First-Time Buyers - What You Need To Know12th Apr 2023
First-Time Buyers Guide
You’re buying your first home! It’s an exciting time, but with so much to think about it can be very daunting.
Our expert guidance can help you understand how to take your first step on to the property ladder.
What qualifies you as a first-time buyer?
The most common reason that you will need to consider whether you qualify as a first-time buyer is so that you can determine whether you are able to claim First Time Buyer Relief from the Government for Stamp Duty Land Tax. The Government consider that a first-time buyer is an individual who has never owned a property before anywhere in the world. The Government will also consider whether you have ever owned an interest in a property which you may not have purchased, for example an inherited property.
It’s important to remember that if you are buying a house with someone that has owned before then even if you haven’t owned a property before, you will not qualify as a first-time buyer. With joint mortgages, all applicants have to be first-time buyers in order to qualify.
Your first step as a first-time buyer and one which you may already have done, is to save for a deposit.
How much deposit do first-time buyers need?
With a first-time buyer mortgage, you’re likely to be looking for a 90% or 95% mortgage deal (meaning you’ll need a 5% or 10% deposit saved.) So, for example on a £250,000 house or flat, you will need £12,500 for a 5% deposit and £25,000 saved for a 10% deposit.
What help is available for first time buyers?
Several government schemes can help you to buy a home. Find out more about the affordable home ownership schemes here.
Once you’ve saved your deposit, established that you qualify as a first-time buyer and found out what help is available, it’s time to find out how much you can borrow and apply for a mortgage agreement in principle.
Time for the exciting part – house hunting!
Research your chosen areas and register with local estate agents, start to make appointments for properties within your budget and always try to view them in person, if possible.
Once you have found your chosen property - make an offer.
Once you have had an offer accepted you will then need to apply for a mortgage – if you’ve applied for a mortgage agreement in principle – this can give you and your vendor confidence, but it offers no guarantees. Be prepared, there are still plenty of hurdles to jump and the choice of mortgages can be overwhelming. You may want to consider using a mortgage broker as they have access to the majority of lenders and will be able to advise you on the best mortgage for your particular circumstances without you having to do all of the research – ask around for recommendations.
Find the right legal help.
Your next step is to find a conveyancer or property lawyer – do your research – look at recommendations. The cheapest is not always the best option and can end up costing you more money, time and stress in the long run. Be wary of online companies who appear to offer low prices as they can often have several hidden charges which can result in higher prices than using a local firm.
We would highly recommend using someone local to the area - you want a legal team that is prompt, efficient, cost-effective and knowledgeable.
Once you’ve had an offer accepted, it's time to get a house survey carried out on the property. This is to check that the home you're buying is worth what you're paying for it. It will also reveal any potentially costly defects in the building which you will need to factor into your budget.
Your lawyer at this point should request the contract papers from the seller’s conveyancer and when it arrives, carry out investigations, raise any required enquiries and apply for the required searches to be carried out against the property. It would also be a good idea at this stage to research removal companies, if necessary.
Your lawyer will then report to you on the search results and replies to the enquiries raised and will also send you copies of documents received from the seller’s conveyancer including copies of the legal title, Property Information Form and Fittings and Contents Forms.
You should make sure you have buildings insurance for the property you are buying in place from the date of exchange. Your solicitor or conveyancer should check you are happy to proceed and will then exchange the contracts with the seller’s solicitor and transfer the deposit monies to them on your behalf. This is the point at which your purchase becomes legally binding. Your lawyer will then arrange for the mortgage money to be sent directly to them and will also request any balance monies from you at this time.
Complete and move in!
The balance of the purchase price is transferred to the seller’s solicitor and they should ring you to let you know that all is completed and you can collect the keys. Following completion, the solicitor will pay any Stamp Duty Land Tax payable on your behalf (first-time buyers paying £300,000 or less for a residential property will pay no stamp duty – use our conveyancing calculator to get an estimate for your conveyancing costs.
Finally, your solicitor should register your new ownership with H.M. Land Registry. Happy house hunting!
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