Welcome to my little blog and first time buyer guide. Before I dive into it, I know it’s very exciting and sometimes scary when you are considering buying your first home. There is so much to consider right? Where you want to live, what you can afford, how many bedrooms you need and so much more besides! This first time buyer guide is here to help you ever step of the way and give you lots to think about and hopefully some positive actions to take!
So what are the steps a first time buyer should follow?
It can be a little overwhelming so what should you do first?
Before you start looking at properties to buy, find out how much deposit you will need and how much you can borrow. This sounds obvious right? But you will be surprised how many people either waste a huge amount of time looking without even knowing what they can do, or worse, some people make offers without knowing they can get a mortgage!
We see this all the time and if the truth be told this tends to happen with older applicants who think they know it all! They are usually selling their home and buying something else. For some reason they assume just because they have a mortgage means they will be able to do it again, and this isn’t always the case!
- Get an idea how much of a deposit you will need and start saving.
- Make sure you have all your documents to hand; payslips, P60’s, bank statements (if you are self employed your advisor will tell you what you need). You will need all these for an application and to get an accurate idea of your borrowing capacity.
- Once you have your deposit ready get an accurate idea of how much you can borrow. To do this, always speak to an independent mortgage broker and provide them with your evidence of income.
- Make sure your mortgage broker is independent. Some mortgage brokers work with a limited panel of lenders, so you won’t be getting a true reflection of all your options. Having said that, this is still better than just speaking to one or two banks on your own, just not as good as someone who is independent.
The benefit of speaking to a mortgage broker before house hunting:
Okay, okay, this is the bit where you think “he would say this”!
But honestly this is true and one tip I would give anybody, is always use an independent mortgage broker, even if they are not us. A good one will help not only get you the cheapest and best mortgage, but help you and hold your hand throughout the buying process.
You just won’t ever get that help or support if you went direct to a bank. They will just submit an application and let you get on with it yourself. What does that mean? It means we are able to answer your general buying questions, we can deal with pushy estate agents, help chase up your solicitors or just be there for you if you’ve got a question about something unrelated to the mortgage but related to you buying.
Don’t forget we help people buy property all the time. We know so much more than just “whats the best mortgage” and lets be honest, that’s really boring! The exciting bit is the property right?
So here are some other little pointers:
- The mortgage broker will be able to look at all the lenders to find a solution that best helps you.
- You will have a clear indication of how much you can borrow.
- The mortgage broker will be able to give you a clear idea how much the mortgage will cost.
- You’ll have a clear idea of the different mortgage types which might be right for you.
- You could get an agreement in principle (AIP), however strictly speaking this isn’t always required and it’s important to not have too many of these done. An AIP is only a credit score not a mortgage offer. In fact you can get an AIP without providing any evidence of income, so its value is limited (other than identifying if you have any credit issues). Having your mortgage adviser thoroughly assess your documents and circumstances is more important and if they feel an AIP is worth doing, they will tell you.
Now you know how much you can borrow follow these steps to buy your first home:
Great as a first time buyer you are now ready to go property hunting, fully armed, prepared and with all the information and knowledge you need…now go find that firsts home:
- Start looking at properties in your price range.
- Don’t be afraid to also look at properties 10-20% above your price point as you might find a motivated seller who is willing to take an offer.
- Let them know you are a good buyer. Tell the estate agents that you have a mortgage broker who has your mortgage ready to go.
- Think carefully about the property you want to buy; how many bedrooms, the space, parking, location etc. Also think about the practicalities of living in the property don’t just fall for the shiny kitchen!
You’ve found your first home, now what?
Now it gets exciting right? Hold on tight and make sure you follow these next steps:
- The first thing to do is to check in with your mortgage broker. Time might have passed since you first spoke to them, so the mortgage options might have also changed.
- Think about who you might want to use as a solicitor. Your mortgage broker works in this house buying industry, so they will know who the good one’s are. Just as its important to find a great mortgage broker, it's really, really important to get a helpful and proactive solicitor. Click To TweetDon’t just rely on a recommendation from someone who is not actively working with solicitors (your mum, dad, a friend), but listen to a recommendation of someone who works closely with solicitors all the time. It really can make a huge difference in how your purchase and your blood pressure goes!
- Once your broker has confirmed the mortgage is still okay, make your offer!
How to make an offer on your first house:
As a first time buyer there are quite a few points to consider, but make sure you think carefully about each one. They are really important!
- Do your research. Is the property well priced? How does it compare to similar properties on the market and other properties that have sold?
- Decide exactly what the maximum amount you are prepared to pay is. Click To Tweet You have to be prepared to walk away. Its important and really helpful to be clear and of course it doesn’t mean you have to start at your maximum amount.
- Make sure you have decided which solicitor you are planning to use. The estate agent will want to know.
- Make sure the estate agent knows who your mortgage broker is and that they’ve confirmed you can get a mortgage.
- Decide what your opening offer should be. Like I said don’t be afraid to offer 10-20% below the asking price, but be sensible. If you’ve done research on the property, you will know if its well priced or not. You will know if its likely to be a popular property or not. Has it been on the market a long time? How motivated are the sellers? You need to be digging as much as you can before you make your offer.
