How to buy a home

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The Homesforte first-time buyers’ property guide

Buying your first home – bedsit, flat or house – is incredibly exciting. But what do you need to know before starting out? Avoid the pitfalls and find your perfect place with the Homesforte first-time buyers guide.

Stage 1 – Save, save, save

The first step for most first time buyers is unfortunately a period of serious saving! Unless you’re very lucky, you’ll need to take out a mortgage to pay for your home. There are lots of different mortgages out there, but before you start shopping, you’ll need a deposit. This can be as little as 5% of the value of the property you’d like to buy, though better rates are often available for larger deposits. This Which? video explains it well.

It’s also important to consider your credit rating and spending habits. Before granting a mortgage, most providers will ask for at least 3 months’ bank statements so they can make sure you can afford the payments.

Stage 2 – Talk to a mortgage advisor or broker

Once you’ve started to save, it’s a good idea to talk to the experts. It can be worth talking to an independent mortgage broker, rather than the one at your bank or building society. This is because they can choose from every mortgage on the market – not just the ones offered by your bank – potentially finding you a better deal.

Mortgage advisors and brokers will explain the different kind of loans, and may have ideas that could stretch your budget – such as asking your parents to act as ‘guarantor’ for your loan. Once you’re happy, they will arrange the loan on your behalf, getting you what’s called an ‘Offer In Principle’. This is an agreement from the lender that says you can borrow up to an agreed amount – the seller’s estate agent may ask to see it when you make an offer.

Stage 3 – Set your budget

After talking to a mortgage advisor, you should have a good idea of what you can afford. Next, you need to factor in the hidden costs of your potential purchase before you set your budget. You’ll need to allow extra for:

Broker and solicitor fees – £2,000
Furnishing and decorating – Free-£5,000
Moving costs – Free-£1,000
Stamp duty – no stamp duty on the first £125,000, then 2% on £125,000 to £250,000 and 5% above £250,000. Moneysavingexpert provides a calculator here.

The HomeOwners Alliance provides a more in-depth overview of all the hidden costs here.

Stage 4 – Start your house hunt

Once you’ve sorted out the finances, got your Offer In Principle and set your budget, it’s time to start the fun bit – house hunting! There are many in-depth online guides to viewing properties, so we’ll keep it simple:

Know your ‘must-haves’ – but otherwise be flexible on size, features and location.
Be realistic about doing work – will you really have the budget and inclination?
View a little over your top budget – some sellers are open to offers, particularly from first-time buyers.
Look at the bones – updating heating and electrics is expensive, factor this in!
Try and see potential – it can be hard to see past dodgy decor and lots of clutter, but try and be open minded.
Look carefully at layout – moving bathrooms and load-bearing walls is much more difficult (and expensive) than knocking through stud walls. For your first property, it can make sense to opt for more manageable renovations.
Ask for expert advice – if you’ve found a potential property but want to make changes, pay a builder to join you on a viewing and give their honest opinion on.
Check, check and double check – Look for at least 99 years on the leasehold, and watchout for the 80 year trap and marriage value or fees required for a lease extension, if you aren’t buying a freehold property. Also carefully read the small print on pet ownership, decoration and access to communal areas and parking.

It’s also worth making the most of emerging technologies like 3D property tours and aerial footage to get a better idea of the properties you’re really interested in before making physical viewings.

Stage 5 – Make an offer

The next step is making an offer. Consider the asking price, your budget, and what you feel the property is worth. As a first time buyer, you’re actually at an advantage as you don’t have a home to sell – what’s called ‘being in a chain’. It can be worth leveraging your position when negotiating a price.

If you’re lucky, the seller may accept your offer. If not, they will likely make a counter offer. You then negotiate through the estate agent until you reach a price everyone is happy with. This negotiation process can lead to homes becoming more – or less – expensive than the asking price. Very desirable homes can end up selling for tens of thousands of pounds over the asking price if there’s a ‘bidding war’ between interested buyers.

Stage 6 – Negotiating contracts

Once your seller has accepted an offer, it’s time for the solicitors to get to work. Both sides will work together to create and exchange sales contacts. If you’re buying a Homesforte property, our team will work with you to make this process as fast and effortless as possible. This phase includes fact-finding searches, collating documents like property deeds, and ensuring that both parties are happy and confident to move forward.

Believe it or not, the sale isn’t actually binding until the next stage – exchange of contract – so it can be a nail-biting time.

Stage 7 – Exchange

When everything is agreed, it’s time to exchange contracts. At this point, a deposit will be transferred to the seller’s solicitor, and you’re definitely moving!

Stage 8 – Completion

After an agreed period, it’s time to complete the purchase. This is when your mortgage company transfers funds to the seller’s bank account, and you go to pick up the keys. The next step is down to you – unpacking and enjoying your lovely new home.

Categorised in: GUIDES