First-time buyer

Most home buyers require a mortgage, which is based on your household income.

Your mortgage calculation plus deposit will provide an indication of your budget.

The government have a range of schemes to help people buy a home.

Additional expenses that you may need to consider:

• Stamp Duty
• Survey/mortgage valuations
• Conveyancing fees
• Search fees
• Building insurance
• Moving costs
• Essential repairs/improvements
• Mortgage costs and life insurance
• Service charges/ground rent (leasehold properties)

Check your credit score – this shows how likely you are to be accepted for credit.

Mortgage lenders will consider the total amount you can borrow and how affordable your monthly mortgage payments will be. The affordability assessment takes into account your income and current outgoings.

There are many different types of mortgages on offer:

• Fixed Rate – monthly repayments remain the same for the duration of the deal (popular with first-time buyers).
• Capped Rate – variable rate and repayments with a set cap which cannot be exceeded.
• Discounted – discounted standard variable rate.
• Tracker – variable rate which tracks the Bank of England base rate, plus an agreed percentage.

You should get a mortgage agreement in principle before viewing properties. This is a written statement from a lender, with no obligation to take out a mortgage with them.

Once your offer has been accepted, you need to complete a full mortgage application for the lender you wish to use.

When completing the application you will need to provide ID, proof of address and proof of income. Self-employed people may require additional assurances of their income.

The mortgage provider will carry out a mortgage valuation to check that they are happy to lend against the property.

Estate agents, lawyers and mortgage lenders are required by law to check your identity at several stages during the transaction – you will have to produce documents to provide your identity, address and source of funds.

Prepare the documentation you may need in advance:

• Proof of identity – passport and driving licence.
• Proof of address – driving licence, bank/credit card statement, utility bill (within three months and not including mobile phone bills).
• Proof and source of funds – last three months’ payslips, P60 from employer, tax return and other documents if self employed.

Consider the following criteria during your property search:

• Affordability
• Location
• Transport links
• Number of bedrooms
• Energy performance
• Internet speed
• Car parking
• Potential for extending
• Garden
• Condition
• Drawbacks

Before making an offer on a property, consider the following:

• What is included – fixtures and fittings
• Property worth – value of similar properties
• Leasehold – cost of ground rent/service charge
• How much you are willing to pay
• Seller’s circumstances
• Your appeal as a buyer – agreement in principle or cash buyer
• Interest from other buyers

You should instruct a legal representative as soon as your offer has been accepted.

They play a key role in the purchase of your home:

• Appropriate legal checks on the property
• Legal work for property purchase
• Ensuring the mortgage meets your lender’s requirements
• Identify title or planning issues
• Advise on searches to have carried out
• Legal work of transferring the ownership

Your legal representative will organise local authority searches on the property and/or land, which will inform you about any restrictions relating to the land or property and any external factors.

During the buying process your legal representative will raise enquiries based on the information received. Enquiries are wide-ranging and raised at different points through the process.

A survey is a detailed inspection of a property’s condition, advising of minor maintenance and major works required on the property now and in the future.

The survey should be carried out by a trained professional.

Types of survey:

• HomeBuyer Report – suitable for conventional properties in reasonable condition to ascertain any structural problems and hidden issues inside and outside. This report does not look beyond the floorboards or behind the walls. Some HomeBuyer reports include a property valuation, which you can compare with the mortgage lender’s valuation.
• Full Structural Survey – the most comprehensive survey for all residential properties, providing detailed advice on repairs. This survey is extensive but does not include a valuation. The surveyor should provide information on the potential for hidden defects and repair options.
• Mortgage Valuation Survey – your mortgage provider will ask for a mortgage valuation before approving your mortgage. It will not point out repairs or structural problems.

What are you options if significant issues are uncovered by the survey?

• Ask the seller to pay for the issues to be fixed before you purchase
• Renegotiate your offer to take into account the cost of works
• Withdraw your offer

When the buyer and seller exchange their signed agreements they are legally bound to the transaction.

Checklist before exchanging:

• You are happy with searches, survey and contract details
• Your lender has confirmed the mortgage
• You are able to pay the deposit
• You are able to pay associated costs
• Building insurance has been arranged

At exchange you will confirm a completion date, which is when you will move in or start work on your new home.

Exchanging contracts is a legal commitment; if you withdraw after exchange you may lose your deposit and have to pay compensation to the seller, and if the seller withdraws they may be liable for your costs and compensation.

When your legal representative transfers the remaining funds to the seller’s legal representative, you take ownership of the property and keys are handed over.

Your legal representative will register the change of ownership with HM Land Registry and settle Stamp Duty and Land Tax payments.