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How to buy a home

Help and advice to guide you through the process

Getting your first foot on the property ladder can seem a daunting prospect, with so many things to consider. But it's an exciting time - making plans and decisions for your future.

Please note the steps here may differ depending on your location. Please contact us or contact your solicitor for more information.

Budgets and location

There are two things you have to know in order to make sure that the rest of the process runs as smoothly as possible.

Most importantly, you have to find out how much you can borrow. We calculate the amount that we will lend you based on your individual circumstances. We'll look at your household income and then take into account any monthly credit commitments such as loans and credit cards.

You should also find out how much your monthly repayments and other outgoings are likely to be and that you'll be able to afford them. Stretching your finances to the limit could prove very costly in the future.

Once you've got an idea of how much you can afford, you next have to consider where you want to buy. Accessibility to work and good transport links are worth careful consideration, as are the location and quality of shops, doctors and schools.

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Your ideal home

When you're looking for your first home, it's likely that what you want and what you can afford don't match. So you need to compromise. It may be helpful if you list the features that you feel are essential, such as minimum number of bedrooms and off-street parking, and list those features that are preferable, such as a garage or garden.

You should also think about other factors, such as the overall size and age of the house. Older houses can cost more to heat and maintain whilst newer houses generally are cheaper to maintain for the first few years.

Contact as many local estate agents as possible and ask them to send you details of properties on a regular basis. You can also search yourself, using local newspapers and the Internet.

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The right mortgage for you

Your mortgage is likely to be the biggest expense of your life. When you take out a mortgage, remember that not only do you have to pay back the initial loan, you'll also need to pay interest, usually equating to the same amount again.

Once you've found a place that you like, it is important to arrange a mortgage as soon as possible. A home loan can take weeks to arrange and it's important not to delay a possible purchase.

The home loan amount you are offered will depend on your income, employment status, other financial commitments and the size of the deposit you can provide. You can choose to shop around for mortgages, use a mortgage broker to find a mortgage for you or simply use the bank that runs your current account.

There are many mortgages available but they are all either:

  • repayment, where your monthly repayments cover both the capital and interest on the loan.
  • or interest only, where your monthly repayments cover only the interest and the full amount of the loan is repaid by putting additional funds in long-term investments

Other factors to consider are Early Repayment Charges (charges for moving lender or changing product), whether the loan comes with repayment holidays, if you can make over or underpayments, any 'cashback' sums offered at the outset and whether you can still afford the repayments once a special or discounted rate is over.

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Using a solicitor

Once you have found a property and have had your offer accepted you will need to appoint a solicitor or conveyancer

Your solicitor or conveyancer will obtain all the legal documentation so that you know exactly what is included in the purchase price - such as carpets, curtains or kitchen appliances. They will also confirm the property's legal boundaries.

Once everything is in order, your solicitor will also check local planning information to uncover any future developments that could affect the property's value. Finally they will explain the legal documentation to you and help you to arrange a date to complete the transaction.

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Making an offer

Because you're a first-time buyer, you don't have to sell your present home before you can move. This puts you in a stronger buying position and could help speed up the buying process.

Once you have found the property you want to buy, it's time to put in an offer, 'subject to contract and survey', through the estate agent. Remember that the asking price is how much the seller hopes to get for the property - not necessarily how much they realistically expect - and your first offer can be below the asking price.

Once you have made an offer, it is up to the seller to accept or reject it. It is also possible that other buyers are putting offers in at the same time, so it's a good idea to research into the typical price of such a property or you may find yourself caught in a bidding war. If the seller does reject your first offer, you can always put in a higher offer later.

If your offer is accepted, the estate agent will confirm it in writing. However, depending on where you are buying, this may not be legally binding and you could still lose the property if another buyer comes in with a higher price and the seller agrees to it. (This is known as gazumping.)

A main advantage you have over other prospective purchasers is that, as a first-time buyer, you don't have a property to sell before you move into your new home and are not caught up in the 'chain', although you may be the last person in the chain. The seller will probably want to sell their property quickly, and your situation will be very appealing to them.

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The survey

Your mortgage lender will usually want at least a basic valuation on the property before releasing your loan, but this isn't a survey as such and you should not rely on it for your own purposes if your mortgage lender lets you have a copy. A detailed report on the condition of the property is highly recommended, as it will not only satisfy your mortgage lender but also give you peace of mind.

The basic survey, a House Buyer's Report, only concerns the parts of the property that are easily accessible or visible. A Full Structural Survey, on the other hand, is more in-depth and can unearth problems that could be costly in the future. If the survey does reveal serious problems, you are free to withdraw your offer on the property.

Be prepared to budget for more than one survey during your home buying process, in case the first sale falls through

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Exchanging contracts

Assuming the survey was satisfactory and your lender is happy to release your home loan, you can now make a formal offer on the property. Before you do this, it's a good idea to read carefully through the terms of your mortgage, asking for an explanation of anything that you don't understand.

Your solicitor will have already agreed the terms of the contract for you and the seller to sign. This contract is legally binding once you sign it, so make sure you are completely happy. On exchange of contracts, you are normally required to put down a deposit of between 5% and 10% of the house price and the date agreed for completion will be inserted into the contract before exchange.

Once you have signed contracts you must also ensure that the building is insured, as you are now legally obliged to buy it.

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Moving in

Once the contract is signed and the money required to buy the property is handed over, all you have to do is to arrange to move in. The date you move in is agreed by you and the seller, and you should remember that you are legally bound to complete on the agreed date. You may want to book a removal firm to help you.

Make sure you're fully prepared before you move, with possessions boxed up and clearly labelled. Don't forget to inform your old gas, electric, water and telephone suppliers that you are moving out, as well as telling your new suppliers that you have moved in. You may also want to ask the Post Office to redirect your mail from your old address.

Once you've moved in there are a couple of extra things that you should do. First, after the first month, check that you're paying the right mortgage repayment amounts at the right time.

Second, make sure that you carefully file away all the important documentation you have gathered. They are your primary record of your purchase and your mortgage and you may need them in the future.

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