Search Location’s Ultimate Guide to Buying Your First Home
A home of your own, buying your first house.
You have always dreamed of that cottage or house of your very own. Perhaps it is in the city or out in the countryside. Getting a home is every family’s dream, it can be exciting and daunting at the same time. Hopefully this guide will provide some of the information that you need when you decide to step on the first rung of the property ladder.
Today, we’re going to go down the list of things you need to do before signing the final papers and accepting the keys to your new home. There are many pitfalls that trap the unwary First Time buyers and with our guide, you will avoid falling into them. This is our Ultimate Guide to Buying Your First Home.
You will learn why it is so important to have a solicitor before starting the entire process of buying a house. Why you need surveys and should get the most comprehensive one you can. You will also learn about taxes and some new charges that you might not even be aware of. This guide will point them all out to you so you can buy the house of your dreams and not have it turn into a nightmare.
The first thing you have to do is…
Prior to you beginning your home search, you need to do some other things beforehand. You need to do a detailed survey of your finances and understand exactly where all your money is going at the current time. Create a spreadsheet of all incoming money and where you are spending your outgoings. Be honest with yourself, if you enjoy going out for meals and social activities factor these in to work out what figures are left at the end of the month.
Purchasing a home is a major investment and cutting the frivolous things out of your home budget is one of the first things to look at. Bankers and mortgage brokers are going to want to look at a detailed report of your spending habits and your sources of income.
A rule of thumb that seems universal anywhere in the world is that you should look at your monthly mortgage payment and it should be no more than 30% of your monthly income. You will get a better feel for this from your mortgage broker or banker. Getting a good financial advisor will help in the mortgage process. Applying for mortgages has become a lot tougher over recent years and the financial advisor will go through the finer things and liaise with possible mortgage providers. Independent Financial Advisors can access different rates than the general public, so it is always worth getting some quote from an IFA.
This gives you an estimate of about how much house you can purchase and afford the monthly payment.
A free budget planner is available here: https://www.moneyadviceservice.org.uk/en/tools/budget-planner
Save for a Deposit
You will discover that mortgage institutions, as well as most banks, will not even talk to you unless you have that much money of your own to put into the pot. The more deposit at the outset, the better rate you will be able to negotiate.
Finding an IFA, Mortgage Broker or Bank
Set yourself up with a reputable IFA or mortgage broker. Do your homework in this and choose one with strong qualities and a reputation for fairness. You can use online sites like Vouchedfor and they can help you locate such an individual, with reviews. Also asking friends and family of their opinion of an IFA they have worked with in the past will normally bring up some excellent recommendations. Set up a meeting and explain your goals and financial wherewithal. From there he will work with you to get you the best deal on a mortgage possible. Your other option, of course, is to go to your local banker and do the same thing. Be prepared to spend a bit of time with your IFA or bank as this process has become tighter due to recent rule changes on mortgage acceptance.
Hire a solicitor
One of the most important things you can do is hire a solicitor. Make sure you hire one that is experienced in home sales normally called a conveyancer. This is one of the secrets to not being cheated or spending more money than you have planned on. The solicitor knows what papers, forms, and the bureaucracy needed to wade through to help you getting that dream house you have always wanted.
Again, use recommendations from friends or family or use a comparison site like vouched for.
Find the house
There are many sources of information that can help you in your quest. Online websites of reputable Estate agents check with your local banks as they often have houses that they have foreclosed on for one reason or another and are putting them up on the market at a deep discount.
Zoopla, Rightmove and other sites allow you to search specific houses in your favoured areas. Be aware that not all estate agents subscribe to these sites so it is worth scouting areas to see if there are any for sale signs around.
You could do the old-fashioned approach and have an estate agent take you out and about and look at houses in your price range. You might also scour the news sheets such as the Guardian and the Telegraph see what is available.
With regards to location, key questions to ask yourself are:
- How close is the house to local schools?
- Is the house within realistic commuting distance?
- Is public transport easily accessible from the house?
- How close is the house to friends and family?
- How close is to local facilities like health clubs, restaurants, pubs, shops etc?
- Does the area have a low crime rate?
House Search Advice
Do your research on prices paid in the street previously on our property search https://searchlocation.co.uk/find-house-prices/
Visit the house at different times of the week and day/night to assess things like neighbours/ traffic.
Other things to consider at this stage would be fixture and fittings (are they included), how easy is it to repair structural issues (and cost associated) and could you eventually add space to the building in the form of an extension or loft conversion.
The type of property you decide on can be influenced by a number of other decisions:
- Will the house be terraced/ semi-detached/ detached, flat or an apartment?
- Will the property be leasehold?
- Will the property be freehold?
- Are you after a new build property or an existing house?
- How many bathrooms are required and how many bedrooms are needed?
- Is it essential for a garage or off road parking?
- Does is it have central heating and double glazed windows?
- What size are the rooms?
When you have seen a property that has taken your fancy it is now time to contact the estate agent to arrange a viewing. First viewings often go fast, so take your time and try to inspect as many areas of the house that you can take in. It is advised to make a second viewing and take a family member or friend who has purchased a house previously. They may be able to point out things that you have missed first time around. If you know a builder or tradesperson it would be a good idea to walk the property with them as they can give you an idea of repair and renovation costs.
