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Buying your first home

Posted on Thursday, 26th May 2016 by

Buying your first home can be daunting, but if you want to take your first step on the property ladder, it’s important to know the basics – and to have the right people to fight your corner.

 

Most people would think the priority is to find a good estate agent, but that can actually be quite a way down the list – and if you see a property you love, you’ll have to go with whichever estate agent it’s listed with anyway.

first time buyer

Focus on finding a conveyancing solicitor who can guide you through any of the tricky parts (a good solicitor will be almost like a counsellor at times) and consider a mortgage broker if you’re not sure about getting approved for the finance you need.

Advice for first-time buyers:

DON’T PANIC. There’s plenty that can go wrong, but a good solicitor will fight on your behalf to get the deal done, and can negotiate with the seller’s solicitors to smooth out any rough patches too.

Make sure you have your money in place before you put an offer down on a property – you need to know how much you can borrow and be as certain as possible that the lending will be approved once your offer is accepted.

Remember to leave some aside for solicitor’s fees, mortgage arrangement fees and your first repayments, as well as property surveys, removals costs and any furniture you’ll need too – it all adds up and it’s essential not to go over your budget.

First-time buyer mortgages:

As a first-time buyer, you might find you have access to mortgages that are not available to other customers – often a way for the banks to win your custom in the hope that you won’t move away to a different lender later.

You’ll often be looking for a higher ‘LTV’ – this is the ‘loan to value’ ratio, which means the amount you are borrowing will usually be closer to the full value of the property for an FTB, as you don’t have capital from an existing property to put towards the deposit.

As such, you might be looking towards a 90% LTV or higher – and depending on the current mortgage market, this will restrict what’s available to you and increase the interest rate you pay too, so try to put down a larger deposit if possible.

Help to Buy scheme:

‘Help to Buy’ is a name given to several schemes over recent years, designed to help FTBs buy theirNCCHELPTOBUY2

first home (although some are also open to existing property owners who are trading up).

Help to Buy: ISA is an FTB-only scheme, and works through a cash ISA, with the government adding a 25% bonus on top of whatever you save, up to a bonus of £3,000 towards your first home deposit.

Other Help to Buy schemes include Equity Loan, where the government lends you up to 20% of the property price; Shared Ownership, where you only own 25-75% of the property depending on what you can afford; and Mortgage Guarantee, where the government guarantees your repayments if you fail to pay (you will still lose the property though – the guarantee is for the lender).

First-time buyer FAQs.

It can feel like you’re the only person who ever had doubts about buying a property, but everyone feels the pressure during their first time.

Here are some common questions we get asked time and time again – and which should help remove some of those initial doubts.

What risks should I be aware of when buying my first home?

Just remember nothing is guaranteed until you exchange contracts – this is the source of the most stress for many people, because at any stage in the process it could still all fall through.

Keep a close eye on any deadlines, for example if you have a mortgage offer that expires within a few weeks or months, as you need to make sure you’ve found a place before your funding gets withdrawn.

And try to be aware of the risks involved with the property itself – a full structural survey will cost more than a basic lender’s survey, but should uncover any evidence of damp, subsidence, and other major problems that might affect the value, the availability of buildings insurance, and even your overall decision of whether or not to put in an offer.

When do I need a conveyancer?

As early as possible. There’s definitely no extra risk from getting a conveyancer ‘too early’ – you can go through all the initial enquiries together but you’ll only really start running up your fees once you put in an offer and the actual conveyancing work starts.

Your conveyancer can help you to understand what you need to do at each stage of the process, and will liaise with your estate agent, mortgage lender or broker, and the seller’s solicitors too.

Basically, a good conveyancing solicitor will guide you through the process and help clear up any areas you’re still not sure about, so the sooner you start talking to your conveyancer, the better.

What fees will be charged?

There are a few fees you can’t avoid, and lots of others that you can, so be careful about what you sign up for.

A good conveyancing solicitor will let you know their standard fee up front. They will also handle the transfer of your mortgage funds so there’s no need to be nervous about that part.

There are certain ‘searches’ that must be carried out, and these help to flag up any concerns about properties in flood risk areas, locations with mining activity, whether the roads have been adapted and we insure that no other searches are needed, again, your solicitor can let you know how much these are likely to cost.

Other fees you might encounter include the cost of a survey – mortgage lenders will offer a basic survey, but for a higher cost you can have a full structural survey which is more likely to warn of any damp etc.

Finally, be careful about which products you sign up for. Some mortgage brokers may charge a fee, whereas others will charge this to the lender. Some mortgages may include a setup fee, while others could waive this in exchange for a slightly higher interest rate.

In general, it’s best not to use the mortgage broker or solicitor recommended by your estate agent, as the fees are usually higher for these – go your own way, find a reputable firm for each service you need, and you can keep your fees in check along the way.

How long does it take to buy a home?

Don’t assume your transaction will go without a hitch. The absolute shortest time to buy a home – assuming you already know which one you want and have your mortgage approval in place – is still around six weeks.

A problem with the survey can set you back or even cancel everything, and if the seller is in a property chain, you’ll be at the mercy of every other buyer along the way too.

You cannot rely on your lenders survey so if you need help searching or an independent surveyor speak to your conveyancer today.

Your lender might come back to you with more financial questions, or there might be a discrepancy with the property boundary on the deeds, or with the leasehold information and ground rent – the list goes on and on, and can turn a few weeks into a few months quite easily.

It’s impossible to know what your moving date will be, but your solicitor will let you know as soon as possible; in the meantime, hold your nerve if the estate agent tries to hurry you along, as there’s nothing you can do to speed things up except keep filing the paperwork promptly when it’s needed.

TIP: Do not relinquish rental accommodation until contracts can be exchanged.

What should I look for when buying my first home?

 

You can look around for obvious signs of damp, although a structural survey will go into more depth if you’re not sure what warning signs to look for – beware of properties with all the windows wide open or the heating turned up, as this can be a sign of a humidity problem the seller or agent is trying to disguise.NCCfbad3

Spend some time outside the property and listen for noisy neighbours, nearby schools, pubs and other public buildings that might get raucous, and look out for any motorbikes or sports cars parked nearby, as these might turn into a regular noise nuisance at all times of day and night.

There are certain conveniences to look for too – check the windows open and close easily, as a jammed window might mean subsidence, and you can even try turning on the taps to check there’s decent water pressure, too.

Remember, it’s never too late to withdraw your offer, until the contracts and keys are exchanged – if you get cold feet, speak to your solicitor about it, and decide whether you’re just going through first-time anxiety or whether there is a legitimate reason why you might not want to go through with the purchase.

 

 

Talk to our legal team

The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.

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