Guide to buying your first home
Forward planning – Tips
- Build up a good savings balance – you’ll usually need a deposit of 5% or more of the property value
- Opening a monthly savings account might help you save towards your goal
- Remember that your loans and credit card debts will be taken into consideration when calculating the amount you can borrow
- Check your credit file because mortgage lenders will take this into account when deciding if and how much you can borrow
- Find out the costs involved in buying a property, including moving costs and legal fees
- Consider your household bills and perhaps ask others to help you estimate if you’re not used to these outgoings
- Consider the location and local amenities as you might want to stay put for a while
How can I check my credit rating?
Polish up your credit rating, it will help if you
- Register to vote at your current address
- Keep up with all repayments and pay on time. Ensure that you remain within your credit limit as lenders will want to know that you’re not overstretched financially and how you conduct your finances will be an indicator to the lender of how you’re likely to conduct your mortgage account
- Close unused credit accounts as lenders can take into account the credit limits available to you, not just what you currently owe. Try to keep the balances on your cards to less than 25% of the credit limit
- Don’t make multiple credit applications in a short space of time as this could be seen by potential lenders as a sign of financial stress, or even fraud
- Protect your identity. Look out for unfamiliar or suspicious entries on your credit report or bank statement
- Try not to chop and change current accounts too often
What you can afford
Before you start looking for a property to buy, you need to work out exactly what you can afford. You could talk to our Mortgage Advice team at The Loughborough about your mortgage as early as possible. Your mortgage adviser will take you through the application process and will calculate the amount you can afford to borrow based on your income after the deduction of those expenses and commitments.
Finding the right home
When you’re considering buying a new home, there are a number of things you may want to look at before making your decision:
- You may want to find a job in a certain area or move to somewhere that has better schools or more green spaces
- Create a Viewing Checklist that describes the kind of home you want and your preferred location
- Do your homework to get an idea of what’s available
- Compare prices and get in touch with a few local estate agents, look in local newspapers, drive around the area and search online. One good property website that many estate agents advertise their properties on is Rightmove.co.uk
- When you get to the stage of looking at properties, take someone with you as they may pick up things you miss, and you can discuss it with them later on and make sure you have a second viewing at a different time on another day
- Try to see beyond décor, you’ll want to put your own stamp on it so don’t worry if the walls are painted a colour you dislike
Here are some key points to consider when buying a new build home:
- Study the plans and room sizes as these may be smaller than a show house
- Research the surrounding area, services and amenities
- Check if the property has a warranty such as National House Building Council Certificate or a Premier Guarantee
Remember that the estate agent acts for the seller and not for you and that a basic mortgage valuation is for the lender’s benefit and is not a full survey of the property condition.
It might be worth considering paying for your own survey, but make sure you ask lots of questions, such as:
- What’s included in the sale?
- Why are the sellers moving?
- Are there any alterations and if there are, was planning permission required?
- How old is the boiler and when was it last serviced?
- How much is the council tax and what are the average utility costs?
Consider whether there is enough storage, if the garden is too large or too small, whether the property needs updating and if so, whether you have the funds and/or expertise to complete the work, if the rooms are big enough for your needs, if there are any damp smells and whether or not the windows and electrics are in good condition.
Time to make an offer
When you’re sure you’ve found the right property, it’s time to make an offer. This is a big step and you need to make sure you’re ready. Having answers to the following questions will make it easier for you:
- What’s the maximum amount you can spend on your new home?
- What percentage of the property price will you need a mortgage for (loan to value)?
- Have you got a decision in principle of your mortgage with The Loughborough?
- What’s your timescale for the move?
- How much are you willing to offer and how much are you willing to negotiate?
- Are any fixtures and fittings included in the sale?
- Talk to the estate agent to find out as much as possible, for example, whether the seller wants to move quickly or has found a property to move to
Remember, estate agents work for the seller and are often trying to get the best deal for them rather than you. They’ll also expect you to confirm you have a mortgage in principle (subject to full underwriting)
When you make the offer, get in touch with the seller’s estate agent and tell them how much you would like to offer. If they don’t accept, you can increase the offer, but make sure it’s within your budget.
Arranging protection for your home and family
Buying a home is a complex and expensive process and, as a first-time buyer, you’ll find there’s a lot to understand. That’s why we want to help keep the process as simple as possible.
All lenders insist on buildings insurance to cover the property in case the building is damaged or destroyed. You don’t have to buy it from your lender, so shop around to get the best deal for you.
One thing that is often overlooked is protecting your belongings so do consider insuring your home’s contents
If you can’t work because of an accident, illness or redundancy, your lender will still expect you to continue paying your mortgage. There are a number of products you can buy to help with your repayments but check out when they pay out and how long for.