- Make your offer and listen carefully for the reaction. This will help you gauge how it went down and will help you decide your next move, but don’t forget the maximum you are prepared to pay.
How to negotiate on a house purchase:
Now you will probably find yourself in the negotiation game. So keep cool and calm, these pointers should help you out:
- Remember you are a “hot buyer”! This is a term often used by estate agents for someone who is serious and ready to go. You’ve got nothing to sell, you’ve got the finances ready and solicitor on standby! You can’t get better than that.
- Be aware the estate agent is acting for the seller not you. Click To Tweet They will try and squeeze every penny out of you for their client. However, a side you won’t see is the estate agent trying to persuade their client to take the offer if they think its good. Remember the estate agent will know how motivated their client is, so try and get as much of an insight from them as possible.
- Not all sellers will be realistic or motivated to sell. Remember you have to be prepaid to walk away.
- Be sensible when negotiating! If the property is your dream home and your squabbling over a few pounds, ask yourself does it really matter? Are you prepared to lose a property out of being stubborn? Just be sensible and use common sense.
Move quickly and get your first time buyer mortgage started!
Hopefully your offer has now be accepted and you will be happy and excited. I hate to bring you back down to earth with a bump, but the serious stuff is only just beginning!
You need to get your first time buyer mortgage application underway. Remember at this point you’ve only done due diligence to establish if you can get a mortgage and what its likely to look like. Its important to get the mortgage underway quickly now:
- As soon as your offer has been accepted, get in touch with your mortgage broker. They will guide you through the next steps for the mortgage application.
- Instruct your solicitor, but don’t spend too much on them until you know the mortgage is moving forward nicely.
- The mortgage broker will either pick up where you left off or find a new deal if things have changed and present the best mortgage deal for you.
- The mortgage broker may need more up to date documents, so its really important to constantly keep all of your paperwork to hand.
- Your application be submitted to the lender. The application is usually in two parts; the initial credit score and then the specifics of the case.
- Once the application has been submitted, the lender will request the documents they need to assess your application. Because the mortgage broker will have all these to do the research, they will be able to send these all to the lender immediately.
- Your application will then be assessed by the lender with your supporting documents.
- Survey is instructed; usually this is instructed once the lender has assessed your application and is happy with it. However some lenders do instruct the survey before your application has been assessed, but this can be dangerous if you’ve had to pay for the valuation and then later your application is declined! Its likey you will lose your money for the survey.
- One thing to be aware of, is that sometimes a lot has to happen before a survey is done. But the estate agent, will be 'obsessed' with finding out when the survey is going to take place! Click To Tweet To be honest they are usually a little uneducated in the mortgage process and to be fair why would they know! The point is simply; a lot has to happen before the survey takes place, but the estate agent isn’t necessarily seeing all of this activity, which is why it’s a good idea to keep them in the loop.
- Once the application and survey has been done the lender will conduct a final assessment and if they are happy, they will issue a mortgage offer.
- The mortgage offer is the point that you know that you can get the finances.
- Technically that’s our job done! We’ve got you the mortgage…your on your own now! Only kidding…
- Your mortgage broker will be able to liaise with the estate agent and solicitors to help keep you informed and help move things along as much as they can. The reality is, its now in the hands of the solicitors and estate agents to push things along, but as proactive mortgage advisers, we always want to help our clients until they get the keys to the house.
The legal bit!
The solicitors will be arranging contracts between you and the seller and carrying out searches. When your mortgage offer is issued you, your solicitor and your mortgage broker will get a copy. Its really important to check the mortgage offer at this stage. The solicitor will now be in a position to request the funds from the lender, but before they do, they will need your deposit funds.
Once your solicitor has everything they will liaise with all the other solicitors in the property chain to agree an exchange and completion date. Remember, although you might be buying off one person, your seller might be buying off someone else and so on and so forth. This is called a “chain” and all the people in the property chain will (most likely) be selling and buying at the same time and all have their own solicitors.
What does exchange mean?
The exchange is the legal contract where you are agreeing to buy and the seller is agreeing to sell. Click To Tweet This is the point where you are contractually obliged to purchase the property. Up until this point you could have pulled out without any repercussions, other than any personal costs you might have incurred. However now, you are committed to buying. The reality is you can still decide not to proceed with the purchase, however you will likely be sued.
What does completion mean?
The completion is the date your mortgage will start and the point at which you own the property. This is also the date you get the keys and can move in…really exciting!
Just be aware that when you are moving in, the sellers will also be moving out. Usually a time is agreed for the seller to be out by and for you to be able to pick up the keys from the estate agent.
Now you are a homeowner and you will never again be a first time buyer…don’t be sad, this is just the beginning of your property journey.
How your mortgage broker continues to help?
A good mortgage broker will keep an eye on your mortgage and monitor when your special deal comes to an end. Click To Tweet Remember you might have a 2 year fixed rate or a 5 year fixed rate or something else, so its important to plan before the deal ends, otherwise your mortgage costs could go up quite a lot!
Its really helpful using a mortgage broker because you don’t have to worry about remembering dates or worry about when the deal ends. Your mortgage broker will keep on top of this for you and help you out. Before you know it, you’ll be having to think about a remortgage…but don’t worry about that yet. Just focus on buying that first home 🙂