Buying your first home is an exciting time and, at times, an overwhelming experience!
As an independent, mutual building society, we have put together a comprehensive guide containing everything you need to know about becoming a first-time buyer, including:
1. Saving for a house deposit
Firstly, you need to decide on your budget for buying your first home. Start by researching where you want to live, or the type of home you want to live in and viewing average house prices.
Then work out your monthly outgoings and how/if you can reduce them. This will help you to decide how much you’ll be able to save each month. In turn, this will give you a timeline for how quickly you could save.
If your savings timeline isn’t feasible, take another look at your outgoings or consider compromising on house size or location to find something more affordable.
Clare Mahood, Head of Products and Marketing at Chorley Building Society, offers these tips:
“Make sure you set up a separate savings or ISA account to deposit your money into each month. This will help you to keep your savings separate and can offer you useful interest on your money.
It’s very difficult to comment without knowledge of individual circumstances. However, we’d recommend looking into the type of accounts which will secure your savings with a higher interest rate, such as tax-free ISA or notice accounts. This way you can make sure you’re making the most out of your savings while taking away the temptation to access your money.”
Read our full guide on saving for your house deposit here.
2. Finding out how much you can borrow
Next, you’ll need to understand how much you could afford to borrow against your mortgage and work out what your monthly payments might be.
Our mortgage calculator will help you work out what your monthly repayments will be. Enter the amount you want to borrow, followed by the interest rate and the period of the loan. You can see what increasing or decreasing interest rates will mean for your repayments. It will also illustrate the total amount of interest you will pay, dependent on the interest rate.
3. What you should look for when buying your first home
You may already have a good idea of where you want to live or what kind of house you want to live in but it’s still important that you do your research to really understand where you want to live.
Look out for things like:
Liz Pearson, Head of Lending at Chorley Building Society, says:
“There’s a reason the famous saying ‘location, location, location’ exists! Buying a house in the right location for you and your family is one of the most important decisions you’ll make when getting onto the property ladder. Really considering your location can also be beneficial years down the line when you look to move – buying in an up and coming area will usually see the value of your house soar giving you more capital when it comes to selling!”
4. Applying for a decision in principle
A decision in principle (also known as either a mortgage or agreement in principle) is a document from us stating that you would be accepted for a mortgage on a house within your budget. You can obtain a decision in principle/mortgage in principle from any lender even if you are not a customer.
Chat to one of our advisors about how much you want to borrow, monthly income and spending to help them give you a decision in principle, which you might see expressed as a DIP.
A decision in principle is a quick and easy way to find out if you can borrow the amount you need for your first home
5. Registering with estate agents
When you’re ready to start looking at properties, it’s best to register your interest with an estate agent.
Most estate agents have an email newsletter releasing latest properties as soon as they’re uploaded online. You can usually sign up to these newsletters via the estate agents’ website but visiting your local estate agent’s office in person is always a good idea too. This allows you to meet the people who are selling homes and usually get a direct contact.
6. View properties in person
Viewing houses is arguably one of the most exciting steps of finding your first home, but it’s important not to get carried away and remember to look out for any potential issues that would cause you additional expenses like damp, an old boiler or old windows. Big issues like these will be raised in your homebuyer survey (See point 10 below) should you choose to pay for one once an offer is accepted, but it’s always good to try and keep an eye out for these at viewing stage to avoid any unnecessary expenses.
Try to imagine the space without any furniture in – are the spaces big enough? Is there ample storage?
7. Making an offer on a house
Once you’ve viewed your potential first home, it’s time to make an offer.
You should always put your offers in via the estate agent – a quick call to their office is usually the best way to do this. Make sure you request to speak to the agent who organised your viewing. It’s also worth reiterating that you’re a buyer with no chain at this point as this could be attractive to the seller if they’re seeking a quick sale.
The offer you put in on the house is completely up to you and may be impacted by the current housing market and previous bidding experiences.
Many people offer 5 – 10% below the asking price so there is room for negotiation. However, if you’re in a particularly competitive area for first time buyers, you may want to offer the asking price, or something near to it.