As difficult as it might be to think about, you should also carefully consider what would happen to those you leave behind if you were to pass away or become critically ill during the mortgage term. The price of protection is often less than you might think and never too expensive to give you and your loved one’s peace of mind.
The legal process
The legal work to transfer a property is called conveyancing. Conveyancing is the process of legally transferring ownership of a property from the seller to the buyer.
Starting the legal process
Ensure that you’re happy with the contract and understand it before you exchange, so keep track of what your conveyancer is doing. Make sure you understand what charges you’ll incur.
Arranging your mortgage
It’s a good idea to research this as early as possible. If you haven’t got a decision in principle from your mortgage provider which outlines the amount you can borrow, you should contact them now.
Get a survey
Check the building is sound. Your mortgage provider will arrange a basic mortgage valuation but that is not a full survey of the condition of the property. There are different levels of survey so please do talk to your mortgage provider to decide which option you might be most comfortable with.
If you want work done before the sale goes through, or you want to negotiate a reduction in price, ask your conveyancer to negotiate this with the seller’s conveyancer and estate agent.
After acceptance of the offer
The seller’s estate agent will contact you to confirm the offer has been accepted. On receipt, give the estate agent your conveyancer’s name and contact details. Give your conveyancer details of the property, the estate agent, the price and your mortgage lender. If you don’t already have a conveyancer or a mortgage lender, you need to organise this now.
If you haven’t already, you’ll need to get a formal mortgage offer sorted out quickly. If you already have a Decision in Principle, getting a formal offer should be straightforward, subject to a satisfactory valuation of the property and status checks.
Once you’ve accepted, the property might still be advertised as ‘sold subject to contract’ or ‘under offer’. However, either you or the seller could pull out without penalty up to the point of exchanging contracts.
When you exchange contracts, you make a financial and legal commitment.
These are the last stages in the legal process. Exchanging contracts means that the buyer and the seller are both legally committed to the sale. When the buyer and seller are happy with its contents, they sign final copies of the contract and send them to each other. This is called the exchange of contracts.
Once contracts are exchanged, the agreement to sell and buy is legally binding and usually neither party can pull out without paying compensation.
Preparing for exchange of contracts
Once your conveyancer has all the details they need, they’ll send you a pre-contract report and a copy of the registered title. If you’re happy with everything, you need to approve the contract by signing it.
Your conveyancer and the seller’s conveyancer will swap or ‘exchange’ contracts. Your conveyancer will transfer your deposit to the seller’s solicitor and arrange a date of completion.
If you pull out at this point, you could lose your deposit. Other cost may also need to be paid/repaid.
Preparing for completion
Ask your conveyancer what you need to do and when. Your conveyancer will:
- Check with the Land Registry to make sure the title of the property is OK
- Prepare the Transfer Deed to transfer ownership
- Make the final arrangements for payment, including drawing down the mortgage funds for you
- Prepare final accounts for you including details of any further money needed from you
- Once you have exchanged contracts, you’re responsible for the property’s building insurance so make sure you’re covered in case anything happens before completion
Completing on your new home
With all the paperwork out of the way, it’s time to move into your new home.
Four weeks before moving:
- Have you confirmed the date you’ll be moving in?
- Have you booked time off work?
- Have you started thinking about and planning your removal? Get more than one quote as prices differ considerably
- Does your home contents insurance cover you for the move? If not, have you arranged for separate cover?
- Have you put together a moving pack with all the essentials you’ll need such as a kettle, mugs, light bulbs, toilet paper?
- Have you let all your telephone, utility companies, bank and other key parties know when you’re moving?
Two weeks before moving:
- Have you told your local authority your new address and moving date?
- Have you redirected your post (if appropriate)?
- Have you arranged to take over the phone in your new home? Contact the line operator to see if you can keep the line switched on and avoid any reconnection charges
One week before moving:
- Have you packed the majority of your items?
- Do you know what time you’ll be able to move?
- Have you confirmed all details with your removal company?
- Have you asked the previous owners to show you where the gas, electricity and water meters are, and where you can find the fuse box and stopcocks?
- Are all the window and door keys labelled and easily available?
Day before moving:
- Have you packed a moving day survival kit with all you need such as tea and coffee etc?
- Have you settled all your bills?
Completion day checklist:
- Has your conveyancer transferred payment to the seller? If you have a mortgage, this money will have been sent from your lender to your conveyancer
- Have you received the keys to the property?
- Has your conveyancer received the Transfer Deed, originals of any important documents, and registered you as the owner?
- Has your conveyancer completed a tax return to pay the Stamp Duty Land Tax where applicable? You’ll need to sign this before sending
- Read the meters in your new and old homes