The ultimate first-time buyer guide:

Buying a home can be a daunting and overwhelming process, especially if you have not done it before. To help you prepare for the buying process and give you the best possible chance of success, we have put together a complete guide detailing each stage of the process.

What is a Mortgage?

A mortgage is a type of loan used to purchase a property, where the property itself is used as security for the loan.

The borrower (mortgagor) makes monthly payments to the lender (mortgagee), typically over a period of 25 to 35 years, to repay the loan plus interest. If the borrower fails to keep up with the repayments, the lender may repossess the property to recover the debt.

How much deposit do I need?

The amount of deposit required for a mortgage can vary depending on several factors. Technically, you can obtain a mortgage with no deposit, but this is very rare and typically reserved for special circumstances.

The most common deposit required by lenders is around 5% to 20% of the property’s value, although some lenders may require a higher deposit.

The amount you need will depend on your specific circumstances, such as your credit score, income, and savings, as well as the lender’s criteria and your ability to repay the remainder of the mortgage.

Help for FTB

There are several options available to help first-time buyers in the UK:

  • Shared Ownership: This scheme allows you to purchase a share of a property (usually between 25% and 75%) and pay rent on the remaining share. You can increase your ownership over time through a process called “staircasing”.  Shared Ownership Mortgages
  • First Homes Scheme: This scheme offers newly built homes at a discount of at least 30% to market value to local first-time buyers.First Homes Scheme Mortgages
  • Lifetime ISA (LISA): This is a savings account that offers a government bonus of up to £1,000 per year towards your first home purchase, provided you meet the eligibility criteria.

What is Loan to value

Loan to value (LTV) is a financial ratio that compares the size of a loan to the value of an asset. In the context of a £200,000 purchase price, if the LTV is 50%, it means that the loan amount is half of the property value, which is £100,000.

The remaining £100,000 would need to be paid as a deposit by the borrower. Lenders typically use LTV as a measure of risk when considering loan applications, as a higher LTV means the borrower has less equity in the property and is therefore more likely to default.

What is Loan to Value

Budget & costs (surveys)

Here are some costs that first-time buyers may need to consider:

  • Deposit: The amount of money you need to put down as a deposit can vary, but it’s usually a percentage of the property’s purchase price. The minimum deposit is usually 5%, but some lenders require 10% or more.
  • Mortgage fees: Lenders may charge fees for arranging your mortgage, such as application fees, valuation fees, and legal fees. These can add up to thousands of pounds.
  • Stamp duty: This is a tax you need to pay when you buy a property over a certain value. The threshold varies depending on where in the UK you’re buying and whether you’re a first-time buyer. In England and Northern Ireland, the threshold for first-time buyers is currently £300,000. Stamp Duty calculator
  • Survey fees: Before you buy a property, it’s a good idea to have a survey done to identify any issues with the property that could affect its value. Survey fees can range from a few hundred to a few thousand pounds.What types of Survey are there?
  • Conveyancing fees: You’ll need a solicitor or conveyancer to handle the legal aspects of buying a property. Conveyancing fees can vary depending on the complexity of the transaction and the value of the property.
  • Moving costs: You’ll need to pay for the actual process of moving your belongings, whether you hire a removals company or do it yourself.

Calculate the cost of buying a home

It’s worth noting that these costs can add up quickly, so it’s important to factor them into your budget when considering buying a property.

Finding a suitable mortgage

Before you start looking for a property, it’s important to check whether you can get a mortgage and determine your affordability.

Here are the steps:

  • Assess your finances: Before you start looking for a mortgage, it’s important to assess your finances to determine what you can afford. You’ll need to consider your income, expenses, and any outstanding debts.
  • Research mortgage products: There are many different mortgage products available, each with their own advantages and disadvantages. You can research online, consult with a mortgage broker, or speak to lenders directly to understand the various options.
  • Choose a mortgage broker: If you decide to work with a mortgage broker, do your research to find a reputable and experienced broker who can help you find the right mortgage product for your needs. You can ask for recommendations from friends and family, check online reviews, or use a comparison site.Why use a mortgage broker Questions to ask a mortgage broker
  • Provide documentation:  Your mortgage broker or lender will require documentation such as proof of income, bank statements, and identification documents to verify your eligibility for a mortgage.
  • Secure an AIP: An AIP is a conditional agreement from a lender that they will lend you a certain amount of money subject to further checks. Your mortgage broker or lender can help you secure an AIP, which will give you an idea of how much you can borrow and can help you in your property search.Agreement in Principle’s

The property search

Once you’ve checked your finances you can begin the property search.

  • Research the local property market: Before you start your property search, it’s a good idea to research the local property market. This will help you to get a better idea of the type of properties available in your price range, as well as the areas you might be interested in.
  • Register on property websites: Sign up for property websites such as Rightmove , Zoopla and others to search for properties that match your criteria. You can set up alerts to receive notifications of new properties that become available in your preferred areas and price range.
  • Register with estate agents: In addition to registering on property websites, you can also register with local estate agents in the areas you’re interested in. This will allow them to inform you of any properties that match your criteria as soon as they become available.
  • Be clear about your requirements: When you register with estate agents, be clear about your budget and the type of property you’re looking for. This will help them to narrow down their search and find suitable properties for you.
  • Attend viewings: Once you’ve found properties that interest you, attend viewings to get a better idea of what the property is like and whether it meets your requirements.
  • Second viewing: Before making an offer, it’s worth having a second viewing of the property, and ideally, at different times of the day to get a better sense of what the property is like in different conditions. This can help you to spot any potential issues or problems that you might have missed during the first viewing.
  • Make an offer: If you find a property you like, you can make an offer to the seller. Your estate agent can help you with this process and negotiate on your behalf.

