Buying Your First Home

Nobody who is buying a home for the first time is going to be an expert and there will be unforeseen complications along the way.

The aim of the guide is to keep any complications to a minimum and to give you a level of understanding that will help you in your quest to purchase your ideal first home as easily as possible.

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Things covered by this guide include:

• Working out what you can afford
• Getting a mortgage agreement in principle
• Choosing your home
• Hiring a solicitor
• Make an offer
• Get a survey and valuation done
• Legal work
• Getting life assurance
• Finalize your mortgage and exchange contracts
• Organizing the move and the finalization of contracts

Working out what you can afford

Houses are expensive; buying a house is also a potentially expensive process with one off costs coming in at around £2,000-£5,000 on top of the price of your new home:

• One off costs include a possible mortgage arrangement fee and lender valuation fee although both can be waived depending on the perks of your chosen lender. But if payable they will set you back several hundred pounds.
• Surveys can also be an expensive business, usually between £250 and £500. However, for an old property a more comprehensive structural survey may be necessary and it can cost in excess of £1,000
• The there are legal/conveyancing fees and search fees (it is wise to shop around as rates vary quite considerably), stamp duty (which usually comes in at around 1% of the property's selling price and is payable for properties above £120,000) and if you are selling a property yourself, the estate agents commission for the sale of your own property.
• Other costs include the inflated phone bills, travel costs, loss of earning and any other expenses.
• Insurance costs must also be considered
• Land registry transfer will also set you back anything between £40 and £800 depending on the value of your property.

These costs must of course be budgeted for, along with the costs of any potential work on the house that might be necessary. A house that needs a new bathroom for example is going to end up costing you a good few thousand pounds more

So then, to calculate your price range you must take the following into account:

1. The income from any pending sale of a current home
2. The amount you are able to borrow (a lender or mortgage advisor will advise you on the maximum you can borrow based on your income and the size of your deposit)
3. The amount of savings you have at your disposal
4. The amount of one-off costs

The total of the first three minus the last should give you a rough indication of your price range.

Getting a mortgage agreement in principle

At SoSmart Money we know mortgages aren't always that easy. The vast number of different deals can make finding the right mortgage a daunting prospect. Fortunately, that's exactly where we can help.

Our mortgage section contains articles on the main types of mortgage, information on most UK lenders, various guides to getting a mortgage and even a handy calculator to give you an idea of monthly repayments.

SoSmart Money provides you with expert help getting a mortgage through London and Country.

Have a look at Getting Your First Mortgage to gain a better understanding of what to expect when getting a mortgage.

Choosing your home

Trying to find the perfect home is stressful, time consuming and requires considerable effort if you are to maximise your chances of success.

It is not as simple, or at least it is very rarely as simple, as wanting 2 bedrooms for under £200,000 and as long as any property meets these criteria you are happy.

There is a huge amount of things to consider such as the local area, the neighbours, the state of repair of the property, the nature of the ownership (is it leasehold or freehold?), any legal complications with regard to the property's registration, and just generally how you feel about a property. After all, it is going to be your home!

Therefore doing some research and arranging an ample amount of viewings is imperative if you want to avoid disappointment.

Hiring a solicitor

Hiring a solicitor or conveyancer to handle the legal stuff is highly advisable due to the fact that things can get very complicated and it is of paramount importance that the legal processes are carried out correctly for obvious reasons.

Make an offer

Once you have found the house of your dreams (or at least one that you like) it is time to make an offer.

Things to consider before making an offer include:

• Prices of similar properties recently sold or for sale in the local area (you must though be wary of the property's individual extras/inadequacies, a brand new kitchen for example will inflate the price. Conversely, if you feel the particular property is below par in terms of state of repair, bring it up in negotiation, but always be polite)
• The inclusion of fixtures and fittings should be agreed and put on paper
• Initial offers are generally 5-10% lower than the asking price
• Likely demand for the property you are interested in. See The Best Time to Sell Your Property
• Position of the seller; do they want a quick sale? Can you boast the freedom from a property chain and guarantee fast completion?
• Getting a written agreement in principle to show the seller that you are a serious buyer with the funds to back up your interest.

Get a survey and valuation done

Surveys and valuations can be expensive but they are necessary. You are spending a huge amount of money and so everything must be checked and double checked.

You do not want to pay over the odds and you certainly do not want to buy a home that has got a whole load of hidden problems.

Legal work

The conveyancing process will then be carried out by your solicitor or conveyancer.

Getting life assurance

As financial commitments go, your mortgage repayments will be the biggest you or your family will ever make. It is not something that you would want to consider too often but if the unthinkable were to happen to you, your family are going to be left with a huge debt and reduced income to deal with, as if the bereavement, accident or illness was not enough.

Life assurance is therefore highly recommended as it will cover your family in their time of need, giving them one less thing to worry about.

Speak to an independent adviser and get a life assurance quote through Lifebroker UK.

Finalise your mortgage and exchange contracts

Once the contracts are exchanged and you have paid the deposit you are no longer free to change your mind or pull out of the move. Both parties are legally bound to follow through with the transaction.

The deposit is non-refundable and is negotiable, but it is often around 10% of the purchase price.

Bridging Loans can be arranged from your bank if you are not in a position to pay the money immediately.

Your solicitor will then draw up the transfer documents for the seller's solicitor, arrange the finalization and signing of your mortgage documents, and carry out any last minute searches.

Organizing the move and the finalization of contracts

All that is left now is for you to arrange for your moving in day and to tie up a few loose ends.

Arranging for your moving in day may include: booking time off work, new address notifications, hiring a removal van, arranging for insurance for various different things, activating any services that have been ceased and ordering the champagne!

Meanwhile your solicitor will be sending you the transfer document and title deeds and carrying out final pieces of administration with regard to the land registry and statements of completion.

And unfortunately there is also the small matter of their payment and the payment of any extra costs that have not already been sorted.

But on the bright side, the time has now come to get the keys, move in and enjoy your new home!

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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