If you’re thinking about buying your first home, then we have put together a first-time buyer guide with tips on the buying process and the costs involved. Buying a home for the first time can be daunting and you will have many questions to ask; What do I do first, who do I go to for help and how do I get a mortgage? Do I need a conveyancer? Here we try to break down the first-time buyer process into simple steps to help you understand what will happen and when.
The Buying Process
- Look around the property market to get an idea of properties you would like to buy. You can visit websites such as Rightmove and Zoopla to help give you some inspiration on the kind of location to look at, and what kind of property you are interested in.
- Speak to a mortgage broker to explore your mortgage options. You can buy a property with a deposit and take out a mortgage, however as a first-time buyer you also have other mortgage schemes available to help you get onto the property ladder, such as Shared Ownership and Help to Buy. The mortgage broker can give you advice in this area. The adviser will help arrange an ‘Agreement in Principle from the mortgage lender and discuss insurance products that you should consider.
- You find a property and have an offer accepted. At this point, you can provide the estate agent with a copy of your ‘Agreement in Principle so that they are aware that you have mortgage options already lined up.
- Your mortgage broker will then submit the mortgage application to the lender along with relevant documentation – Proof of income (payslips or accounts), Proof of Identify (Passport or Driving License) and the last 3 months of bank statements. The lender will then begin the underwriting of your case and may ask for additional information.
- Find and instruct a Conveyancer who will act on your behalf. It’s a conveyancer’s job to liaise with the seller’s conveyancer, carry out necessary searches and raise any enquiries with you.
- The property that you wish to buy needs to be valued to make sure it is suitable security for the lender. Once this has been done and the lender completes their underwriting checks, they will then issue a mortgage offer.
- At this point your insurance policies need to be set up, so for example with a life insurance policy you need to complete a Health Questionnaire and you can set up your building and contents insurance policy ready to be activated when needed.
- The conveyancer will review the mortgage offer and will send you any documentation that needs signing i.e. the mortgage deed, signed contract and the deposit money will also need to be paid to them.
- Your conveyancer will liaise with the seller’s conveyancer to schedule a completion date and contracts are formally ‘exchanged’.
- Once you have exchanged on the property, any life insurance policy should be put at risk and the buildings and contents policy can be scheduled to go live on the completion date.
- The conveyancer will draw down the money from your lender and send the completion monies to the seller. By this final stage, you will have completed the sale and the estate agent will give you the keys!
This is a brief overview of the homebuyer transaction there are other processes that take place with the mortgage broker and the conveyancer, but it will give you a good solid guide on what processes you can expect to go through.
The Costs Involved
When buying a property, many fees will be payable at different stages throughout the process. Here you will see a breakdown of the fees payable and when they tend to be due throughout the process:
Valuation Fee – This is payable upfront, and it is for the property you wish to buy to be valued by an independent surveyor to make sure the property is suitable security for the lender to lend against. The lender will want a basic valuation done; however, you could arrange for a more in-depth valuation to be carried out such as a Homebuyer Survey or a Full Structural survey.
Broker Fee – This is to cover the services provided by your chosen broker. The fee may be payable at various stages through the process for example upfront when a mortgage offer is issued or maybe on completion. Your chosen broker should clearly state what fees are payable and when from the start.
Conveyancing Fee – This is a fee the conveyancer will charge for their services and act on your behalf to arrange the property purchase. They may want some of this paid upfront and some on completion. Searches need to be carried out on the property and you will generally have to pay for these also. The conveyancer should provide you with a quotation from the outset of what fees are payable and when.
Stamp Duty – As a first-time buyer currently you do not need to pay stamp duty on properties purchased up to £300,000, however, this may change in the future. It is the conveyancer’s responsibility to advise you of any stamp duty costs applicable.
We hope that our expert guidance has helped to provide you with an insight into the first-time buyer market!
How to secure a first-time buyer mortgage with The Money Hub
To secure a first-time buyer mortgage, you should speak to an FCA-authorised broker who can give you advice on mortgages from the whole of the market. We have mortgage advisers on hand to help at the Money Hub and to answer all of your other questions. To speak to a member of our helpful team, please get in touch today!
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.