How to buy a home in 7 steps (first-time buyer guide)
Buying your first house can be daunting. Especially if you’re not sure where to begin.
From buying schemes to property taxes, mortgages to deposit requirements, there’s a lot to think about.
Whether you’re ready to start looking or just putting a plan in place, this guide will tell you what to do next.
Let’s take a look at the key steps involved in buying a house.
1. Research & planning
The first step is deciding what property you want to buy and in which location.
Perhaps you want to live close to family and friends, or maybe you want to buy in a strategic location in the hopes of making some gains over time.
Research the areas thoroughly. Weigh up their pros and cons. As the old saying goes: “location, location, location”.
Also, do you want to live in a house or a flat? Will this be your forever home or a temporary property?
These essential considerations will help you narrow your search and make a solid plan.
Lastly, determine whether you want to leverage one of the government’s affordable home ownership schemes or if you’d rather use a traditional mortgage.
2. Consider the costs involved
The main factor defining your property search is your budget. Once you have a good idea of where you want to live and in what type of property, you can start figuring out the costs involved.
Lenders typically want a deposit of between 5% and 10% of the property value.
So, once you’ve spotted some suitable properties on a website like RightMove, you can easily work out what deposit will be needed for houses in your price range.
Aside from the cost of buying, which includes conveyancing and survey fees, there’s also Land Transaction Tax (known as Stamp Duty in England) to be aware of.
Calculate how much you’ll be paying on the mortgage each month using one of these handy calculators provided by mortgage providers.
Further costs to keep in mind are building and contents insurance, council tax, utility bills and repairs and maintenance.
3. Start saving for a deposit
With a clear figure in mind, you can start saving.
When it comes to deposits, the more money you can put down up front, the better, as this means lower interest rates and a lower overall amount to repay.
4. Find your property
Once you have saved your deposit, you can start browsing the market for the exact home you want within your budget.
At this stage, it’s good to speak to a mortgage advisor and get a Decision in Principle, which is a certificate from a lender saying how much they would likely lend you.
Some agents require this before they’ll do viewings to confirm you’re a serious buyer, but it’s not always needed.
5. Apply for a mortgage
You need to look for the right mortgage rates for you. You can apply directly with a bank or building society or consult comparison sites for other deals.
You could also use the services of a broker or mortgage advisor, who may charge you a fee, but can find you a deal that would be hard to source otherwise, especially if you have a small deposit or are self-employed.
It’s a good idea to speak to family members when it comes to finding a mortgage broker, as they can probably recommend someone who helped with theirs.
For your application you will need to gather information such as details of your outgoings, payslips or possibly tax returns if you are self-employed.
The mortgage company will review this information and carry out a credit check to ensure you can afford your repayments.
Once this is approved, you will receive your mortgage offer.
6. Double check the property & exchange contracts
You’re almost a first-time home owner.
You’ve chosen the property and had your mortgage application approved and you’re ready to exchange contracts.
But first, you need to double check the sustainability of the property, which basically means assessing the quality and durability. This includes things like energy efficiency and build quality.
Once you’re happy, it’s time for the exciting part.
Exchanging contracts may take some time to finalise, but once you and the seller have signed your contracts, the property is legally yours.
7. Get your keys
All your hard work saving and researching has finally paid off and it’s time for you to move in!
On the completion date, your mortgage lender will send the remaining money needed to purchase the house to your solicitor, who will then transfer it to the seller.
Your solicitor will also register the change in ownership with the Land Registry of England and Wales.
At this point you will need to pay your solicitor, as well as any possible Stamp Duty Land Tax (in England) or Land Transaction Tax (in Wales).
Once all of these payments have been confirmed, you can finally pick up the keys to your very first home and start the move in process.
Congratulations!
If you are interested in buying your first home or a property in Newport contact a member of our James Douglas Newport team here.
