As mortgage brokers, we often help first time buyers on to the housing ladder. A mortgage can be daunting, even if it’s not your first. We’re often asked about how home buying works, so we’ve put together a quick guide to help those who aren’t quite sure how it all works.
Calculating your budget is the first thing you’ll want to aim for. The reason is simple. You can’t begin your home buying journey until you know what you’re able to afford. Having a budget gives you something to aim for and you can then start searching property portals for homes according to your budget.
More than often, homebuyers will begin viewing properties without knowing what their budget is. This is counterproductive as you’re simply wasting your own time, the agents time and the seller’s time.
Your budget will largely be based on your income, affordability and the deposit amount you have saved. Depending on this criteria, your broker will then be able to provide you with a decision in principle, which will outline how much the bank is prepared to lend. This is not a mortgage offer, this is simply a decision ‘in principle’ and is largely based on the information you’ve provided to your broker.
2.Getting an offer accepted
Once you’ve seen a property and have had an offer accepted, your agent will ask you for documents such as photo identification, proof of funds and your decision in principle. This is so that they can authenticate your offer before they put it forward to the property seller.
Having a decision in principle ready can be key in securing a great property deal. A popular property will usually generate multiple buyers, so how do you stand out? Providing your documents to agents at lightning speed will usually highlight you to be a credible and ready buyer. If agents have to wait a few days for your documents, you may be pipped to the post by another buyer.
Once you’ve had your offer accepted, the buying process begins. At the initial stage of deciding your budget, your broker may have introduced some mortgages to you. In that time, if you selected a deal that you’re happy with, your broker will then formally apply for the mortgage. This is followed by a mortgage survey or mortgage valuation.
A mortgage valuation is where the lender will appoint their own surveyor to check that the property is suitable for their lending criteria. From here, your mortgage will either formally be offered, declined or may be approved subject to pending works.
Mortgage surveys will cost the buyer, however they are usually part of your mortgage deal. Some lenders will also offer free valuations as part of the mortgage.
You will need to hire a solicitor to carry out the legal side of things. Conveyancers will legally transfer the title on to your name and also ensure that the funds are sent to the vendor’s solicitors.
Conveyancers will act on your behalf to also request mortgage funds from the lender to ensure that the funds are being used to purchase a property.
As a buyer, you’re usually free to select your own solicitors. Lenders may offer legals as part of their mortgage, however this is more common for remortgages, as the legal work is a lot less than when you’re initially purchasing a property. Your estate agent may also recommend a reputable solicitor. Selecting a reputable solicitor is key as choosing solicitors who are overworked or too busy can cause delays in the purchase. The average timeframe that solicitors should take is around 6-8 weeks.
Before you can complete the purchase of your new property, you will need to ‘exchange’ contracts. This is where you will pay your solicitors a deposit who will then pay the seller’s solicitors. The solicitor will then proceed to exchange contracts. Once contracts are exchanged, there is no turning back.
Your solicitor will then request the mortgage funds from your lender who will then send the mortgage. The funds in total are then sent to the seller’s solicitors and completion can take place. The solicitors will then inform the agent that keys to the property can be released. You can then visit the agent and collect the keys to your new property. Congratulations, that’s all there is to it.