracts begins with the seller’s solicitor preparing a draft contract. This document contains essential information about the property, such as its boundaries, rights of way, and any relevant restrictions. Your solicitor will review the draft contract, making sure it aligns with your understanding and raising any inquiries if necessary.

At this stage, it’s crucial to address any concerns or questions before moving forward. Both parties may negotiate changes to the draft contract until a final agreement is reached.

B. Approval of contracts and inquiries

Once both solicitors have agreed on the draft contract, your solicitor will make additional inquiries to ensure everything is in order. These inquiries may include checking for outstanding planning permissions, environmental factors, or potential disputes.

If any issues arise during this stage, they must be resolved before the contract can be approved. Communication is key, and it’s essential to keep all parties informed of any updates or delays.

C. Deposits, exchange of contracts, and Certificate of Title (COT)

When both parties are satisfied with the contract, you will typically be required to pay a deposit, usually around 10% of the property’s purchase price. The solicitors will then exchange the signed contracts, legally committing both parties to the transaction.

After the exchange, your solicitor will apply for the Certificate of Title (COT) from the Land Registry. The COT confirms the property’s legal ownership, ensuring you have the right to purchase it.

7. Completion and moving in

A. Timeframe between exchange and completion

The period between the exchange of contracts and completion can vary, but it’s typically set at around two to four weeks. This timeframe allows both parties to finalise any outstanding matters, such as arranging removals or settling any remaining payments.

It’s essential to maintain open communication during this stage and be prepared to address any last-minute issues that may arise.

B. Final payments and statements

Final payment mortgage completion

Before completion, your solicitor will provide a completion statement outlining the remaining funds required to complete the purchase. This statement will include the outstanding balance of the purchase price, legal fees, and any relevant taxes, such as Stamp Duty.

You must transfer the remaining funds to your solicitor’s client account, who will then transfer the money to the seller’s solicitor on completion day.

C. Collecting the keys and moving in

On completion day, the seller’s solicitor will confirm receipt of the funds, and the property’s ownership will be legally transferred to you. The estate agent will then release the keys to you, allowing you to move into your new home.

While moving can be stressful, it’s essential to stay organised and ensure all necessary arrangements are in place to facilitate a smooth transition into your new property.

8. Important considerations and timelines

A. Mortgage offer expiration

It’s essential to be aware that mortgage offers typically have an expiration date, usually three to six months from the date of issue. If the home buying process takes longer than expected, your mortgage offer may expire, potentially causing complications. Keep track of your mortgage offer’s expiration date and maintain open communication with your mortgage advisor to avoid issues.

B. Re-inspections and potential delays

During the home buying process, unforeseen issues may arise, such as problems identified during a property survey or inquiries raised by the solicitor. These concerns may require re-inspections or further negotiations, leading to delays. It’s crucial to be prepared for such eventualities and have a flexible mindset as you navigate the process.

C. Typical duration of the home buying process

The duration of the home buying process can vary, but it generally takes around three to six months from start to finish. This timeline can be influenced by various factors, such as the efficiency of your mortgage advisor, solicitor, and estate agent, as well as the property chain and market conditions. Keeping expectations realistic and staying patient will help ensure a smoother journey.

9. Summary

A. Recap of the key steps in the first-time home buying process

As a first-time homebuyer, it’s crucial to understand and follow the key steps of the home buying process. These include:

  1. Assessing your finances and preparing for the mortgage application.
  2. Choosing a mortgage advisor and solicitor.
  3. Conducting a property search and viewing potential homes.
  4. Submitting a mortgage application and going through the legal process.
  5. Exchanging contracts and completing the purchase.
  6. Moving into your new home.

B. Encouragement to seek professional advice and support

The home buying journey can be complex and overwhelming, particularly for first-time buyers. Seeking professional advice from a mortgage advisor, solicitor, and estate agent can make a significant difference in your experience.

These experts will guide you through the process, helping you avoid pitfalls and ensuring a successful outcome. Remember, knowledge is power, and taking the time to educate yourself will set you on the right path to homeownership.

1 Comment

Comments are closed.