Ultimate Guide for First-Time Home Buyers

Purchasing your first home is a significant milestone. Though the journey might appear overwhelming at first, gaining an understanding of the essential steps and considerations can help simplify the process and empower you to make informed decisions.

Assessing Your Financial Position 

Before entering the property market, we recommend starting by assessing your current financial position. Here are three crucial areas to consider:

• Savings: Since both the down payment and legal fees will be substantial initial expenses, understanding your financial ability is essential when setting your budget.
• Spending Patterns: Review your spending habits and financial commitments. Identifying areas where you can reduce expenses can enhance your savings potential. Lenders typically examine spending patterns and may request 2 or 3 months of account statements, so we would advise watching your spending patterns before applying for a mortgage.
• Credit Score: Your credit score significantly influences mortgage eligibility and interest rates. Obtain a copy of your credit report to address any inaccuracies or discrepancies promptly.

First-Time Buyer Schemes

Buying you first home may seem like a distant goal. However, several government schemes are designed to assist you in achieving homeownership for the first time.

• Help to Buy: This initiative allows you to purchase a new-build property with a deposit as low as 5%. You can access an interest-free equity loan of up to 20% of the property's value (up to 40% in London) for the first five years, making homeownership more achievable with a reduced deposit.
• Shared Ownership: With shared ownership, you can buy a share of a property and pay rent on the remainder. Over time, you have the option to increase your ownership stake until you eventually own the property outright.
• Starter Homes Scheme: Available to those under 40, this scheme offers discounted homes sold at least 20% below market value. Eligibility criteria include income limits and a commitment to reside in the property as your primary residence for a specified period.

Mortgage Options Available 

Understanding your options when examining mortgage options is important for first-time buyers. There are various options to consider, each with its unique benefits. Let's take a look at some options:

• Fixed Rate: A fixed-rate mortgage provides stability by securing an interest rate for a set period, typically two, three, or five years. This guarantees steady monthly payments, making budgeting simpler and appealing to those looking for long-term predictability.
• Tracker: Tracker mortgages vary with interest rates, potentially changing monthly payments. They initially provide competitive rates but are better suited for those with shorter-term homeownership plans or higher risk tolerance, as costs may rise if interest rates increase.
• Offset: Offset mortgages link savings to the mortgage, reducing interest by offsetting the balance. While savings don't accrue interest, they offset an equivalent mortgage balance, reducing interest payments. Family offset choices utilise relatives' savings to offset mortgage debt. 

Selecting a mortgage that aligns with your needs and financial goals is essential, especially for first-time buyers. Fixed-rate mortgages are often the most popular for first-time buyers due to their emphasis on stability and managing financial risks.

Conveyancing & Survey After Acceptance an Offer

Once you've found your first property and your offer has been accepted, the subsequent steps include enlisting a conveyancing and organising a survey. A conveyancer manages the legal transfer of ownership of the property, ensuring a prompt and successful process. It's crucial to appoint a conveyancer to oversee this transfer smoothly.

Additionally, we recommend scheduling a property survey to assess its condition. While not required, a surveyor will examine various aspects of the property, identifying potential issues or areas requiring attention. Prioritising conveyancing and surveys help reduce potential risks and ensure a smooth purchase.

Closing On Your First Property 

As you near the end of your home-buying journey, the closing process begins, marking the final steps to complete the purchase and become an official property owner. It's crucial to maintain close contact with your lender, agent, and legal representative to complete all necessary tasks within the agreed timeline. Once all requirements are met and payments are completed, you'll receive the keys to your new home, officially marking the start of a brand-new chapter.

Additional Costs When Buying A Property  

First-time property buyers should be mindful of potential additional expenses beyond the purchase price of the property. Here are some typical costs to consider:

1. Legal Fees
2. Stamp Duty
3. Moving Costs
4. Survey Fees

Being aware of these expenses helps ensure a smooth process and prevents unexpected financial challenges.

Conclusion  

Buying a home requires thorough research, financial preparation, and informed decision-making. By following these steps and seeking guidance, when necessary, you can confidently embark on your journey to homeownership.

If you're looking to purchase a new home and require a quick sale of your current property, We Buy Any House will sell your house in as little as 3 days.