Buying your first home is an exciting time but it is a daunting prospect. We are pleased to say we have skill and experience that will help you step on to the property ladder.
We are pleased to say there are many reasons you can rely on us for support.
We are an independent company
As an independent company, we are not tied into a relationship with any mortgage lender or provider. This means we have the freedom to provide you with the best options for your needs. Equally, we are not dependent on commission from lenders, which means you can be confident we will provide you with the best guidance.
We are specialists in the mortgage industry
Buying your first home is tough, which is why we want to provide you with the best standard of service. We offer a range of benefits in our services, including:
• You get access to a personal adviser and this professional is assigned to you until the work is completed
• We provide you with information in plain English
• We get to know what you are looking for
• We aim to be completely transparent with respect to charges and fees
We can also offer advice on matters other than your mortgage. If you are looking for the most appropriate home insurance or you want advice on choosing the best conveyancer, we can help. No matter the issue, you will find we provide the best standard of service in helping you step on to the property ladder.
What should you expect when buying your first home?
You will go through a range of emotions when buying your first home, but this guide aims to make the process simpler.
What is a mortgage?
A mortgage is likely to be the largest purchase you will make in your life. Very few people are able to buy a home outright, and a mortgage is a suitable way of affording the property.
A mortgage is like a large loan, and you need to repay the loan and make all the payments. If you don’t make the repayments, you will lose the home as the lender will repossess it. It would be wrong to say that a mortgage was the same as an unsecured loan though because the mortgage lender considers many aspects before determining if you can have the loan. These factors include:
- How much the borrower can afford to borrow
- How much the borrower can pay off each month
- How long will the borrower receive to pay off the mortgage?
- Things to consider with a mortgage
As you would expect, there is a lot for borrowers to consider when looking for a home.
If you currently rent, you will pay rent each month and your mortgage payments will operate in a comparable manner. Rather than paying money each month to your landlord, you will instead pay money to your mortgage lender.
A repayment mortgage is the most generic form of mortgage and with this, you pay off the money that has been borrowed, which is the capital amount, and the interest. The standard mortgage term runs for 25 to 25 years and the aim is to have paid off the capital and interest by the end of the mortgage.
Lenders and banks make money through the interest they receive. You should consider taking out a loan as a lender selling you money and the interest is the profit earned by the bank or lender for doing so.
Your mortgage terms
It is important that you agree to terms and conditions with the lender for the length of the mortgage. Make sure you aware of the length of the mortgage and the amount of money you need to pay each month.
There are different repayment types
When taking out a mortgage, there is more than one repayment type so make sure you know which option is right for your needs.
A capital and interest mortgage
You will find that a capital and interest mortgage is the most commonly found mortgage and many people liken it to a personal loan. This is because, with each payment, you pay towards the money that is owed as well as paying towards the interest. By the end of the term, you should have paid off the capital aspect and the interest element.
An interest only mortgage
With the interest-only mortgage, the borrower only pays back interest over the course of the mortgage. This means that monthly payments are lower, which will appeal to many landlords, but it means the full extent of the capital must be paid off when the mortgage ends. This means the borrower must ensure they have sufficient cash to pay off the mortgage in full at this time.
An interest-only mortgage is usually covered by the proceeds of the house sale.
An offset mortgage
An offset mortgage isn’t too common, and it can be a complicated process. An offset mortgage is only suitable for people who have a considerable volume of savings, with payments being offset against how much savings a person has.
You will find that the sums involved with paying a mortgage are high enough but there are also many fees involved with paying off a mortgage, and it is vital borrowers are aware of these:
This is a tax that is paid when buying a property. As a first-time buyer, the amount of stamp duty you have to pay, or indeed if you have to pay any stamp duty at all, depends on the price of the home you buy.
If you purchase a home up to £300,000; you don’t have to pay any stamp duty. This came into effect in November of 2017.
If you purchase a home priced above £300,000 but up to £500,000; you will need to pay 5% stamp duty for the amount between £300,001 and £500,000.
For purchases over £500,000; buyers will pay the standard stamp duty rate that is paid for properties over £125,000.
Before your mortgage lender will agree to loan you the money you need to buy a home, they need to agree to the property value. Although not all lenders charge for this, many do. Be aware that the mortgage valuation doesn’t provide you with much insight as to the condition of the property and you may not even receive a copy of the mortgage valuation.
Homebuyer report/property survey
It is important that you find out about the condition of the home before you finalise the purchase. If there are problems with the home, you may decide to walk away from the deal or you may look to lower the price of the property. You may even ask the vendor to resolve the issues. The information contained within your property survey will help you to make an informed decision.
The most popular form of report is the Homebuyer’s Report, and if you are buying a relatively new or straightforward property, this will be sufficient for your needs.