The most important thing to do at this point is not to get your hopes up for one particular house. You may put in offers on multiple houses before one is accepted.
8. Applying for a mortgage
It is possible to make online mortgage applications but, especially as a first time buyer, we recommend you make an appointment with your chosen mortgage provider so they can offer the support you need.
Liz Pearson, at Chorley Building Society, talks about the usual process they take first time buyers through when they come to their local Chorley branch or speak to us on the phone:
“We always ask first time buyers to bring a few things with them to their meeting with one of our mortgage advisors, including proof of income, any benefits and outgoings. Here are some of the kinds of documents we usually ask to see:
Don’t worry, you won’t need all of these documents and we’ll always advise you exactly what to bring when you make your appointment with us.”
One of our mortgage advisors will help you choose the right mortgage for you and help you complete the mortgage application. We offer a great range of mortgages suited to different needs. Our discounted mortgages typically offer discounts from the standard variable rate for the first few years – typically two or five years – to help you in the early period of home-ownership. We have mortgages for borrowers with limited deposits and also offer government backed help schemes such as ‘First Homes’ and ‘Help to Buy.’
9. Appointing a solicitor
Once you’ve successfully applied for a mortgage, it’s time to appoint a solicitor to facilitate the purchase of your first home.
You can choose your own solicitor after carrying out your own research, or we could appoint one for you from the Legal Marketing Services (LMS) panel. Established in 1991, LMS is one of the principle providers of conveyancing services to the three cornerstones of the housing industry: lenders, brokers and estate agents.
Whoever you choose, make sure your solicitor is local – you may need to drop off documents quickly and doing it in person is always more reassuring than having to wait for a postal delivery!
Family or friends may also have personal recommendations of solicitors they’ve user for their own house purchases so take advantage of your contacts.
10. Getting a property survey
As lenders we insist on a property survey for market valuation purposes. But homebuyers often choose an extended survey for peace of mind. This includes a report on the property’s condition, risks, potential legal issues, and urgent defects with recommendations on repairs and maintenance.
Pay close attention to this report as it could result in you getting money deducted from the sale price, saving you the all-important pounds!
You can research experts to carry out your survey online, or ask your estate agent or mortgage lender for advice.
11. Organising logistics of moving
Depending on where you’re moving from and to, you may want to consider hiring a van or removal company.
Take stock of what you’ll be moving and how best to move it.
Hiring a van is one of the most cost-efficient ways of moving everything quickly and in as few trips as possible.
A removal company is more expensive but will take all of the stress out of the heavy lifting, allowing you space to get settled as soon as possible.
12. Buying home insurance
Making sure your home is insured from moving day is important.
Use a comparison site to compare insurance providers before you move. You can choose to start your insurance on a specified date, even if you’re not moving in right away. It’s tempting not to pay to insure a house you don’t yet live in – but you absolutely should once the sale is completed.
Remember to let your insurance provider know if you have any particular high-value items as you may be able to get additional cover for these.
13. Arranging Wi-Fi
There is nothing worse than moving into a new home and having to wait weeks for Wi-Fi coverage.
Save your data usage and arrange for Wi-Fi to be installed as soon as possible after you move in.
14. Exchanging contracts
Exchanging contracts is when the buyer and seller’s solicitors swap signed contracts, and the buyer pays the house deposit.
Once you’ve exchanged contracts there’s no going back as this legally binds the sale – you’re a homeowner!
If you have a government Help to Buy ISA, the point between exchange and completion is when you should claim your bonus. The government bonus will be added towards your overall deposit. It won’t help towards your home exchange deposit.
15. Moving day
Completion (aka moving day) is usually agreed shortly after exchange but is flexible and a date that’s convenient for you and the seller is confirmed.
Completion means your deposit is transferred the seller and you can head to the estate agents to pick up your keys. Your solicitor will usually be in touch with you first on completion day to confirm the transfer of money, followed by your estate agents to let you know that your keys are available to collect.
If you would like any further information on how Chorley Building Society can help you take the first steps on to the property ladder, call a member of our Mortgages team on 01257 235001
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