A guide to buying your first home 2023

A guide to buying your first home 2023
Buying a house is a huge life event, and it can be daunting if you’ve never done it before. Although nobody is born knowing how to buy a house, we all have to learn as we go along and need support and advice from others who have done it before. 

For those times late at night when you’re stressing about what to do or how to do it, and there’s nobody awake to ask, here are the main steps involved in buying your first house.

1. Work out how much you can borrow

Before you can look for a house, you’ll need to know how much you could pay. This will help narrow your choice of which houses you can consider considerably. 

There are two figures to consider - the amount you can borrow (based on your income) and the monthly amount you’ll have to repay. How much you *can* borrow isn’t always the same as how much you *should* borrow because if interest rates change, your monthly repayments can go up (or down) by hundreds of pounds. So be mindful of how much monthly payments could rise if interest rates increase further, and borrow within your budget.

To find out how much you can borrow:

a) Get a broad idea using a mortgage calculator
Several mortgage calculators are available online to give you a broad idea of how much you could borrow and how much it would cost each month to repay. Bear in mind that these monthly repayment figures are based on likely interest rates at the time. 

b) Instruct a mortgage broker or apply for a mortgage direct
Your first official step will be to apply for a mortgage “in principle” with a bank or building society. They will only be able to offer you mortgages that they sell, though - to get a broader idea of all the mortgages available to you, especially if you are self-employed or are in receipt of any benefits, is to seek a mortgage broker. 

A mortgage broker is independent of banks and building societies and will look at all the products available on the market from different lenders and see which ones suit your circumstances. You don’t usually have to pay for the mortgage broker’s services - they get a commission from whichever mortgage lender you end up taking a mortgage out with.

If the house you plan to buy is a ‘leasehold’ rather than a ‘freehold’, remember that some lenders won’t give mortgages on properties with less than 100 years left on the lease.

A mortgage broker can factor this in; a mortgage lender might give you a flat rejection.

The paperwork you’ll need for your mortgage broker and application will be as follows:
  • ID (e.g. passport or driving licence)
  • Proof of current address (e.g. council tax bill)
  • three months’ bank statements
  • three months’ wage slips or most recent annual accounts
Your appointment with your mortgage lender to apply for the mortgage will take around 2-3 hours to complete all the paperwork.

c) Don’t despair
Shared interest houses might be an option if your mortgage calculator reveals that you can’t afford the sort of house you wanted to buy (or, indeed, any house). With these, you buy a share of the house (say, 50%) with a mortgage. A Housing Association usually owns the other 50%. You’d have to pay the mortgage repayments each month and ‘rent’ to the Housing Association on the 50% you don’t own. 

2. Work out how much buying a house will cost

(not including the price of the house)

You’ll usually need a deposit, typically 5 - 10% of the value of the property you want to buy.

You’ll also need to pay the following:

a) Stamp duty (applies if your house is worth over £250,000) - you can calculate how much your stamp duty will cost here

b) Valuation fee - this is charged by your mortgage lender to determine if the house you want to buy is worth the amount you’re seeking to borrow. It’s usually around £150 but will depend on the house's value. Some lenders want this to be paid upfront, while others will add it to the money you owe on your mortgage.

c) Survey - you might rely on the valuation fee provided by your mortgage lender, or you can buy a housebuyer's survey to check for any likely work needed in the foreseeable future. 

d) Solicitors’/Conveyancers’ fees. They usually charge a fixed fee, which will be agreed upon in advance, usually a few hundred pounds.

e) Moving day costs - if you need to hire a van to move your possessions into your new home, get a quote early to know how much to set aside in your budget. The amount depends on how much you want to transfer and how far it’ll be transported. If you decide to keep items in storage until you’ve moved in properly, you should also factor in the cost of a self storage unit for a few weeks.

