A First-Time Home Buyers Guide: Tips, Resources and the Conveyancing Process
When it comes to buying a first home, buyers need all the help they can get. Chances are, a first-time buyer will be of a younger generation, maybe in their 20s or 30s, who is looking for financial help and advice and may have never been involved in such a large purchase before.
This blog will act as a guide to all those who are venturing upon buying a home for the first time, offering helpful tips and advice.
Those who are aiming to take their first steps onto the property ladder might be aware of needing a conveyancing lawyer, but may not be sure what conveyancing means, especially in terms of buying and selling a house.
Simply put, conveyancing is the legal process of transferring a property from one person to another. Typical conveyancing transactions have two main phases: exchange of contracts and completion. A conveyancing solicitor will act on the behalf of the buyer or seller to ensure their client is guided through a lot more than just contract exchanges.
So, where does a first-time buyer start?
Although it may seem like an obvious place to start, thinking about what you can afford and looking for the kind of property you’re after is an important first step to take.
Before you jump into viewings, sit down and work out how much you could potentially afford. It may also help to go to a few mortgage lenders first to work out what your mortgage would be based on your deposit, your annual salary, expenses and more. Once you have a rough idea of budget, you won’t be disappointed when reaching for that five-bedroom mansion you’ve got your eye on.
Next, consider the location you want to buy within as this will affect both your budget and viewings. For example, opting for a flat or home within a city is going to be more expensive than the suburbs. Buying in the north of England or in Wales is also thought to be cheaper than the rest of the UK. Think about your priorities; are you looking to get a bigger sized home for your money, is the location the most important thing so you can be nearer your workplace etc, or does the size not matter as long as you have a garden, for example? Either way, aim to complete your location research first.
There are many ways to start doing your research, from useful online tools such as Zoopla and Rightmove to checking the ‘house for sale’ listings in newspapers. If you’re looking to buy somewhere local to where you already live, take notice of “for sale” signs when you’re out and about and scan local property agency windows too.
Once you’ve found a few that fit your requirements, request a viewing. Don’t forget to ask all you can about the property, from when it was built to whether it is double glazed. Think about how much work you’re willing to do on the property also. For example, some couples love an older home so they can create their own project and refurbish it the way they want, whereas others like the convenience of simply moving straight in with no issues. However, any structural problems such as damp, cracking or a sagging roof could signify major construction work is needed, so look out for these issues when on viewings. Fortunately, if you decide to put an offer on and haven’t spotted these issues, a homebuyers report or survey (see below) will help reveal these problems.
Once you’ve found a house that fits your requirements and you’ve fallen in love with it, you may be ready to put in an offer. Usually, an offer will be lower than the asking price and this is where the negotiation and haggling begins. To get an idea of how low to go without being immediately rejected, or how high to go without spending more than you have to, here are a few need-to-knows when putting in an offer:
● Research - do your homework on the asking prices and sold prices of similar properties within your area to get an idea of what you can offer.
● Finance and documents - you should start preparing your documentation with your solicitor in case your offer is accepted. Also, you’ll need to show proof of funds so it may be a good idea to arrange a mortgage-in-principle (see below).
● Making the offer - once you’ve worked out your bidding strategy and prepped, you can make an offer by calling or going into the estate agent’s office. It is recommended to put the offer in writing too as this will ensure it’s recorded accurately.
Mortgages and mortgages in principle
Briefly touched upon above, you may need to visit a mortgage advisor and lender prior to starting your search, but you’ll definitely need to speak to someone if you’re at the stage of putting down an offer.
Essentially, a mortgage is a legal agreement and loan taken out with a bank or building society to buy a property, which has to be paid back over a set number of years (10, 15, 25 or more). A mortgage is worked out depending on your salary, expenses, deposit amount and more.
Also known as a Decision in Principle (DIP), Agreement in Principle (AIP) or mortgage promise, a mortgage in principle is a statement from a mortgage lender. It will confirm that they'll lend a certain amount to you before you've finalised the purchase of your home - you’ll definitely need this before moving ahead with your first-house purchase.
You might be thinking “how much of a deposit do I need for a mortgage?” As a mortgage attracts interest, you’re looking to keep your repayments and interest at a manageable rate. Here is some information on deposits if you’re a first-time buyer:
● 0% deposits - these are now quite rare, but instead, exist as guarantor mortgages. This is where the homebuyer gets someone else to use their property or savings to be secured against the deposit percentage instead.
● 5% deposits - the largest mortgages you can get are 95%, meaning you need a 5% deposit. These exist with mortgage lenders but also exist with many help to buy schemes for first-time buyers (see below).
● 10% to 20% deposits - these are the most recommended mortgages and mortgage lenders like to see this amount as it shows you’re a solid investment and won’t struggle with repayments. Any deposits over 15% will usually offer the best mortgage rates, meaning you’ll have the lowest interest rates available. Anything more than 20% is a bonus to you, as you’ll be in the best position to pay off your first-home at a quicker rate.
A conveyancing solicitor can carry out or arrange the necessary local authority searches and environmental surveys on a property, as well as being able to communicate the results. Before going ahead and taking on a property, get a homebuyers report done on the home. Acting as a health check on the property, this report will reveal the property’s condition and shine a spotlight on any problems. This will enable you to renegotiate the price or, if necessary, it will provide you with the grounds to pull out of the purchase.
Useful resources for first-time buyers
As a first-time buyer, you’ll need all the help you can get. Fortunately, there is a lot of information and schemes out there to favour those looking to purchase your first home.
General tips and mortgage calculators
Sites like MoneySavingExpert and MoneyAdviceService offer a lot of information, tips, advice and tools to aid those who are looking to buy their first home. This includes mortgage calculators, money-saving tips, what to do and what not to do, advice on hiring solicitors and much more.
New builds and government schemes
You have probably heard of the Help to Buy schemes available - as a first-time buyer, it’s now time to utilise them! These schemes require a minimum 5% deposit of the property value and provide flexibility to many buyers. If you’re an existing buyer who wants to buy a ‘new build’ house, some schemes are open to you also. These include:
●Help to Buy: Equity
●London Help to Buy
●Armed Forces Help to Buy
●Equity Loan
As well as the above-mentioned schemes, there are also ISAs that you can take advantage of: Help to Buy ISA and Lifetime ISA.
● Help to Buy ISA is designed to boost first-time buyers’ savings - for every £200 saved, the Government will add £50 and this is up to a maximum of £3,000 extra (based on saving £12,000).
● Lifetime ISA offers a tax-free boost of up to £1,000 a year (if you save £4,000) which can be put towards a first home or retirement savings for anyone aged between 18-39 years old.
For more information about schemes and ISAs, visit our previous blog post here .
Andrew Lee Property Lawyers - specialist conveyancing solicitors in the South East of England
If you’re looking to buy your first home in the South East of England, enlist the help of Andrew Lee Property Lawyers today. As a trusted, supportive and reliable team of expert conveyancing solicitors, we can guide you through the process of buying your first home with ease. For more information about our services and rates, get in touch with us today.
