Nine steps to buying your first home
Buying your first home can seem a bit daunting. Nottingham Building Society has offered to help the ‘bust the myth’ detailing the nine steps a first time buyer needs to take.
Step 1 - Work out what you can afford
Before you go house hunting, you need to know how much you’ve got to spend and what it’s going to cost you each month. Work out how much of your income is already allocated.
Don’t forget the deposit. You’ll usually need to put down at least 5% of the value of the house.
Step 2 – Add in other costs
As well as the mortgage and deposit, you’ll also need to factor in other costs when buying a house. These include:
Step 3 – Choose the right mortgage package
- Solicitor’s fees
- Mortgage arrangement fees
- Valuation and survey fees
- Stamp duty
- Moving in costs.
The main types of first time buyer mortgages offer a choice of:
- Fixed rate – the interest rate on your mortgage is fixed for a set period, so for that time you know exactly how much your monthly payments will be.
- Discount mortgage - with a discount on the standard variable rate (SVR) for a set time from the start of your mortgage.
Step 4 – The Agreement in Principle
Once you’ve had a chat with your mortgage adviser and together you’ve worked out how much you can afford, they’ll be able to give you an ‘Agreement in Principle’ certificate (AIP). This shows estate agents and the people whose house you are interested in that you are serious about buying. The AIP is free.
Step 5 – Make an offer
Once you’ve found your dream home, you should make the initial offer through the estate agent who will put it to the vendor on your behalf.
Step 6 – Make a full mortgage application
Once your offer has been accepted, you need to complete your mortgage application. This will involve credit checks on you (and your partner, if it’s a joint application). Your mortgage lender will also need proof of things such as identity, income and current address.
They’ll also need to check that the house you want to buy is worth what you’ve offered for it and doesn’t have any major problems such as subsidence or dry rot. The lender will arrange a survey for you called a Mortgage Valuation Report (MVR). But you could choose to organise an additional survey. There are two options you can go for, a homebuyer’s report or a detailed building survey. Both of these can also be arranged by your lender but they will incur a cost.
Step 7 – Find the right solicitor
You need to be certain that all the legal paperwork is done properly and for this you’ll need a solicitor or licensed conveyancer. Your lender can help you to find the right one.
Step 8 – Exchange contracts
Once you have your mortgage offer in place and your solicitor has confirmed that all the checks have been made, then you can go ahead and ‘exchange’ contracts. This means you sign a contract legally committing you to buying the property, pay the deposit and agree a completion date. It’s worth noting that if you decide to pull out of the purchase at this point, you could lose your deposit.
Step 9 - Complete
Your ‘completion day’ is the day when the money is transferred from your mortgage provider to the seller. Your solicitor will organise this for you – then all you have to do is collect your keys and start the next stage of your life.
Jayne Shepherdson, branch manager at The Nottingham’s city centre branch, adds, “Buying your home can seem a bit daunting but it needn’t be. Here at The Nottingham we pride ourselves on providing face-to-face customer service for the first time buyer and guiding them through each step of the whole process. We also recognise that there’s a real need to provide some fluidity to the property market in the region and that’s one of the reasons we provide a 95% first time buyer mortgage, helping to get people onto the property ladder and get the market moving from the bottom up.”
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