One of the most exciting milestones on the journey towards adulthood is the opportunity to buy your very own property - a place to call home, solidify your independence and perhaps even start a family.
Years ago, the house buying process was much simpler, but today, there are a number of things to consider before taking that initial leap onto the property ladder. We’ve simplified the process into a first-time buyer's ultimate guide and checklist of must-haves before doing so.
When thinking about property affordability, there are a number of things to consider, including:
These four key factors will determine whether or not you’re financially fit to buy a property in the first place.
Mortgage lenders typically cap the amount you can borrow at 4 to 4.5 times your annual salary. In some cases, you’ll be able to borrow 5 times your income, and very rarely 6 times your income, considering your circumstances and other factors like your credit score.
For example, if you earn £50,000 per annum, you’ll likely be borrowing in the region of £200,000 to £225,000.
If you decide to purchase a property with someone else, whether that’s a partner, friend or family member, you can take advantage of a joint ownership mortgage which allows you to combine your income.
A property is one of the most expensive purchases you’ll make in your lifetime, so it’s important to carry out thorough research on exactly what it is you’re looking for in your new home.
For example, depending on your budget and family size (or future family size) you’ll need to consider the minimum number of bedrooms that your new home will need to have, the overall preferred size of the house, the practicality of the house and most importantly, its location.
If you already have children or are thinking of starting a family, you’ll need to consider locations for schools and catchment areas. If you work a fair distance away, you’ll need to consider travel links, and so on. There’s lots to think about when buying a property, so thorough research is paramount.
To get a mortgage agreement in principle, otherwise known as an AIP, you’ll need to contact a mortgage company to discuss your circumstances, and if they deem you financially fit enough to start the house buying process, they’ll provide you with a written estimate of how much money they’d be willing to lend you.
This step will not only give you the confidence to move forward with your search, but will also make you look a lot more attractive to sellers as you’ll already have your paperwork in order.
Building good relationships with your local estate agents can make all the difference in your property search. The trick here is not just to call or email to signal your interest in a property, but to see them whenever you can and fully immerse yourself in the house hunting process.
That way, if your local estate agents come across a property that fits your requirements, they’re more likely to keep you in mind and contact you for more viewing opportunities!
Now for the fun part: viewing properties. We’d recommend viewing properties both online and in person. Viewing online usually allows you to filter through your preferences and read up on property features, therefore saving you lots of time, whilst in-person viewings give you a real feel for the space and atmosphere of the house.
When viewing a property in person, you should ask yourself the following:
Once you’ve found your ideal property, you’ll be ready to make an offer.
Depending on the speed of the market (and how badly you want the property), you can either offer below the asking price, the exact asking price or in some cases, over the asking price.
Offering less than the asking price usually leaves more room for negotiation, but your offer should be no more than 25% below. Offers can be made either over the phone or in writing to your estate agent.
Once your offer is accepted, you can either get a fixed term mortgage to know exactly what you’ll be paying each month, or a tracker mortgage - a type of variable rate mortgage that usually follows the Bank of England's base rate - in other words, the interest rate at which high street banks borrow money.
A fixed-rate mortgage is popular amongst first-time buyers because they usually want to know exactly how much they’ll need to budget every month.
This step is usually done through a solicitor overseeing the legal process from when your offer is accepted, right through to completion. Your solicitor will be responsible for carrying out surveys, searches, sorting your land registry, stamp duty and more.
You may also have this step done by a conveyancer, who may not be a qualified solicitor but will certainly have experience in dealing with properties.
For an in-depth house survey, you’ll typically pay around £1,000 for structural checks and to identify any other factors that might stand in the way of you acquiring the property.
Buildings Insurance and Contents Insurance are typically bought together. These will cover you in the case of an unexpected adversity such as a flood or fire. And since you’ll officially own the building at that point, you’re better safe than sorry!
This is the most critical stage of the process because you’ll need to ensure you have the following in place before you can collect your keys:
If you have all of the above sorted, then you’re officially a homeowner! You’ll be able to collect the keys from your estate agent and enjoy your lovely new home.
Every month, we'll send you The Plug - a curation of the best personal finance content in the UK. We share real-life stories, how-to guides, top personal finance news, popular community questions, and tips to help you stay on top of your money.