Owning your own home is an incredible accomplishment that can enable you to plan for the future. The process of buying a home is very complex with lots of factors to consider.
If you are buying a home with an onward chain (where the person you are buying from is also purchasing another home) then the process can be even more difficult to navigate. To make this even more stressful, a lot of the process will be completely out of your control.
In this guide, we will provide an overview of the steps you can expect during the process of buying your first home. This should enable you to prepare for the steps and ensure nothing catches you off guard.
Lenders will typically only lend between 3-5 times your annual salary. This should give you a range that you will be able to borrow. If you are applying with another person, you will have the opportunity to increase your budget. Remember you should also add on your deposit amount to land on your final budget.
You should aim to save as much as possible for your deposit, as this can help to reduce the amount you need to borrow. You can also access better interest rates if you have saved a larger deposit.
Now you know how much you have to spend and how much deposit you have saved, you can now start looking for your dream home. You could work with an estate agent who understands your requirements, or you could use online listing websites to find your ideal property.
An agreement in principle will allow you to put in an offer on a home with confidence. Some estate agents won’t allow you to view a property without an agreement in principle. This is a shorter application process that covers the basics of affordability. Once you find a property you like, you then submit a full application.
Once you’ve seen the property that you want that ticks all of the boxes, you can then put in an offer. In very popular areas, you might be competing against other buyers to put in the most attractive offer.
Obviously, you’ll be limited in how much you can offer by your budget and agreement in principle. If you choose to put in a higher offer than is on your agreement in principle, there is no guarantee you will be granted a mortgage for this amount. In this instance, you would then need to increase your deposit amount to cover the difference.
If you submit an offer and this is accepted by the seller, then it’s time to submit your complete application. This will require a more extensive dig around your finances, so expect to have to share lots of information with the lender. Having this information ready before you start the process can help to speed up your application – or at least avoid delaying it.
If your application is accepted, the lender will then want to know more about the property. You will need to arrange professional surveys to determine the value of the property. This will ensure you aren’t paying too much for the property, as this leaves the bank at risk of losing money if you default on your mortgage.
If the sale can go ahead, the conveyancing process can begin. This is the legal process of transferring the legal ownership of a property from one person to another. A conveyancing solicitor will carry out all of the relevant legal checks and also handle the transfer of the deposit. If you have used a lifetime ISA or other deposit scheme, your conveyancing solicitor will request the additional money from the government to top up your deposit.
If everyone is happy with the sale price and the mortgage is approved, it’s time to sign and exchange the contracts. At this point, you will be legally responsible for the property, so this is when you should think about taking out various types of insurance. Building and contents insurance is a great place to start, but you might also want to think about life insurance or employment insurance.
Now you are the legal owner of the property, you can start planning your big move. It’s time to pack up your things, book the moving company and start thinking about how you’re going to decorate your first home.
Buying a home is a huge milestone in your life, so make sure you take the time to enjoy it and savour the moment. It also marks the end of a long and complex process, so take a moment to think about how far you’ve come.
Working with a mortgage broker can help to simplify the process and minimise the risk of unexpected surprises along the way.