8 Tips for First-Time Home Buyers
Whether you’re a first-time buyer or moving onto a new home, buying a house can feel overwhelming. Here are some tips to help make the process of buying a house run more smoothly.
Getting on the property ladder is a huge milestone, and there are many ways to make the process of buying a house run more smoothly.
Whether you’re a first-time buyer or moving on to your next home, below we run through some top tips to help you feel more prepared and keep costs down.
Work out what you can afford
Before you start the process of buying a house you’ll need to work out exactly what you can afford to pay and how much you’ll need to borrow. Using a mortgage calculator can give you an idea of how much of a mortgage you can afford on your own and with another person.
Aside from your mortgage, there are lots of other costs to factor in when you buy a house including:
- stamp duty
- estate agent fees
- conveyancing fees
- house survey costs
- house removals
- home insurance
- new furniture
If you’d like professional support and advice during the house buying process, you may want to consider using a mortgage adviser. The average cost of a mortgage adviser is around £500 but this can vary depending on the size of your mortgage. Some that won’t charge you anything, but instead receive commission from the lender once you agree on a specific mortgage.
It’s also worth thinking about whether you’ll be able to afford the lifestyle you want once you’ve moved in. For example, if there’ll still be money in your budget to buy a car or take a holiday.
Get a mortgage in principle
Once you have an idea of how much you can afford, it’s helpful to apply for a mortgage in principle from your lender.
A mortgage in principle, also known as an agreement in principle, is a certificate that shows how much money a lender may be prepared to loan you.
You can apply for a mortgage in principle without a full credit check and it’s not legally binding. So you don’t have to follow through with the loan if you change your mind about buying. It’s also not a guarantee that a lender will loan you a particular amount.
Although it’s not binding on the lender’s part, getting a mortgage in principle shows sellers that you are serious about buying and could put you in a stronger position when you make an offer. A mortgage in principle can last anywhere between 30 and 90 days, depending on your lender.
Put in an offer
Before making an offer on a property you’d like to buy it’s worth researching local house prices and sale prices. This will give you an idea of the market rate for properties similar to the one you’d like to buy. It will also help you negotiate if the asking price is too high.
You can put an offer in through your estate agent and if it’s accepted you should ask for the property to be taken off the market. In England and Wales, the deal is not legally binding until the exchange of contracts. Sometimes sellers pull out of a deal because another buyer has come along and agreed to pay more money than you have. This is known as ‘gazumping’ and can be costly if you have already spent money on house surveys.
It may be worth considering a home buyer insurance policy. This type of insurance covers some of the money you pay when buying a home or buy-to-let property, such as conveyancing fees and survey costs, should the sale fall through.
» MORE: Learn about buying costs
Apply for a mortgage
Once your offer is accepted it’s time to apply for a mortgage though it doesn’t have to be with the same lender that gave you a mortgage in principle. You might decide to use a mortgage broker who can guide you through the process and suggest the most suitable mortgage products.
Mortgage providers have different ways of working out whether to approve an application and many consider the following:
Being extra careful with spending in the run up to your mortgage application can help demonstrate how well you manage money. Avoid applying for other forms of credit when you know you will be about to apply for a mortgage. Making too many credit applications can damage your credit score as it suggests you rely on credit and may not be able to repay what you borrow.
» MORE: How to apply for a mortgage
Hire a conveyancer
You’ll need to hire a conveyancing solicitor or a licensed conveyancer, to handle all of the legal paperwork for your property purchase. According to the HomeOwners Alliance, conveyancers tend to charge around £850-£1,500 but fees can be higher for leasehold properties.
The conveyancing process takes around 12-16 weeks. Your conveyancer will get to work carrying out local authority searches and putting together contracts ready for exchange and completion. You can use a solicitor from anywhere in the UK; they don’t have to be based in the town or city where you live or are buying.
» MORE: Conveyancing fees
Get a house survey
Once your offer has been accepted by the seller, it’s wise to arrange a house survey.
A house survey provides a detailed inspection of the property. It looks at the property’s condition, overall value and highlights any major repairs or maintenance work that may be needed. For example, if the property has subsidence damage or the roof needs repairing.
The exchange of contracts is a process that makes the property sale legally binding. That means that neither party can pull out of the deal without paying damages.
After an offer has been accepted, the conveyancers will collect information to include in the contracts before they are exchanged.
When you exchange contracts, you’ll need to pay a lump sum called an exchange deposit which is usually around 10% of the property purchase price.
The exchange of contracts usually happens anywhere between one and four weeks before the completion date. But this can vary depending on those involved in the deal and if you’re part of a property chain.
Prepare for completion
The final stage in buying a house is completion day. This is when the money is transferred to the seller through a conveyancer and the buyer can pick up their keys and move in.
Preparing for your completion day in advance can help make the process run more smoothly. For example, arranging for a house removals firm to pack up your belongings and transport them to your new home.
It’s important to stay in regular contact with your conveyancer so that you’re aware of any issues that may delay the move.
And, be sure to have your paperwork to hand in case you need to confirm details about your mortgage agreement or the transfer of funds to the seller.
» COMPARE: Mortgage deals and rates
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Laura is a journalist and author, writing about money since 2008. Including writing for The Times for 9 years. She believes finance doesn't need to be complicated. Author of Money: a user's guide. Read more
Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more