Purchasing your perfect property can be a long haul. But for first-time buyers, research is the key to making the right choices.
By Judith Parsons
For anyone new to the property market, the process of buying a house or flat comes with a steep learning curve. Fortunately, you're not the first person to buy a property, and if you approach it slowly and confidently, it shouldn't be too intimidating.
As a prospective purchaser, you can take comfort in the fact that 370,000 people bought their first property in 2018, according to UK Finance. This was the highest number in 12 years, with competitive deals and government schemes such as Help to Buy continuing to support new homeowners.
But, as potentially the biggest purchase of your life, what do you need to know when buying a home?
“The first thing to consider is that you can always modify a property but not the location," says Michael Lythgoe, Director of Nelsons estate agency in London. "Even if the house is attractive, you will not enjoy living in a bad location.”
So, as it's all about location, location, location, research where you hope to live, put on your walking shoes and take time to explore. Think long-term – how would you score the shops and amenities, schools, transport links, rush-hour traffic, noise, local environment, crime rate, new developments and neighbours now, and for years to come?
Future-proof your purchase
Mortgage lenders tend to shy away from homes of unusual construction; high-rise blocks; flats over shops, restaurants and offices; short leaseholds (less than 70 to 80 years); and proximity to water. Bear this in mind when you’re searching for your dream home.
And what about connectivity? House buyers’ priorities are changing. According to 2018 research by Broadband Genie, around 80% of respondents would not move into a property, however well-priced or close to work, if it lacked fast broadband or a mobile phone signal.
Understanding the different parts of the process
These are points worth mulling over as you start saving for a deposit – the first step in the process of buying a house. A typical deposit is between 5% and 20% of the property price, so this will give you an idea of the sums involved.
To work out how much you need to save, and how long it will take, the Which? mortgage deposit calculator is helpful. At the same time, check if you need to pay Stamp Duty Land Tax on the property price you have in mind, and if so, factor this into your budget.
Once you have your deposit, rather than set your sights on a house or flat straight away, wait until you know how much you can borrow. To get an idea, the Money Advice Service provides a useful mortgage calculator.
For a more accurate figure and help with your application, you could speak to a whole-of-market (independent) mortgage broker.
When you’ve worked out your budget, investigate your chosen area and apply for a mortgage agreement in principle (AIP), also known as a decision in principle (DIP).
It's confirmation from a lender that they would, hypothetically, be willing to lend you a specific sum. An AIP is important as it shows you can afford your new home and will help you move more quickly.
Compare and contrast properties
Now it’s time to register with estate agents and check the property websites. Estate agents offer a wealth of local knowledge, so introduce yourself. View several places to establish what’s on the market in your price range and see how they compare.
And be open-minded – pictures online can’t always convey what’s behind the front door.
Once you find that special one, decide how much to offer. It’s quite acceptable to go in at 5 to 10% less than the asking price. Present your offer to the estate agent who will pass it on to the seller. This is a negotiation, so don’t panic if it’s rejected. If you can, and are willing, increase the amount until a price is agreed.
Finding the best deal in town
As soon as your offer is accepted, apply for a mortgage. This could be via your bank, building society or mortgage broker, also known as an intermediary.
The Intermediary Mortgage Lenders Association advises that it’s sensible for first-time buyers to seek professional advice to compare products than aren't available on the high street.
While waiting for your mortgage to be approved, appoint a property solicitor or conveyancer to handle the legal side of transferring the house or flat from one person to another. Don’t go on price alone as good service and communication are essential for this part of the process. Ask around for recommendations.
Before your mortgage is approved, your lender will arrange a valuation survey to check the property is worth the amount being lent. Don’t confuse this with a house survey, which you will need to organise yourself once you get approval.
Get covered with buildings insurance
All being well, and with your mortgage approved, an exchange of contracts follows. On the day of exchange, you’ll usually agree on a completion date with your seller and insure your new property. Aviva Home Insurance, combined contents and buildings protection and offers competitive cover for this step in the process.
At exchange, you will also need to transfer 10% of the sale price to your solicitor who then swaps signed contracts with the seller’s solicitor. You are now legally bound to buy the property and ready to book a removals company.
On completion – moving day – your solicitor transfers the remaining money (including your mortgage) to the seller’s solicitor, who will inform the estate agent.
The keys are then released, and the property is yours. For a final hurrah, settle up with your solicitor, who'll pay stamp duty on your behalf, register a change of ownership with HM Land Registry, and forward the new title deeds to your mortgage lender.
At this point, it is officially time to put the kettle on and start unpacking.