Once you discover the home that you want, you need to find out about the condition of the home and for that, you will need the help of the Royal Institute of Chartered Surveyors. They will do things for you like preparing an Energy Performance Certificate. They also set up a property questionnaire, do a mortgage valuation report, home condition survey, homebuyers report and perhaps a Building/Structural Survey.
The various above reports all vary in cost and depends on how deep and detailed you want to go check with your solicitor for their recommendations. Banks, solicitors and IFA’s may be able to recommend surveyors to use and again recommendations from friends and family might be an option.
The reason why you want to do all this is sometimes there are hidden flaws. This could run from water damage, a previous fire, insect damages, and hidden cracks in the foundation and support walls.
Not to mention the roof and the basement, these two areas can hide a cornucopia of problems that you want fixed upfront before you purchase the home. Depending on what is found, you may also want to back out of the deal at this stage if the repair work is out of your budget.
Make sure you have all the paperwork from the various reports and send it off to your solicitor. Do this prior to putting down a deposit, as often this is non-refundable.
Make an Offer
Now comes the exciting part of making an offer to the seller of the house you wish to purchase. Some estate agents will tell you to underbid and offer less than what the homeowner is asking for. This is sometimes a trap, as Estate agents know you want to buy but they have a better estimate of your finances than you yourself do.
They take advantage of this by getting you excited about a piece of property and have already shown it to someone else who is more flush than you. What he or she will do is get you to underbid, which the seller will often refuse and accept the offer from another buyer that the Estate agent has also on the hook.
In your disappointment, the Estate agent will use it to focus you on a different house and thereby sell two houses instead of just one. In this way, you do not get the house that, you originally set your heart. Remember the estate agent works for the seller because it is they who pays their commission. You have an upper hand as a first time buyer because you are part of no chain from the outset. If you have already been accepted for a mortgage in principal this could also work in your advantage.
To assess an amount to start the ball rolling, take into account the following factors:
What have other properties in the area sold for recently?
How long has the property been on the market?
What are the reason behind the sale?
What part of the chain are they involved in?
What is the timeframe they are aiming for?
Once an offer has been accepted, it is normally in the hands of your solicitor from here. One thing to remember at this stage is that it can take a while to get your hands on the keys to the house from the initial offer to moving in day. There may be plenty of hoops to jump through, especially if you are in a chain. You are not there yet and house sales can still fall through at this stage but if there is a setback, do not panic.
Getting the Contract
Once you have the contract done up to take it to your solicitor and had them go through it line by line with you. You will find hidden costs and items that may cost you at the end. Also at the day of the closing, make sure you have your solicitor available for contact. This ensures there are no surprises add-on fees and keeps everything running smoothly during the final process.
During this process, you or the seller may request to put down a deposit. This locks everything in so the seller can turn around and sell the house to someone else who offers a better deal. The amount is usually 10% of the total asking cost for the house.
This is one of the little, hidden surprises they can hit you on the day of closing. While you having your surveys and getting reports together. The bank or the mortgage broker is doing the same and may discover there are hidden title burdens against the property. These will have to be paid off by you if you sign the contract and have not had it checked out by your solicitor.
This is another reason why you should have a good solicitor at your disposal before you enter into any negotiations.
The Arrangement Fees
There is a plethora of miscellaneous fees that can be applied to buying house, cottage, and flat. These numerous taxes, additional charges, and they all come in a bewildering array. This is an additional reason to have your solicitor working with you throughout the entire process so you do not get any surprises. We had linked to a web page where you can see what you are up against.
Stamp duty is a tax on land and property transactions. Its full name is ‘stamp duty land tax’ (SDLT) but most people shorten it to stamp duty.
Stamp duty rates at present
|Purchase price of property||% paid on the part of the property price within each tax band|
Stamp duty changes came into effect in December 2014. The tax is now tiered like income tax. So for example, a property costing £280,000 will incur 0% tax on the first £125,000 2% tax on the next £125,000 and 5% on the remaining £30,000. In this instance the tax would be £4000.00
A stamp duty calculator can be found here: http://www.which.co.uk/money/mortgages-and-property/guides/stamp-duty-explained/stamp-duty-calculator/
You home purchase may find itself under a new law that went into effect in 2015.
Called the Lands and Buildings Transaction Tax (LBTT) due, this tax was introduced on April 1, 2015, for homes costing more than £145,000 and must be paid within 30 days of the completion of the sale. This applies in Scotland.
Exchange & Completion
If you did all your homework up front and hired a good solicitor as well as a mortgage banker you can trust you have now made it the big day and make sure your solicitor peruses all the paperwork prior to your placing your name on the final dotted line.
When your solicitor gives you the nod of approval and you agree, you can now finish buying that house that you have always wanted for you and your family. You get the keys and the house is now yours.
The advice in this article is to aid you in the process and we sincerely hope goes smoothly and you go to bed during the process without worry and headaches as purchasing a house can increase stress level at times.
Remember planning upfront can save you a great deal of money and frustration. Let your solicitor do the hard work and ensure you get the house you want at a price that is fair and fits your budget. We hope that you found The Ultimate Guide to Buying Your First Home useful.