How to buy a house as a first time buyer

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I remember vividly I asked before we bought our first house, I was looking for information on how to buy a house as a first time buyer.

Let me begin by asking you a question, have you ever bought a house before? What was your experience like as a first time buyer? Did you wish you had a bit more knowledge before buying your house? Or did you get it right on your first buy?

Keep reading as I have some valuable information for you.

Well, chances are that you are also reading this because you seek knowledge about purchasing your first house. It is actually a fairly difficult process and it pays to know what to expect beforehand.

Nothing will break your heart more than knowing you could have saved a few thousand pounds if you knew certain things earlier.

This is why I have prepared this guide to give you a step by step instruction on how to buy your first house without any hassle.

But first, I want you to consider these questions.

Is It Time To Buy A House

It is very important to ponder on this question so as to prevent having regrets down the line. Before you take the leap to invest in a house, you must ask yourself if you are ready for it. You do not need to buy a home because everyone is doing it or because you saw a great mortgage deal.

My advice to you is that you should buy a house because you are ready to settle down in a location for at least five years. And of course, you must be financially ready.

Before we bought our first home, we asked ourself this question. We were convinced that we were ready before we started the process of buying a house.

How Will You Pay For The House?

Buying a home is different from purchasing a car, jewellery and the likes. In fact, unless you are the type that invests a lot of money, buying a house will be the most expensive thing you’ll ever buy.

Three things are needed to help in buying a home for the first time. They are good credit, a solid job and cash for a down payment. These three things are also important in getting a mortgage.

Majority of people who will buy a house will need a mortgage. But, not every house buyer require a mortgage. If you are one of those people who can afford to buy your first house cash, you don’t need to work about this question.

How Much Deposit Do You Need?

It is advisable to have some money saved before going property shopping.

The general rule of thumb is that you should save between 5% and 20% of the cost of your dream home.

For example, if your house is to cost you £200,000, you could save at least £10,000 (10%).

It is, however, important to know that saving more than 5% opens up cheaper mortgages for you.

Budget For Other Costs

Your house cost is more than just paying monthly mortgages. There are still some other costs that you must account for before proceeding.

Some of them include:

  • Solicitor’s fee
  • Survey costs
  • Building insurance
  • Mortgage arrangement and valuation fees
  • Stamp duty
  • Furnishing and decoration costs

Money Advice Service has a very comprehensive guide on Stamp Duties.

Can You Afford It?

Before making up your mind on buying a new house, you must consider some factors to see if you can truly afford it. You do not want to fall short of paying your monthly mortgages in the future.

Review Your Financial Health

Firstly, I wouldn’t advise you to buy a home if you don’t have an emergency savings account. You must have an emergency fund saved in case of those unexpected expenses that are outside of buying a house.

This is because buying a house is quite expensive and will strain your finances.

The next thing you’ll want to do is calculate exactly how much you’re spending every month – and on what?

This will give you the opportunity to cut cost on some unnecessary expenses as well as figure out how much to allocate to your mortgage payment.

We have an article on how to save more money here.

The above review is especially important because checks are now stricter when applying for a mortgage.

It is now very common for Lenders to ‘stress test’ your finances. They do this to check if you can keep up with your payment if unforeseen circumstances happen, interest rates increases, you started a family, etc.

Now that you have ascertained that getting a house is the correct move for you and you have the financial capacity to do so. It is now time to start preparing for the purchase of your new house as a first-time buyer.

Check Programs For First Time Home Buyers Opportunities

There are always government-backed schemes for first time buyers. These schemes were put in place to help get first time home buyers up the property ladder. Some examples of such schemes are Shared Ownership, Help to Buy ISA, Right to Buy/Right to Acquire, and Starter Home Schemes.

You can find out more about these scheme here and here.

You can also read up on Affordable housing schemes, Help to Buy scheme: everything you need to know, and Shared ownership schemes.

Find A Mortgage

Finding a mortgage isn’t so hard if you have your finances in place. But I will admit that it can be tricky to choose the right one from a plethora of options that you’ll get. This is why it is sometimes advisable to get a mortgage broker. You can, however, carry out your own research if you are comfortable doing that instead.

For our first house and when we moved house, we used a mortgage broker. I have friends who did DIY, they researched the market and got the mortgage on their own.

Its really up to you to decide which option are you comfortable with.

To help simplify your research, read this guide for First Time Buyer Mortgages and What type of mortgage should I get?

After agreeing on your mortgage, you can then hire a solicitor or a conveyancer to handle the legal works going forward.

Freehold or Leasehold

Another factor to consider is whether to get freehold or leasehold.

With freehold, you’ll own the property and land it occupies and mostly applies to houses. While with leasehold, you’ll only be buying into a share of the freehold. An example is buying a flat.

You can go through this article for the financial implications of both freehold and leasehold.

Find A Estate Agent

Once you have sorted your finances, mortgage, and the likes, it’s now time to find an estate agent. Ideally, you should choose one who has a diverse team and experience. This can potentially save you cost on wasting money on the wrong home inspectors, insurance agents and others.

But finding a good estate agent also requires a little bit of research. You should know first hand the services they are offering and what their charges are.

Sometimes you can just go the easy route and seek advice from friends and family that have employed the use of an estate agent before. This will save you a lot of time researching.

You can find out more on how to find the best estate agent here.

Decide On Neighbourhood

We all dream about living in our ideal neighbourhood at one point or the other in our life. But reality dawns on us when mortgage and other factors come in

There are two main factors that I’ll like you to ponder on and resolve before deciding on a neighbourhood.

The first is the realization that homes and land are generally less expensive the farther you are away from metropolitan areas.

The second one is the cost of transportation to your place of work and others. Longer commute can drain you quickly and can become unhealthy.

Other factors to consider are local safety and crime statistics as well as nearness to social amenities.

It is also important to decide if you want a new house or an old house. We have an article that talks about this in more details here.

Decide On Survey

Your mortgage lender will want a quick valuation of the property by a surveyor to ensure they are making the right investment.

However, this survey is usually superficial and isn’t a full survey. You can always ask for a full survey separately.

You can read this to get the right survey you need.

Exchange Contracts

You must make pay the deposit agreed with you bank and your bank will pay the balance before you exchange contract. You don’t need to worry about this stage because your solicitor will put you through and deal with the situation

This is the reason why you must get a solicitor that know what they are doing.

Exchanging of properties mean that the seller is committed to selling to you and you are committed to buying.

You must make sure you carry out a survey and make sure there is no problem with the house you are buying before exchanging contract.

Another thing you’ll want to do is get buildings insurance immediately as the property is now legally yours.

Complete Sale

A sales completion is only complete after you pay for the property and take ownership of it. The deeds of the property are then transferred to you through your conveyancer.

The Conclusion

Buying your first home is an exciting experience and it’s a time to be proud of yourself. But you can avoid some rookie mistakes by carrying out proper research before embarking on the journey.


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