So you've got a mortgage?
When it comes to buying your first home, finding the money is just as important as finding the right place.
This guide only explains what happens after you know you can get a mortgage, and how much you can afford.
If you haven't looked into a mortgage, or don't think you can afford one, stop now and read our complete guide to buying your first home.
It's got tips on everything from saving enough money to Government help, buying with friends and working out what you can afford.
This guide is also for buyers looking at existing properties in England, Wales, and Northern Ireland. If you're buying a new build home - such as because you are using the Help to Buy scheme - click here, as the process is slightly different.
Buying an existing property? Know you can afford a mortgage? Search for the best deal if you've not already done so, then read on.
Pros and cons of agreement in principle
First things first: you don't need a mortgage arranged before you start looking for a property.
Whilst we'd recommend talking to a mortgage broker or bank to work out what you can afford, you don't need a mortgage arranged (known as an agreement, decision or mortgage in principle).
The advantage of having one is that it proves to the estate agent you can actually afford the offer you make on a property.
The disadvantages are that it can make a mark on your credit file, making it more difficult to get a mortgage or credit card elsewhere, and the lender might not be as competitive in a few months when you find a property.
Some estate agents will be happy with you providing contact details to your broker or bank - without getting a mortgage arranged - to check you can afford the property, which will save you hassle and paperwork.
Shop for a property
Now for the fun part, shopping for your first home.
The best place to start is with sites like Rightmove and Zoopla, but be sure to register with your local agents too as they can show you properties before they go online, and suggest specific properties for your needs.
Look for properties within your budget and slightly above as you may be able to bargain with the seller to bring the price down.
Once you've got a shortlist make appointments to visit the properties.
If you’re looking at a leasehold property make sure you ask how long the lease is, the cost of renewing it and what the service charge and ground rent is. Read Leasehold vs Freehold property: what you need to know for more.
New build homes involve a slightly different buying process; click here for more information.
Take photos and if possible visit at different times of day and make sure the local area is what you’re looking for. Check out parks, pubs and neighbours. Does anything look rundown? Ask the locals what the area is like and things that you should be aware of.
Put in an offer
Once you've decided on the property, it's time to make an offer.
Don't be afraid to offer less than the asking price - the majority of homes sold in the UK go at a discount.
As a first-time buyer, you won’t be part of a chain, making you a more attractive option to a seller. A mortgage agreement in principle (discussed above) can also help here.
Once your offer has been accepted, ask for the house to be taken off the market to reduce the chance of gazumping. This is where another buyer 'steals' your sale at the last minute with a higher bid.
Find a conveyancing solicitor
You will need to get a conveyancing solicitor to handle all the legal workaround purchasing the property.
Often estate agents and lenders will be keen to recommend you one but make sure you compare costs with other firms before committing.
You should try and get a fixed fee to avoid any nasty surprises.
Costs are around £500 to £1,200 plus VAT depending on whether the property is freehold or leasehold (conveyancing fees for leasehold properties are higher as there is more work to do).
The firm you instruct will liaise with the vendor’s solicitor, go about drawing up a contract, send you other documents you need to consider (like the lease agreement if you are buying a leasehold property), flag up problems and will also take care of doing the legal and environmental searches.
Organise a property survey
Most lenders will ask to do basic valuation survey on the property before agreeing your mortgage. This just checks the property is worth the price you have offered.
The cost will depend on the lender as well as the value and size of a property. Costs can range from £150 to £1,500, but some lenders offer the valuation for free.
To avoid hidden costly problems, consider asking for a more detailed survey. There are three main options: RICS Condition Report (£250), Homebuyer Report (£400+) and a full structural survey (£600+). As you might have guessed, the more expensive the check, the more thorough it is.
Before you choose one decide what kind of state the house you want to buy is in, how much work it’s had done and how old it is. Read more at What type of home survey do you need?
Many homebuyers don’t notice what needs to be repaired and often have to fork out thousands more than they thought they would once they’ve moved in. Damp, rot and structural defects are all common problems with sky-high bills that your budget may not be able to stretch to.
Finalise your offer and mortgage
Once you have had your mortgage valuation survey and a more detailed survey done you might want to go back and renegotiate your offer.
This may be because your lender has valued the property at something lower which means it’s not prepared to lend the amount you need or your more detailed survey might uncover problems that are expensive to fix.
This can be a stressful stage as delays and problems can mean a seller withdraws the property from the market, the seller accepts a higher offer from another buyer or your mortgage application gets rejected.
On the other hand, you may be able to negotiate the price down or get the vendor to fix any problems before the sale goes through.
It’s important to communicate with your solicitor and estate agent when these problems occur and try to rescue the situation.
If you’re happy, contact your lender or mortgage broker to apply for your mortgage.
What you need to apply for your mortgage
Generally, you will need to have proof of ID, proof of address, three to six months’ bank statements and proof of your income in the form of recent payslips and a P60.
Mortgage lenders will be making sure you can afford the mortgage now and in the future and will take into account your credit card debts, childcare costs, season ticket costs and other outgoings in its calculation.
Should you be successful you will get a formal mortgage offer, which you have time to consider before accepting.
Once everything has been finalised you should go through your contract, check all the details are correct and sign. Your solicitor will then exchange contracts on your behalf.
You can pull out of the arrangement at any point before this if you change your mind, but after the exchange of contracts, you and the seller are committed to the sale.
You may have to pay an exchange deposit at this time. This is usually around 10% of the deposit you have saved up.
The process of putting in an offer to exchanging contracts could take anywhere from two to six weeks.
The time from the exchange of contracts to completion could be almost immediate, or it could take up to six weeks so that the rest of the property chain can be settled at around the same time.
Sort insurance and utilities
You will need to make sure you have a buildings insurance policy in place for when you exchange contracts. Avoid taking out workaround with your mortgage provider as you’ll most likely be able to get a much better deal elsewhere.
You should also think about the other utilities you will want to set up once you get in such as energy and broadband and start comparing deals.
You can save money by:
- Using cashback websites such as Quidco or TopCashback to get money back for your utilities
- Switching to a cheaper gas and electricity provider
- Comparing broadband prices
Transfer your money
Your solicitor should prepare a financial statement detailing how much you need to transfer to them in order to complete the sale.
This will typically include the remaining deposit money, Stamp Duty fee, solicitor’s fees plus VAT, Land Registry fee (England and Wales), service charge and ground rent (if the property is leasehold) and a bank transfer fee (to move the money from your mortgage provider to the seller’s account).
Congratulations! Completion marks the stage where you can pick up your keys and move into your new home.
Don't forget to save money on removal services and furnishing your new home - it might feel like spare change compared to what you've paid already, but with a mortgage to handle, every little helps.