A guide to house buying for first time buyers
If you have made the decision to buy your first home but you don’t know where to start, then this is the guide for you. We cover everything you need to know, from sorting out funds to finding a good conveyancer and more. Buying your first home is stressful, but if you have a good idea of the chronology and you know what to expect, that whole process can run smoothly.
1. Can you afford it?
Sometime first time buyers go straight out and choose a house they love, then realise it is out of reach financially. They often have an unrealistic idea of how much they can save and borrow in order to make it happen. Knowing your limits will help you narrow down your search to viable properties. The government ‘Help to Buy’ schemes can widen your horizons financially, but may narrow down the type of property you are able to buy or the mortgage rates you are able to get.
A good place to start is the mortgage calculator, which can be found on most money advice and mortgage lender websites. They take into account your savings, earnings and outgoings, in the same way as your lender will when assessing your mortgage application. This will show you how much you could borrow and how much your repayments will be. Your interest rate will depend on your chosen lender and your deposit. The bigger your deposit is, the better the rates available.
2. Get an Agreement in Principle
Once you know how much you can borrow, you can apply for an Agreement in Principle (AIP. This is a soft application to your chosen lender, where they agree (in principle), that they will lend you a certain amount subject to further checks.
With an AIP already in place, you will find Estate Agents take you seriously when arranging to view houses. Very few Estate Agents will negotiate with you on a house purchase without one.
3. Choose your dream home
If this is your first house, it probably isn’t your dream home, but you will be ecstatically excited when it becomes legally yours nonetheless. Choosing a home is harder than it looks. You have to shortlist the ones you like in the area you like and that you can afford. Then you have to arrange to view them, which can be time consuming and disappointing.
Eventually you will find THE house. At that point, you can start negotiations on price. Once you have a sale agreed, you can start on the buying process.
4. Apply for your mortgage
If you did your homework in step one, this shouldn’t be a difficult stage in the process. It will be a nerve wracking one, with waits for mortgage approvals higher than ever thanks to the 2014 Mortgage Market Review. But unless you have missed something or misled the lender, there aren’t many other reasons a mortgage application is turned down after the AIP.
5. Arrange a survey
Your mortgage lender will require a valuation survey to make sure they don’t loan more than the property is worth. A good structural survey may cost extra but can alert you to problems that may cost big sums to put right once you make that purchase.
6. Choose a good conveyancer
A good conveyancing company will take you through the entire house buying process without you needing to break a sweat. There are a few things to consider when choosing a conveyancing service as a first time buyer. Fees are one consideration, but you also need a company who is happy to answer your questions and who offers fixed fee conveyancing with no hidden costs. Read our guide to conveyancing for first time buyers for more information.
When it is all wrapped up, you will be relieved that it is over. Thankfully, being a first time buyer is a one-off experience and you will never feel so overwhelmed when buying property again. The downside is that the challenges you face as part of a chain can be even more complex!