Guide to First Time Buyers

Completion,Contracts,Cost of Buying, Finding a Suitable Property, How Much Money Do I Need?, Preparations For Moving, Shared Ownership, The Survey, Using A Solicitor, Types of Mortgage.

Completion

Completion usually takes place 2 to 4 weeks after exchange of contracts but may be completed sooner if required.  The remainder of the purchase price is paid on this day.  Once completion has taken place you can collect the keys and move in.

Contracts

Sign and exchange contracts when your Solicitor advises you to do so.  On the date that the contracts are exchanged you must normally pay 10% of the purchase price as a 'down payment'.

Cost Of Home Buying

One off costs

• Indemnity Insurance (for most mortgages over 75% of the purchase price)
• Valuation Fee
• Structural Survey (if applicable)

Legal costs

• Solicitor's Fees
• Land Registry Fee
• Land Search Fees
• Stamp Duty (where applicable)

Recurring Costs

• Mortgage Repayments
• Endowment/Mortgage Protection Insurance Premiums
• Building Insurance
• Service Charge and/or Ground Rent (for flats)
• Repairs and Maintenance
• Council Tax
• Water and Sewerage Charges
• Gas and Electricity etc
• Contents Insurance

Do not borrow more than you can afford to repay, allow a safety margin for any possible changes in your financial circumstances.

Finding a Suitable Property

Contact local estate agents and check local press for details of properties within your price range.

When you have found a suitable property, make an offer through the estate agent and make your formal mortgage application.

How Much Money Do I Need?

Discuss your plan with a bank or building society and obtain some indication as to the amount that it is prepared to lend you and the way you will have to pay back the loan.

The loan will be limited by the value of the property and your income.  The maximum is usually 2.5 to 3 times your annual income and 1 times your partner's annual income, or 2.5 times your joint annual income.

Always plan pessimistically i.e. under assess income, over assess outgoings.

Preparations

You will need to make arrangements for removals, gas, water, electricity, telephone, Council Tax registration, etc.

Shared Ownership

If you earnings are not high enough to make your eligible for a mortgage for the full price of a suitable property, you may be able to purchase a home under a shared ownership scheme.  These schemes are run by local housing associations and enable you to purchase a 'share' in the property and pay rent on the part that you do not own.  Some shared ownership schemes are only for statutorily homeless applicants or existing Council or housing association tenants.  Other schemes are open to any applicant in housing need.

For further information, please contact the Council's Housing Services Department on 01743 281017.

The Survey

Before offering a mortgage, the bank or building society will require you to pay for a survey or valuation.  This survey will tell the lender whether or not the property is worth the amount you are asking to borrow and if it is likely to last as long as the mortgage period.

For your own peace of mind, especially if you are worried about the structure of the property, you can arrange for a full structural survey to be carried out.  This survey is much more thorough than a normal survey and is, therefore, more expensive.

Using A Solicitor

If you offer is accepted, you should choose a Solicitor to carry out the necessary legal work on your behalf.  Before engaging a Solicitor, obtain a written quotation of fees and remember that it often pays to "shop around" and compare fees.  You should ensure that your solicitor has explained to you all your obligations in relation to the ownership of the property.

Once the mortgage is confirmed and the survey is completed satisfactorily you can instruct your Solicitor to proceed with the purchase, called the "conveyance".  

Repayment

The mortgage is repaid in monthly instalments over an agreed number of years.  Part of the repayment repays the capital (the amount borrowed), the other part is interest.  You may wish to take out a mortgage protection insurance policy (or the building society may insist) to pay off the mortgage if you die, or lose your job.

Endowment

Only the interest is paid during the period of the loan.  The capital is paid back in a lump sum at the end of the mortgage period.  An endowment life insurance policy is taken out to provide this sum but this is no guarantee and depends on the ups and downs of the money market.