Buying your first home can be a daunting process, especially since you have little or no idea of what that process entails. In this article, we try to demystify it a little, so you get an idea of what’s involved. However, when you’re serious about buying your first home, you should contact a professional mortgage advisor for more details about the buying process.
What is Your Price Range?
It’s easy to get carried away when buying your first home and start researching your perfect home immediately. In most cases, this will lead to disappointment as you will soon encounter issues with your budget. It’s better to do the budget work first to keep your ideas realistic and avoid disappointment.
Your first port of call should be a mortgage advisor who you can get in touch with through back or online. Present your advisor with some ID, a passport or driving licence, and your last three months of bank statements. From there, your mortgage advisor will draw up a realistic budget for you to follow.
You’ll Need a Deposit
This is a stumbling block for many first time buyers. In order to lend you the money for your dream home, lenders will require 5 or 10%, which is a fair chunk of money regardless of your budget. It’s even more difficult to get it together when you have to pay for rent, bills, and household expenses.
Luckily there are some good practices you can adopt that will help you get the money you need. Begin by designing a tight but realistic budget so you can stick to it over a designated period. Find a way to stay motivated and focused on why you’re saving the money. You might also set up a monthly direct debit to a high-interest savings account such as an ISA. You might also consider secured loan options to help you cover large expenses and help you save.
Find Your Dream Home
When you have done the groundwork, it’s time to set the wheels in motion. You know what budget you have and how long it will take you to raise the deposit money, so now you can search the market for what’s available. Unfortunately, you will only be able to make offers once you have your deposit money.
Search on market websites such as Zoopla and Rightmove. Use the filters on those websites to keep your searches accurate and realistic. When thinking about your future home, consider the area it’s in along with the nearby utilities. Are there reputable schools in the area, for instance? Even if you find the perfect property, these other factors might rule it out.
Sort out a Mortgage
Your mortgage advisor should tell you everything you need to know about the process of organising a mortgage. One of the things they will advise is to arrange and ‘mortgage in principle.’ This means that all the paperwork has been arranged and the lender is willing to offer you the loan based on your financial criteria.
When agreeing this mortgage in principle, you will be offered two mortgage options. The first will be a repayment mortgage. This means you will pay a sum of the loan amount each month, and over a period of 25 years you will pay off the loan. The alternative is an interest-only mortgage. This will have a cheaper monthly premium, but you will have to pay the loan sum entirely at the end of the agreement.
View the Property
Having found the ideal house on the internet, you will want to see the place for yourself. This can be an exciting experience, but it’s worth keeping a few things in mind, especially since you are for the house and may suffer from confirmation bias. You need to check for yourself there is no dampness or cracks that might have been glossed over in the Ad or the asking price.
Take a friend or family member with you, someone who has some experience in looking at houses and can give you an honest opinion. Also, bring a camera and take pictures that can be useful to surveyors and your mortgage advisor. When you look around the house, check walls for cracks in the plaster that could indicate leaks and smell the air for dampness.
Make an Offer
Once you have found the perfect home and you’re satisfied with your viewing experience of it, it will soon be time to make a serious offer to the owner. Contact the estate agent and submit an offer based on your valuation of the property, and it’s asking price. If you want to secure the property quickly, it’s advisable to offer above the asking price.
In the event, your offer is not accepted go back to your mortgage advisor and reorganise your finances. If it’s possible to offer more you could try and bid again, otherwise, start looking at other properties in your prices. While disappointing, this is not the end of the world, and you will find what you’re looking for eventually.
Surveys and Conveyancing
When your offer has been accepted, you will receive a notice that requests a survey and contract. You and your lender need to be fully aware of the structural conditions of the building so that money is not lost through poor investment. There are three types of survey which are acceptable, a Valuation only, a Homebuyers Report, and a Building Survey.
After the survey has taken place, there is a process called conveyancing in which the property is transferred from one owner to another. The process will be undertaken by a middle person who will organise the contracts between the two parties and deal with the land registry and stamp duty. Although fairly dry and bureaucratic, you’re one step closer to owning a home.
The Big Move
After the contracts have been drawn up, exchanged, and signed, it’s time to move into your new property. By this time you should have the keys and be arranging to transport your belongings. If you need new furniture for your home, you can now access a homeowner loan that is borrowed against the property. These loans usually have a low-interest rate and are repaid over the long term.
Disclosure: This is a collaborative post