Legal / Conveyancing Fees
Given the importance of buying a home, it is understandable that there are many legal issues and ramifications involved with purchasing a property. It is essential you enlist the services of a dependable solicitor and conveyancer to guide you through the process. These professionals will act as your representative when dealing with the vendor’s solicitor and they should ensure that everything that needs to be completed has been taken care of.
Mortgage Broker Fee
A broker helps to secure a mortgage, and some professionals will charge you a fee to offer advice and guidance on which mortgage you should choose. There are benefits to choosing an independent broker and this professional can save you a considerable amount of money. If you go directly to a lender, you only hear about the deals they can offer, and this may not be the best advice for you.
If you move home with a lot of belongings, you will likely need assistance from a removals company. Therefore, you need to factor this cost into your overall expenditure too.
How To Find A Property
Finding a property can be difficult but working closely with an estate agent who operates in the area you wish to buy makes sense. An agent with local expertise and knowledge can make the process run more smoothly.
If you need assistance in finding an estate agent, online property portals like Zoopla or Rightmove can help you find agents that operate in the area you are interested in. Once you have a few agents to consider, compare them to see what agent is best for you.
The type of property impacts on the mortgage
While the choice of a flat or house may not impact on your property too much, some flats are leasehold properties, and this can impact on your mortgage.
With a freehold property, the buyer purchases the property and the land the property is on. With a leasehold property, the buyer has the right to occupy the property, but they must pay ground rent and will likely face a service fee too.
A lease runs for a set period and as the period left on the lease gets shorter, the value of the leasehold property diminishes. If you plan on buying a leasehold property, it is vital you find out how long is left on the leasehold.
A property with a short lease, say 70 years or less poses a problem for buyers. In this instance, a buyer should obtain advice about whether they can extend the leasehold and what the cost would be.
It is possible to obtain a mortgage on a leasehold property with a relatively shorter leasehold, but there will be restrictions. You may also find that many lenders do not wish to provide you with a mortgage.
Insurance is crucial
If you’re looking to obtain a mortgage, you need building insurance. If the home you want to buy has a unique condition, say it has a timber frame or a thatched roof, the mortgage lender may require you to obtain specialist insurance. If you live in an area that is at risk of flooding, you will also likely need specialist insurance.
Viewing a property
There are things you should see and like immediately in a property, such as its location, number of bedrooms and whether it has a garden. However, you shouldn’t take the property at face value because many homes which look fantastic on the surface have problems or issues which come to light later on.
Some of the questions you should ask, either of the property owner or the agent, include:
- What is the local area like?
- Are there good neighbours?
- Is this a secure area?
- What is the traffic like in the local area?
- Is there an issue with on-street parking?
- How much does the current owner pay in rent?
- What is the local transport like?
- What are the local council rates?
You should also ask about the condition of the home and whether there are any problems. A survey or report will provide you with more insightful information but the sooner you are aware of these matters, the better.
If there are problems in the home, it is best to be aware of these as quickly as possible. Also, problems with the home may impact on the ability to obtain a mortgage or how much money is required to buy the home.
Second viewings are essential
First impressions are vital, and a study indicates prospective buyers have come up with 80% of their decision to purchase a home on the initial visit. However, it is best to take a second visit. There may be factors such as weather, a person’s mood or other factors that impact on how a property looks or feels on a certain day.
Also, if you have made an offer and now have a surveyor’s report, it makes sense to review the property with this report, as this will allow you to assess the full extent of the problems.
Buying a home
While it is important to thoroughly assess your options when looking to buy a home, there will come a time when you need to act. Don’t expect a house deal to run smoothly, there are usually always issues that arise, but the following stages should provide you with an overview of buying the property:
- Speak with an adviser or mortgage broker
- Find a property you want to buy
- Place an offer on the property
- Find out of the offer is accepted, if not, continue searching, if it is, congratulations
- Make a formal mortgage application
- Instruct a conveyancer
- Exchange contracts
- Complete the deal
Take each step as it comes and be sure to ask for guidance or support from professionals if you need help.
Specialist types of insurance
Buildings insurance is essential when buying a home, but it may be you need other forms of insurance when purchasing a property.
- Contents insurance – This insurance isn’t essential, but it is a smart idea, offering you peace of mind regarding the contents of your home
- Income protection insurance – If you are worried about maintaining or mortgage payments in the event of being unable to work, this insurance provides a considerable amount of confidence.
- Specialist insurance – If the home you wish to buy has a unique construction feature, is located in an area of high risk or will lie empty for a lengthy period of time, you will require specialist insurance coverage.
Buying your first home is exciting, but you will need help. We are here to assist you in any way that we can.