Buying your first home is a big step. While the journey may seem daunting at the beginning, understanding the key steps and factors can simplify the process and allow you to make well-informed decisions. To help guide you on your journey, let’s break down the steps and considerations involved.
Assessing Your Financial Situation
Before diving into the property market, we recommend beginning by considering your current financial position. There are three key areas to look at which will help you understand your current financial stance and help you on your property journey.
- Savings: There are two major costs involved in buying a property: down payment and legal costs. These costs can be quite substantial, so it will be important to decide how much you can save and afford to spend when setting your budget.
- Spending Habits: Next, we recommend reviewing your spending habits and any financial commitments made. This can highlight opportunities to cut back and boost savings. Lenders typically review spending activity and will usually request to view two or three months of account statements. Making sure you are making smart financial decisions will ensure this process goes smoothly.
- Credit Score: Your credit score is one of the main contributing factors to securing the finance to purchase a home. If you don’t have a good credit score, it can impact your mortgage eligibility and interest rates. To ensure you are prepared, get a copy of your credit report and rectify any potential issues.
If you have a property that you need to sell quickly to fund your new purchase, We Buy Any House can help by selling your home in as little as three days, providing you with the necessary funds.
Schemes for First-Time Buyers
Buying a house for the first time can come with big expenses, especially in the current UK property market. If you feel that owning a home is out of reach financially, there are schemes available to help you get on the property ladder.
Here are two great options that could help you:
- Shared Ownership: This offers you the chance to purchase a percentage of a property and pay rent on the remaining share. This scheme is great if you don’t have all the funds upfront, and its aim is to allow you to gradually increase how much you own over time.
- Starter Homes Scheme: The starter homes scheme offers first-time buyers the opportunity to buy a property for below its current market value. This scheme requires you to be under 30 and plan on living in the property for a certain amount of time.
Understanding Mortgage Choices
Navigating the various mortgage options available is an important but often daunting step in the journey towards home ownership. First-time buyers have access to a variety of mortgage options, each with its own advantages:
Fixed Rate Mortgages
A fixed-rate mortgage is the most constant and predictable type of mortgage. It has a set interest rate for a specific timeframe, typically two, three, or five years. This means your monthly interest payments remain consistent, making budgeting easier. Fixed-rate mortgages are the best choice for buyers looking for stability and planning to stay in their home for an extended period.
Tracker Mortgages
A tracker mortgage will change with interest rate fluctuations. While this means your monthly payments can vary, tracker mortgages will usually offer competitive rates. You will often find that this mortgage tends to last between two and five years, but lifetime tracker options are also available. As you are at risk of payment increases if interest rates rise, it is more suitable if you have shorter-term home ownership plans or can take the risk.
Offset Mortgages
An offset mortgage connects your savings to your mortgage, reducing the interest you pay by offsetting the balance. Although you won’t earn interest on your savings, you won’t be paying interest on the portion of your mortgage balance offset by those savings. While first-time buyers may prefer to allocate all savings towards their initial deposit, family offset options allow the savings of family members to offset mortgage debt instead.
Choosing a mortgage that supports your needs and budget is crucial, particularly for first-time buyers. As first-time buyers prioritise stability and risk reduction, fixed-rate mortgages are the most common for this group.
Conveyancing & Survey After Offer Acceptance
After finding your first property and accepting your offer, the next steps will involve conveyancing and surveys. A conveyancer will oversee the official transfer of your property’s ownership. Instructing a conveyancer will ensure your transfer is done accurately and promptly, ensuring a smooth process. Our team has helped thousands of customers during the conveyancing process, handling the complexities of the property buying journey and allowing you to focus on your future in your new home.
Secondly, we recommend arranging a survey to assess the property’s condition. Although this step isn’t required, a surveyor will examine different aspects of the property, highlighting any potential issues or areas needing attention. By prioritising conveyancing and surveys, you will minimise possible risks and ensure a stress-free transaction.
Closing On Your First Property
As you come to the end of your home-buying journey, the closing process will be the final stage. This will involve finalising the necessary tasks to complete the purchase and gain full property ownership. Working closely with your lender, property assistant, and legal representative is important to ensure all requirements are fulfilled within the agreed timeframe. Once you have met all the requirements and completed the final payments, you’ll receive the keys to your new home, meaning you are now a property owner!
Conclusion
Purchasing a property, especially for the first time, requires careful research, financial planning, and making well-informed choices. By following the steps outlined in this guide and seeking advice when needed, you can start the journey to purchasing your first house confidently and easily.
