Buying a home is one of the most exciting things you can do, but it can also be one of the scariest. It’s a big decision, so it’s important to get it right. Finding a home you and your family love is hard enough – and that’s just the beginning. With loads to think about from mortgages to surveys and valuations, we know it can feel quite intimidating and confusing.
To help get you started, here’s a quick guide to buying a home. We have also developed a jargon buster which explains the acronyms, terms and legal language that you’ll need to get your head around to understand the homebuying vocabulary that will be constantly cropping up. If you do have any questions, please feel free to pop into our Visitors Centre and talk to our team over a cup of tea.
- Getting the right finance in place
- Help from an independent financial adviser
- Applying for a mortgage
- Finding a home you love
- Reserving your property
- Appointing solicitors or conveyancers
- Home valuations
- Nearly there… exchange and completion
- How we’re making the process easier
Getting the right finance in place
The first step to buying a home is deciding your budget. Unless you have the money to buy a property outright, you will need a mortgage. But before you can get a mortgage you will need a deposit, which is normally at least 10% of the property price. The bigger your deposit, the better the mortgage rate you’ll be offered. We know that saving for a deposit might seem overwhelming – it will need discipline and planning, but it’s definitely worth it. Just think of that moment when you’re given the keys to your very own home!
As well as your deposit and mortgage, there are also several associated fees which you’ll need to factor into your overall budget. These include legal and mortgage fees and Stamp Duty (if applicable), as well as survey and valuation costs.
Help from an independent financial adviser
To make sure you’re aware of all your options before you start saving or applying for a mortgage, you should speak to an independent financial adviser (IFA). Being ‘independent’ means they can recommend and sell financial products from any provider across the market and advise on schemes such as Help to Buy and Shared Ownership so that you’re looking at the best products for your circumstances.
Applying for a mortgage
Once you have an idea of how much your deposit will be, this will help you find out how much money you can borrow for a mortgage. You will need to provide details of your income, outgoings, savings and credit history so that a mortgage lender can give you an ‘agreement in principle’, which will set out, in theory, how much they are prepared to lend you.
You can apply for a mortgage using a financial adviser, broker, or direct from a lender. Make sure you shop around and be aware that while brokers can advise you on the best deal for your circumstances, some are independent, and others work for banks or lenders. You can also compare mortgages yourself online.
Finding a home you love
When you’re looking for a property, think about how you will actually live there. For example, do you work from home and need space for your own study with fibre broadband connectivity? Or are you looking for an open-plan feel to your kitchen – where you can throw open the doors to the garden so the kids can play outside while you prepare dinner? Or do you need a large hallway for prams, wellies and football boots, as well as having lots of storage throughout the house?
Also, think about your daily routine: do you need to be near a train station or motorway to ease your commute? Is having good schools nearby your biggest priority, or do you want to be near a park so you can exercise or walk your dog? Make sure you research and visit the local area and imagine yourself really living there – doing your grocery shopping, joining a fitness club, or enjoying a Sunday roast at the local pub.
Don’t forget to check what’s included in the homes you like the look of – if appliances, carpets or other finishes are going to cost extra then you’ll need to factor that into your overall budget.
You’ll probably have to compromise on a couple of things on your wish list, but once you’ve got your heart set on a place, it’s time to get on and buy it!
Reserving your property
To reserve your plot and start the legal process of buying your home you will need to pay a reservation fee to your housebuilder. This amount will be deducted from the final purchase price upon completion. Often, the fee is only partially refundable if the buyer doesn’t exchange contracts within a set period or pulls out of the sale completely.
Appointing solicitors or conveyancers
Once you have reserved your property, you need to appoint a solicitor or conveyancer to manage the contract, deal with the finances and exchange the title deeds. Your solicitor will help you through the process: carrying out local authority searches, advising you on how much Stamp Duty you will have to pay and checking the terms of the lease, where relevant. The seller will also have a solicitor and the two legal teams will be in regular contact to ensure the process is as smooth as possible.
You will also need to tell your mortgage lender once you have reserved your home. They will do a valuation on the property. This demonstrates to your lender that the property is worth the sale price before they approve your mortgage. If you are buying a property that is not a new-build, this is the time you would also instruct a building surveyor to carry out a survey. Our homes come with the National House Building Council’s (NHBC) Buildmark warranty and insurance cover, which is recognised, trusted and approved by all lenders.
Nearly there… exchange and completion
Once your mortgage offer is in place and the contracts have been agreed, a date will be set to exchange contracts. You will need to pay your deposit before exchange to ensure that the contracts are legally binding and a completion date can be set. Exchange and completion can happen on the same day but there may be a bit of lag between the two. If you’re buying off-plan (before your home is built), you can exchange up to six months before completion. You should check whether your mortgage offer will expire within that timeframe and, if so, you may need to get an extension, or even a new mortgage. But it’s worth being aware that you don’t start paying your mortgage until your sale completes.
Your conveyancer will set out any remaining amounts you need to pay before completion, such as the remaining balance of your property and Stamp Duty fees. Then, on completion, the final paperwork is done and your conveyancer will transfer the full balance to the seller. Once the money has been received, you can pick up the keys to your new home, which is now legally yours!
How we’re making the process easier
We know that the process can feel lengthy (and get a bit boring), so we will give you regular updates on how your home is progressing. And, before you move in, we will arrange for you to meet the builder of your chosen home so you’re involved throughout, can see how things are shaping up and ask any technical questions you may have about the build. Our customer service team will also give you a demonstration on how things in your new home work, such as the appliances, boiler, lighting and heating system so that when you get the keys you can just get on and enjoy your new home. You will also get an iPad with pre-installed apps and video tutorials instead of a mountain of instruction manuals that have a tendency get lost among the packing boxes!
To find out more about our fantastic homes at our Buckler’s Park development in Berkshire, come and meet our team at the Visitors Centre and start taking those first steps towards the jangle of new house keys!
By John Allan, Managing Director of Legal & General Homes