Even those who own a house can find buying a property very complicated and confusing.
Most people only do this a few times in their lifetimes so, for first time buyers, the process can be even more daunting. Blue-print Mortgages have created this guide for you –
Learning how much you can borrow to purchase your New Home –
Before you begin the process of selecting a property, it would be in your best interests to speak to Blue-print Mortgages. We can talk through your personal financial situation, learn about your income, outgoings and circumstances and advise you on what loan size you can borrow on the basis of the information you provide. Unlike many of our competitors, we will not charge a fee for our mortgage advice services, even if the case does not complete.
Unfortunately doing your own research online can be a rough guide but, will not take in to account personal circumstances which may affect your ability to borrow money and the amount of it. You can actually adversely affect your chances of getting a mortgage by trying to obtain online lender decisions. Please remember the more credit searches done on you or your partner the lower your credit score, which needs to be higher for mortgage finance.
Choose a property –
The first thing that should be considered is the area you wish to reside in. There will be factors which matter to you such as a good school nearby, local public transport and local facilities etc.
Next you will need to think about the type of property, with the number of bedrooms, whether you need a garden and if a house, bungalow or flat is a suitable investment for you.
It must be considered that the bigger the property will not only cost more to purchase, but may also cost more to heat and maintain. A new build house for example will cost less in the first few years to maintain compared to a 20 year old house with aged heating equipment as an example. You must also remember a bigger house means a bigger council tax bill!
Finding a Property –
Once an area and property type has been decided upon, contact as many local estate agents as possible and ask them to send information on any properties on their books which fit your requirements and request any new properties coming on to their books are sent to you too.
If you keep regular contact with the estate agents, perhaps once a week, the agency will know you’re a serious buyer and you are more likely to be kept informed of upcoming homes as they are added to their books. This is important in areas where similar property is in high demand.
We would also recommend the website / app, Right Move, which is kept up to date, allows you to property search in a radius that suits you, within the comfort of your home.
Making an offer –
By this time you have probably viewed a considerable amount of property but have decided on one you would like to buy. The next action point is to make an offer, which is usually done directly through the estate agents which you arranged the viewing through. It is normal practice to offer less than the seller is asking, but this depends on how competitive the market is and if others are interested. You must keep in mind that you can offer the asking price but, at any point up to exchange, the seller can accept a higher offer from another buyer. Unfortunately this is allowed.
When you think about making an offer on the property, bear in mind if the property requires repairs how much building or redecoration will cost. If you know the property will create much interest due to its condition or location for example it may be considered wise to make a full asking price offer. This will then avoid you getting in to a potential bidding war with another buyer.
Once your offer has been accepted, the estate agents will confirm this in writing. You will then be expected to finalise your mortgage arrangements and get a mortgage offer, but do remember your purchase offer is not legally binding until contracts have been exchanged, so any monies paid on surveys etc, can be lost if the seller or yourself decide to pull out.
Obtaining a Mortgage Offer –
Once an offer is accepted you should speak to Blue-print Mortgages to choose and apply for your mortgage. We will submit an application to a Mortgage Company based on the information provided by you and they will also expect further documentation to be sent with the application. This can include –
- Evidence of your income and commitments, such as recent payslips, a P60, mortgage statements, rent statement, bank statements, proof of tax credits received
- Information from credit reference agencies, employers, other lenders, landlords or accountants or information from HMRC such as SA302’s for self employed applicants
- Proof of photographic Identification such as a passport or driving licence. Please remember to have names and addresses up to date on such documentation
Blue-print Mortgages will process the documentation you give us so you don’t have to.
Finding a solicitor –
Once an offer has been made as well as obtaining an offer, you will also need to find an experienced solicitor to carry out the legal proceedings (conveyancing) on the property you want to buy. We can suggest companies which we work with and trust.
The legal side of buying a property may take longer than you could have imagined but, this is the most expensive commitment you will probably to date, make in your life so it is worth insuring there are no loose ends which could cause problems in the future.
As a guide if you’re choosing your own solicitors please insure they are registered with either The Law Society or Licensed Conveyancers Association. This will give you piece of mind and avoid any problems later down the line.
If house prices are on the up and there is great demand with little supply, there will be, if offered a temptation to the seller to decline your offer if a higher one comes along later down the line, this is known as gazumping.
This process could leave you out of pocket down the line with legal costs and survey fees, but in this country it is the risk you have to take and cannot be avoided. The sale is only secured by law when contracts have been signed and exchanged.
The rules are different in Scotland.
A survey is required to assess the properties condition and value. The mortgage lender insists on a basic valuation before allowing the loan to go ahead.
It is your decision but, we cannot recommend enough you have a more detailed survey report carried out to protect your interests in the long run. Such reports can find more extensive issues for example rot or subsidence. The older the property the more we recommend a structural survey. Should the survey uncover serious fault, as long as you have not exchanged contracts you are completely within your right to pull out of the sale. If the survey reveals a problem which is easily fixed you can also go back to the agent to possibly negotiate a reduction to compensate for the works required.
With a survey completed and the lender happy with the result, the lender can produce a formal mortgage offer, which will also detail any conditions of the loan. This should be read carefully by yourself, us and your solicitor.
The solicitor will have a made a draft contract ready for you and the seller to sign. This is the point, once the contract is signed, there is no going back, and if you should need to would cost you thousands of pounds to do so. This is why you need to be completely happy with all sale arrangements before you commit.
Typically at exchange (unless exchange and completion are on the same day), you will be required to put down a deposit of 5 or 10% of the purchase price, you also need to insure your building insurance is in place as you are legally obliged to buy it, your solicitor will make sure this happens.
If you’re using a qualified, suitable solicitor you shouldn’t need to concern yourself, but do insure the following –
- Your solicitor has completed all local searches
- The surveyors report is complete and accepted by all concerned
- You have a formal mortgage offer in writing, which can be read and understood
- You have agreed the deposit available
- A completion date is agreed and noted in the contract
- There are no outstanding issues remaining to be settled between you and the seller. This is very important such as details like is the carpets included in the sale price.
When contracts have been signed your solicitor will deliver it to the seller’s solicitor in exchange for the contract the seller has signed. From this point forward, both you and the seller are legally committed to deal and nobody else can come in and make an offer.
Completion and Moving in
After exchange the last thing to do is pay over the monies less any deposit already paid at exchange, on a date which should have already been agreed. The solicitor will get the mortgage funds direct from the lender and any remainder from you, and then pass it all on to the seller’s solicitor. Once payment has been confirmed, you can collect the keys to your new home from the estate agent. This can be at any time of the day, from first thing in the morning until minutes before the close of business.
You should book your removal firm when you know your completion date. It is also a good idea to begin to call all utility companies and get final meter readings on the day you move.
Finally take a moment to appreciate your new home. Much effort and time has gone into purchasing it and you will never forget this day for the rest of your life. Get your friends round to celebrate with you and don’t forget to tell them about Blue-print Mortgages.