3. Work out how much it will cost to run a house.

Aside from paying for food and transport costs and your monthly mortgage payments, you’ll need to be confident that you can pay the following for your new house:

a) Council tax - you can check how much this will cost at your new house using the postcode, here.

b) Gas, electric and water bills - you could ask the current owners what they pay to get a rough idea.

c) Insurance - contents (for your possessions, in case they’re stolen or lost in a fire/flood), and buildings (to rebuild or repair the house if it’s damaged).

d) Repairs and maintenance - your boiler and any gas appliances will need to be serviced each year, and you’ll need a slush fund to pay for unexpected breakages or breakdowns (e.g. to repair your boiler or replace any of your white goods).

4. Find your new house!

Search local estate agent websites and online house-buying websites like Rightmove, Zoopla and OnTheMarket. Set up alerts for new properties that fit your criteria (number of bedrooms, car parking, garden, area) and search through the ones already available.

If you’re concerned about finding a house within the catchment area of a particular school, you can search on the school’s local council’s website.

5. Go and have a look

You can contact the estate agent to arrange a viewing when you find a house that fits your criteria. Some estate agents will arrange an appointment to meet you at the house to show you around; sometimes, the seller will show you around instead. Of course, you can always take someone with you to your viewings for safety.

Sellers are only obliged to tell you things that are wrong with the property that you couldn’t reasonably be expected to see on a visit. So, if the taps don’t work, they’re not obliged to tell you because you could turn a tap on and see if it works. Instead, use your visit to look for obvious faults, ask to turn on the shower to check for water pressure, and watch for signs of dampness or water damage. Look under the sink and up in the loft. 

Don’t be afraid to ask questions about what works or doesn’t work, and ask what fixtures and fittings the seller plans to leave (e.g. carpets, curtain rods, white goods). If there have been any significant changes, e.g. if walls have been removed to make open-plan areas, check that they have building regulation permission and receipts. Ask how old the windows and doors are and how recently the wiring has been replaced.

Go back to see the house and local area informally at different times of the day to see if you like it at night, during office hours, or at the weekends. Listen for local noise sources like large lorries, factories, noisy neighbours, barking dogs etc. 

6. Put in an offer

See how long the property has been on the market to understand how amenable a seller might be to accept a lower price. As a first-time buyer, you have an advantage in that there’s no chain for your sellers to worry about, and if you have your mortgage agreed upon in principle, you can offer them a quick sale.

If there’s lots of interest in the property or it hasn’t been on the market very long, you might have to offer the asking price and even expect to offer more. On the other hand, if you plan to offer below the asking price, start by offering 10% less than the asking price and be prepared to haggle.

If there are major works that later flag up on the survey, you can renegotiate the price or make it a requirement of the sale that the seller carries out those works before you complete the sale.

7. Be prepared to be patient

It takes an average of 4-6 months from identifying a house to moving in. 

There are two big dates that you’re waiting for - exchange and completion. ‘Exchange’ is when you and the sellers sign two identical contracts for sale, specifying a date for completion and a price to be paid, and these are exchanged. ‘Completion’ is the date the contract is completed, and you can get the keys to your new home! Often, exchange and completion can happen on the same day, so it can be quite an uncertain time not knowing exactly when you will move. Keep in daily contact with the estate agent nearer the time for updates.

8. Move in!

You’ll get the keys from the estate agent and can move in on the day of completion or whenever you like after that. The sellers must have moved their belongings out by the time agreed on the contract, so make sure you book your removals van for some time after that.

As soon as you get in, take the readings from the water, gas and electricity meters for future reference in case there’s any disagreement over who owes what. You should also contact gas, electricity, water, phone and broadband suppliers to set up accounts and get everything hooked up quickly.

If there is a lot of renovation or redecoration, it would be easier for you to do that without having to move around your furniture. To keep everything clean and out of the way, you could ask your removals firm to move everything except the basics (like your bed and a settee) to a self storage unit. You can then move your boxes in as and when there’s room for them, and you can take some time to choose where everything will go.

Take one step at a time, and soon you’ll be settled in your new home. Eventually, if you decide to move to a new home, you’ll need to coordinate selling and buying a house simultaneously, which is quite trickier - but at least you’ll already have had some experience buying a home!

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