First-Time Buyer Checklist

Buying a house for the first time is a special occasion, which is why most people approach the purchasing process with great care.

Getting on the property ladder for the first time is no small feat, and accompanying this are several legal and financial decisions which you will not have dealt with before. The complexity of some of these decisions can quickly overwhelm a first-time buyer, causing them undue stress and confusion.

So, to alleviate any concerns you may have about the process of buying a house, we’ve created a detailed checklist of things to do. From managing your finances to getting a mortgage in principle and house-hunting, you can find answers to any housing questions you may have.

Without further ado, let’s get started.

First-Time Buyer Checklist

1. Check Your Finances

If you’re mortgaging a house, you will need to pay a percentage of the property value as a deposit. The minimum amount of deposit that a first-time buyer must pay is usually 5% of the property value for a mortgage, called a “95% loan-to-value mortgage”.

But since housing prices fluctuate constantly, it can be difficult to know the exact amount that you would need to save to pay the deposit. 

As such, you can consider getting a “mortgage in principle,” a formal letter from a mortgage lender that states how much they may be willing to lend. 

A “mortgage in principle” is not a binding agreement, so you can use it to gauge how much money you will be able to borrow and whether you meet a lenders credit score requirements. Lenders provide this letter based on a preliminary assessment of your financial situation, making it a good measuring tool for you.

Be sure to carry the following when visiting a mortgage advisor for a mortgage in principle:

• Proof of identification
• Proof of current address
• Salary slips for the previous three months
• Most recent P60
• Information on your credit status
• If Self Employed you may need to provide Tax Calculations & Tax Year Overviews
• For Ltd Company Directors full accounts may be requested

2. Consider Affordability

Next, it’s time to set a budget to get an idea on how much you’re comfortable spending each month. This can help you to gauge which properties will be within your budget so you can start looking at properties in your area. 

Property value depends on several factors, such as its location, the amenities available, the proximity to shops, restaurants, schools, etc. Try to narrow down the selection of properties based on your priorities and the budget to find out which residential projects to look into.

Additionally, you may consider choosing between a newly-constructed home or a refurbished one. Newly-built properties may offer incentives for purchasing the property which may be worth exploring.

Feel free to use a budget planner to calculate your budget and whether a particular property falls into it or not.

3. Search For A Property

Once you have narrowed down the list of properties that fall into your budget, it’s time to go house-hunting.

While out and about searching for your dream home, you will likely explore lots of options. And because of the sheer variety of homes available on the housing market, reaching a definitive decision may seem quite difficult.

But remember to explore all the options available to you, even if you fall in love with a particular property at first sight. View each house through a practical eye to know whether living in it would be feasible or not.

Certain properties may have relatively lower purchasing costs but higher ownership costs such as service charges etc, so consider the whole picture before making a decision.

And on the flip side, you will also find properties that fall just outside your budget but are perfect in nearly every other way. This is why it is important to find out your affordability early to avoid disappointment of falling in love with a home that you may not be able to afford.

4. Research About The Property And Make An Offer

After picking the property that could soon be your home, consider doing some research before you make an offer.

Examine your future house thoroughly and check if all the elements work as intended and there are no major issues with the property. Consider visiting it during different times of the day to get a feel of what it would be like to live there.

You may also consider taking someone else round the property like a family member who may look at the property a little bit more objectively and can point out faults which you may have missed.

Once you’re fully assured about the property, call the estate agent and make the offer.

5. Begin The Mortgage Application Process

After making an offer, the estate agent will send this to the seller of the property. If this is accepted you can then apply for a mortgage. Having been granted a mortgage in principle already, you can contact your mortgage advisor and they can get the process started in order to submit your full application to the lender. 

The lender will then send a surveyor to evaluate your future home and will confirm to the lender if the property is worth what you’re paying for it and if they’re happy to use the property as security for their loan.

This can then highlight any issues you may have missed and if there are any major defects with the property. Consequently, it protects them from a potential financial loss as well. 

You may also consider at this stage whether you would like to pay for your own survey which will be more in depth and can check for any structural problems with the property.

6. Make Legal Agreements

Alongside the application process, you will appoint a solicitor or conveyancer to carry out the legal work in order to purchase your property. A conveyancer or solicitor takes care of the following duties:

• Act as the legal link between you, the property seller and the lender
• Review all contracts between the three parties
• Handle stamp duty
• Deal with Land Registry
• Oversee the exchange of money during the sale
• Ensure the absence of structural liabilities like subsidence

As a first-time buyer, you will receive subsidies from the government on fees like stamp duty land tax (SDLT), which is based on the property value. 

Stamp duty, in particular, can be a hefty expense that can cost a fixed percentage of the property value. But with the government subsidy, you will not have to pay any SDLT for the first £425,000 of the property value.

For the following £200,000, i.e. properties valued up to £625,000, you must pay 5% of the amount above £425,000. So a property valued at £625,000 the SDLT owed would be £10,000.

Note that you will not be able to claim the relief if the property value exceeds £625,000. For properties exceeding this amount, the rates are as follows:

Property Value	SDLT Rate
Up to £250,000	0%
The next £675,000 (from £250,001 to £925,000)	5%
The next £575,000 (from £925,000 to £1.5 million)	10%
The remaining amount	12%

7. Make Arrangements To Move Into Your New Home

Now that all the legal processes have been handled, you can set a completion date and begin making arrangements to move into your new home. Feel free to go shopping for new items and appliances for your new home. 

FAQ

1. What to do if I can’t save enough money for a deposit?

There are certain schemes and help you may have access to as a First Time Buyer, such as shared ownership, gifts from either family members or incentives from new build developers.

You must meet certain criteria with each scheme, so it’s always worth reaching out to a mortgage advisor who can advise you on the options that may be available to you.  

2. Should I buy a freehold or leasehold property?

If you’re buying a house, in most cases it will be a freehold property. This means that you own the land upon which the house is constructed.

For flats, a leasehold purchase is more common, which means that you own the property for a set period but not the land it is built on. 

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.