For many parents and grandparents, helping the next generation onto the property ladder is one of the most rewarding financial gifts they can make. Whether that’s contributing towards a deposit, acting as a guarantor or simply offering guidance, buying a first home is often a family milestone as much as a personal one.
If you’re preparing for buying your first home, or helping someone who is, understanding the process can help make the journey much less daunting.
Here is our simple guide to buying your first home.
Step 1: Set your budget
Before you begin looking at properties, it’s important to understand what you can realistically afford.
For most buyers, this means working out how much you may be able to borrow. Mortgage lenders will typically lend around four to five times your annual income, although this varies depending on your circumstances. If you’re buying with someone else, your incomes may be combined.
You may also need a deposit. Most first-time buyer mortgages require between 5% and 10% of the property’s value. Using the current UK average house price of £271,295, that’s a deposit of approximately £13,565 for a 5% mortgage or £27,130 for a 10% mortgage.
Generally speaking, the larger your deposit, the more mortgage options you could have available and the lower your monthly repayments are likely to be.
If you’re unsure how much you can afford, speaking to a mortgage adviser before you start searching can help you understand your options and set a realistic budget.
Step 2: Choose the right location
Once you know your budget, you can begin narrowing down where you’d like to live.
Think about what’s important to you. That could be being close to work, having good schools nearby, easy transport links or being closer to family and friends.
Visit areas at different times of the day and week to get a feel for them and use property websites to understand local house prices before arranging viewings.
Step 3: Get a mortgage in principle
A mortgage in principle is an indication from a lender of how much they may be prepared to lend.
Although it isn’t a formal mortgage offer, it shows estate agents and sellers that you’re a serious buyer and can often put you in a stronger position when making an offer.
A whole-of-market mortgage adviser can compare products from a wide range of lenders and help you find a mortgage that’s appropriate for your circumstances before arranging your mortgage in principle.
Step 4: Start viewing properties
With your mortgage in principle arranged, you’re ready to begin viewing homes.
Take your time and don’t feel pressured into making a decision too quickly.
Consider not only the property itself, but also its location, running costs and whether it will continue to meet your needs over the coming years.
Step 5: Make an offer
When you’ve found the right property, it’s time to make an offer through the estate agent.
Depending on local demand and the condition of the property, you may decide to offer the asking price or negotiate. If your offer is accepted, the legal process begins.
Step 6: Appoint a conveyancer
Your conveyancer or solicitor will carry out the legal work involved in transferring ownership of the property.
They will perform searches, review contracts and ensure there are no legal issues that could affect your purchase.
Your lender will also arrange a valuation, and you may decide to commission a more detailed survey to identify any structural problems before committing to the purchase.
Step 7: Exchange contracts and complete
Once all legal work has been completed and both parties are ready, contracts are exchanged.
From that point, the purchase becomes legally binding. Completion usually follows a few weeks later, when the remaining funds are transferred and you receive the keys to your new home.
Before moving in, it’s also important to arrange suitable buildings insurance. You may also wish to consider life insurance or income protection to help ensure your mortgage could still be paid if the unexpected happened.
Getting expert help
Buying your first home involves much more than simply choosing a property.
Understanding your borrowing options, finding the most suitable mortgage and protecting your home are all important financial decisions that can have a lasting impact.
Having expert advice can make the process much smoother, helping you avoid common pitfalls and giving you confidence that you’re making informed decisions every step of the way.
Whether you’re buying your first home or planning your next move, Continuum can help you navigate the process with confidence, get in touch today.
This article is intended for general guidance only and is based on the opinion of Continuum it does not constitute financial advice. Individual circumstances vary, and you should consider seeking advice from a regulated financial adviser before making any decisions about your mortgage planning.
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