Want your own house or flat? TheSite.org brings you the 12 basic steps for first-time buyers.
- Work out how much you can spend on buying a home. (Since the credit crunch, You'll need at least 10% deposit of the value of the property - though the more you can put down, the cheaper interest rate you will qualify for.) What sort of monthly repayments can you afford?
- See an independent mortgage broker or financial adviser and ask what kind of mortgage is best† or you.†
- Obtain a mortgage in principal from a lender. This is an indicator - though not a guarantee - that you will be lent the stated funds and is useful when dealing with estate agents and sellers.
- Once you've found your ideal property, make an offer to buy it. This is usually done through the estate agent handling the sale.
- If your offer is accepted, appoint a solicitor or licensed conveyancer to handle legal matters. You're not usually charged at this stage, but it's a good idea to fix a price upfront.
- With your offer agreed, the property is said to be 'sold subject to contract'. You may be asked to pay a small deposit as a gesture of good faith, but at this stage the agreement is not legally binding. (In Scotland, if your offer is accepted the contract is binding and both you and the seller are committed to completing the deal.)
- Inform the mortgage lender and ask them to complete the mortgage application form. All you should need to do is add your signature.
- Your mortgage lender will conduct a 'valuation for mortgage purposes'. You may also want to have a more detailed survey carried out for your own peace of mind if the property is old or run down. Find out more about this on the Royal Institute of Chartered Surveyors' (RICS) website.†
- Once your legal representative has completed all the necessary checks you'll be asked to sign a contract legally committing you to the purchase. The seller will also sign a contract and both contracts will be 'exchanged'.
- At this stage you'll also pay a deposit and probably a mortgage arrangement fee of around £1000 - although this can usually be added to the loan.
- You'll be advised of a completion date, which is the date you move in. The time between exchange and completion is typically between two and four weeks, though it can even be agreed on the same day.
- Your legal representative will get the money from the mortgage lender in time to pay the seller. At this point you'll pay your legal representative's fees, as well as Stamp Duty and Land Registry Fee.
This is a government tax that the buyer pays on the purchase price of the building. Luckily, in the March 2010 budget it was scrapped for homes below £250,000†for first-time buyers. If you're going for something that's worth £250,000 to £500,000 (we wish) you'll get stung for 3%, and anything over this is charged at 4%.
Bear in mind that the percentages are of the whole value of the home, rather than of proportion that is over the previous threshold (as is the case with income tax), so the higher thresholds can work out cripplingly expensive.
Land Registry Fee
The Land Registry Fee covers the cost of recording the change of property ownership at the Land Registry. These costs vary according to the price of the property.
At last the day arrives when you become the owner of your first home. Your legal representative will complete the purchase; you simply collect the keys and move in.
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