What you need to know, how to prepare from saving to putting in your first offer!
Buying your first home is a big step and a huge life decision. It may feel daunting, all the things you need to think about and prepare for. That is why we have put together a guide to buying your first home. Containing everything we think you should know before you take that step.
Saving and Affordability
What can you afford?
The first and most important thing you need to do is find out your affordability. This applies whether you are purchasing a house by yourself or with someone else. There are online calculators, like Money Saving Expert, which can help give you a guide to what you can afford.
However, we would always recommend seeing a mortgage advisor to get a more accurate indication.
Once you know your affordability you can then start to realistically look at how much you need to save to be able to afford the house you want.
Mortgage affordability is typically worked out on 4-5 times your income (combined if you are joint applicants). It’s also important to know that most lenders will prefer a loan to value of 90% but some will have 95% mortgages available.
How to save your deposit?
Ideally, the most you can save will always put you in the best position. The larger deposit amount you have, the more attractive you are to lenders and the better interest rates you are likely to get.
The schemes available to help first time buyers save for their deposit may change in name but you can find what is currently open by visiting the government website.
If you are a first-time buyer, you can open up a Lifetime ISA (although this is available for other reasons). The government will give you 25% for every £1,000 you save.
As well as saving for your deposit you also need to consider the costs of stamp duty, surveys, solicitors fees and any moving fees.
Mortgage Application
Some estate agents may require that you have what is called a ‘Mortgage in Principle’. As this will involve a credit check it’s really important you have this in order beforehand.
You can check your credit score online via Experian. Here’s 6 ways to get your credit score as high as possible:
- Make sure you’re paying off any credit on time and in full.
- Don’t take out any credit or finance 3 months before your application.
- Check all your addresses for everything is up to date.
- Avoid changing banks or opening new accounts 3-6 months before your application.
- Clear as many outstanding debts as you can afford.
- Don’t change jobs in the 3 months before your application.
Visit a mortgage adviser and they will discuss the process with you and manage your application. Alternatively, you can choose to go with a broker, the benefit to this is they will usually take their fee from the lender.
Viewing Houses
Now for the exciting part, viewing houses! If you are already familiar with the area then you will be able to get straight in but if you’re looking to move somewhere new, it’s a good idea to research first.
Things we suggest considering in regard to location:
- School Ofsted reports in the area
- Main roads and possible noise pollution
- Planning applications nearby
- Surrounding house prices
While a survey will take care of all the structural aspects of the house, it is also important to take a careful look around at potential homes for issues that could end up costing you money or causing disruption.
- Old windows
- Mould or damp
- Cracks in external walls
- Age of the boiler/ central heating system
While you may have already considering that you will want to re-decorate your new home, you also need to think about any other renovations as part of the price tag.
These factors can also be useful for negotiating on the selling price.
Don’t be afraid to view a property multiple times while trying to make a decision and we would suggest doing this at different points of the day. Parking may be okay when everyone has left for work by after 6pm you could find yourself struggling for a space!
Putting in an Offer
Don’t be afraid to offer lower than the asking price, this is fairly common. However, if the property is popular and has other interested parties you may have to offer the asking price, or potentially more.
If that is the case, don’t risk offering more than you can afford or going about the property value as this could result in you not being granted the mortgage.
Notify the estate agent of your offer and be sure to mention anything else that is in your favour – for example being a first-time buyer. You can also say that your offer is subject to the property being taken off the market.
Once you have submitted your offer it’s time to see if the sellers will accept – good luck!