Speak To an Expert

Whether you’ve just had an offer accepted on a property and you’re ready to go, or you’re simply wondering how much you need to save for a deposit, it’s never too soon to reach out.

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Once your offer on a property has been accepted

Once your offer on a property has been accepted, there are several steps you will need to take to progress the purchase. Here are some of the key steps involved:

  • Instruct a solicitor or conveyancer: You will need to appoint a solicitor or conveyancer to handle the legal aspects of the purchase.  They will check the property’s legal title and carry out searches to ensure there are no issues that could affect your ownership of the property. They will also handle the transfer of funds and arrange for the exchange of contracts and completion of the purchase.
  • Apply for a mortgage: If you haven’t already done so, you will need to apply for a mortgage. Your lender will need to carry out a valuation survey to ensure the property is worth the amount you are paying for it. You will also need to provide detailed information about your income and financial circumstances to support your mortgage application.
  • Arrange a survey: You may also wish to arrange for a survey to be carried out on the property. This can help to identify any structural issues or defects that may not be immediately apparent. There are different types of surveys available, including a basic valuation report, a homebuyer’s report, and a full structural survey.What types of Survey are there?
  • Finalise the contract: Your solicitor or conveyancer will finalize the contract for the purchase of the property. This will include details of the sale price, any conditions of the sale, and the completion date.
  • Exchange contracts: Once all the legal and financial checks have been completed, you will exchange contracts with the seller. At this point, you will need to pay a deposit, usually around 10% of the purchase price.
  • Complete the purchase: On the completion date, the balance of the purchase price will be transferred to the seller, and you will take ownership of the property. Your solicitor or conveyancer will register your ownership of the property with the Land Registry.

Overall, the process of buying a property can be complex, and it’s important to work with experienced professionals, including your solicitor, mortgage lender, and surveyor, to ensure a smooth and successful purchase.

Timescales buying a property

The timescale for buying a property can vary depending on several factors. If the purchase is part of a chain, meaning there are other properties involved, it can add extra complexity and delay the process. The type of property can also affect the timeline, with leasehold purchases often taking longer than freehold purchases due to the additional legal work required. Additionally, the workload of solicitors and other professionals involved can also affect the timescale.

On average, the process of buying a property takes around three months from the point of offer acceptance to completion. However, it can take significantly longer if issues arise, such as problems with the property’s title or unexpected delays in the mortgage application process.

Freehold/leasehold

If you are buying a flat, it is likely to be leasehold rather than freehold. Here are the key differences between these two types of ownership:

  • Ownership: With freehold ownership, you own the property and the land it sits on outright. With leasehold ownership, you only own the right to occupy the property for the length of the lease agreement.
  • Length of ownership: Freehold ownership is permanent, whereas leasehold ownership is for a fixed term. The length of the lease can vary, but typically it is between 99 and 125 years.
  • Maintenance and repairs: As a freehold owner, you are responsible for all maintenance and repairs to your property and land. As a leaseholder, you may be responsible for some repairs and maintenance, but the freeholder or management company will be responsible for the upkeep of the common areas, such as the building exterior and communal gardens.
  • Ground rent and service charges: As a leaseholder, you may be required to pay ground rent to the freeholder or management company, as well as service charges to cover the cost of maintaining and repairing the common areas. Freehold owners do not have to pay these charges.
  • Lease extensions: As a leaseholder, you may have the right to extend your lease, subject to certain conditions. Extending a lease can be a complex and costly process, but it can be necessary to maintain the value of your property.A guide to Mortgages on flat’s

Overall, the main difference between freehold and leasehold ownership is the length of ownership and the responsibilities that come with each type of ownership. It’s important to understand the differences and implications of each before making a decision to buy a property.

Struggling for a deposit or affordability

If you are struggling to buy a property, either you can’t borrow enough or haven’t got a big enough deposit there are several options available to help you get on the property ladder. Here are a few options to consider:

  • Joint borrower sole proprietor: This option allows you to buy a property with someone else, but only one of you will be named on the property title. This can help you borrow more money and increase your chances of being approved for a mortgage.Joint borrower sole proprietor Mortgages
  • Joint mortgage: If you are buying a property with someone else, you can apply for a joint mortgage. This means that you are both responsible for repaying the loan, and both of your incomes will be taken into account when assessing your affordability.Joint mortgages Explained
  • Gifted deposit: If someone is willing to gift you the money for a deposit, this can help you increase your chances of being approved for a mortgage. You will need to provide evidence that the money has been gifted and that the donor does not expect to be repaid.
  • Guarantor mortgage: If you have a family member who is willing to act as a guarantor for your mortgage, this can help you borrow more money and increase your chances of being approved for a mortgage. The guarantor will be responsible for repaying the loan if you are unable to do so.
  • Shared ownership: Shared ownership allows you to buy a share of a property and pay rent on the remaining share. This can be a more affordable way to get on the property ladder, as you only need a mortgage for the share you are buying.
    Shared ownership Mortgages 

These are just a few options available if you are struggling to buy a property. It’s important to speak to a mortgage advisor or financial expert to explore all of the options available to you and find the best solution for your individual circumstances.

How can Strive Mortgage help

Having a mortgage broker on hand can be extremely beneficial in your property journey. We can assist you with all aspects of buying a property and liaise with all the other parties involved in the process.

We can help you navigate through the mortgage application process and provide you with all the necessary information needed to make informed decisions.

We can work with you to find the best mortgage deal and increase your chances of success with your application. We can help you with all the paperwork involved in the process, making it less daunting and overwhelming for you.

For more info on first-time buyer mortgages, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.