Buying your first home can present a minefield of confusion. To assist first time buyers, this comprehensive guide will help you through the purchase process, from arranging your finances through to exchange of contracts and then moving in.

STEP 1 - SORTING YOUR FINANCES

The 1st step to buying your first home is to establish how much money you will need to have saved & what you can comfortably afford to borrow. Make an appointment with a mortgage advisor.

The mortgage adviser will recommend which mortgages will best suit your needs & circumstances. To do this, he or she will spend some time discussing your current and future requirements and will then provide a full mortgage illustration providing information about the mortgage recommended, the monthly repayment costs and any other associated charges and terms.

We can advise a Independent Financial Adviser upon request.

STEP 2 - GETTING TOGETHER A DEPOSIT

A deposit is the amount of money that you will be required to put towards the purchase of a property, with the balance made up from mortgage finance. The size of deposit may affect the interest rate you pay for some mortgage packages - the more you put down as a deposit, the lower the rate of interest.

A typical deposit would be 5 - 10 per cent of the price of the property. So, for instance, if you were required to provide a 10 per cent deposit and the purchase price was £150,000 you would need to put down a £15,000 deposit. If you cannot raise a deposit, some mortgage lenders do offer 100 per cent mortgages where no deposit is required but this will be dependent on your circumstances and may result in a higher interest rate because of the risk that the lender is taking.

STEP 3 - START HOUSE HUNTING

Now that you know how much you can afford to spend on buying your home, you can start house hunting. Contact estate agents and check local press and websites for details of properties for sale within your price range. Visit as many properties as you can and don’t be afraid to go back for a second look.

Draw up a checklist before you visit and take a camera with you. Take notes during the visit - it is very difficult to remember all the good points once you have left. This way you can draw comparisons between the properties that you see. it is also a good idea to take someone with you when visiting, as they may notice things about the property that you miss. When you have found the property you want, the next step is to put forward your offer.

STEP 4 - CHOOSE A SOLICITOR OR LICENSED CONVEYANCER

The purchase of a property can be a complicated process and there are legal formalities that need to be completed. You should appoint a solicitor or licensed conveyancer to act as your legal representative. Call a number of companies and get quotes before you commit yourself. Jorgensen Turner will be pleased to offer names and addresses of local firms. Once you have chosen your legal representative, give him or her full details of your intended purchase. The solicitor will make any pre-sale enquires between you and the vendor and take you through the exchange and completion of the sale.

We can advise a solicitor upon request.

Before the point of exchange, your solicitor will carry out one or more ‘local searches’.

STEP 5 - ARRANGE YOUR MORTGAGE

Now that you have chosen your property, you should make another appointment with your mortgage adviser and arrange for your loan application to get underway.
at the end of the meeting, the mortgage adviser will be able to confirm if your mortgage has been agreed ‘in principle’, the mortgage lender will then complete further checks on your income and credit status before a formal approval can be given.
Before the lender will agree your mortgage, they will obtain a property valuation which will help to decide how much to lend on the property. you will be given a copy of the valuer’s report.

STEP 6 - MORTGAGE OFFER

When the lender has completed all of their checks and everything is satisfactory, they will send you a ‘mortgage offer’ which is a formal document confirming that your mortgage loan has been agreed. The mortgage offer includes a full illustration of mortgage costs and terms. a copy will be sent directly to your legal representative who will then be able to finalise the purchase on your behalf.

STEP 7 - EXCHANGE OF CONTRACTS

When your legal representative has completed various enquires about the property, such as checking the seller’s title and examining the contract, and is happy with the mortgage offer, you will be ready to ‘exchange contracts’. Your legal adviser will ask you to sign the contract and pay the deposit. The deposit required is usually 10% of the purchase price, but if you are borrowing more than 90% of the purchase price, a smaller deposit is often acceptable. Your signed contract will then be sent to the seller’s solicitor, who in exchange will send back an identical contract signed by the seller - this is the ‘exchange of contracts’ that legally binds you to purchase the property. if you pull out at this stage you would lose your deposit.

Once contracts are exchanged, a date for completion can be agreed.

STEP 8 - INSURANCE

You will be required to have buildings insurance for the property, the policy needs to be in place from exchange of contracts.

STEP 9 - PREPARING TO MOVE IN

With the completion date agreed, you can now obtain quotes from removal companies and instruct your chosen firm. Agree with the seller to inform gas, water, electricity and telephone suppliers of change of ownership. Arrangements should be made for meters to be read and services connected.

STEP 10 - COMPLETION

Once all of the steps above have been completed, you can collect the keys and move into your new home. At the point of completion, your name will be registered with the land registry and you will have to pay stamp duty land tax. The solicitor will arrange this for you. At this stage, you will also pay any telegraphic transfer fees for transferring money from one account to another.

STAMP DUTY LAND TAX WHEN YOU BUY PROPERTY

You pay stamp duty land tax on houses, apartments, other buildings and land. If the purchase price is £125,000 or less you don’t pay any stamp duty land tax at all. If it’s more than £125,000, you pay between one and four per cent of the whole purchase price, on a sliding scale.

The following table highlights the purchase price against the rate of stamp duty land tax for residential property.

Less than - £125,000 0%
£125,001 - £250,000 1%
£250,001 - £500,000 3%
£500,001 - more than 4%

If you’re buying a property in certain areas designated by the government (usually in areas of regeneration) you don’t pay any stamp duty land tax if the purchase price is £150,000 or less.