Step 1: Get Prepared
Before you start looking for a home, it's important to make sure your finances are in good shape.
Save for Your Deposit
Most mortgage lenders require a deposit, which is a percentage of the property's purchase price. Some buyers can purchase with as little as 5%, but a larger deposit may give you access to more mortgage options.
Remember: It's not just the deposit you'll need to budget for. There are also other costs involved in buying a home, such as legal fees, surveys and moving expenses.
Reduce Existing Debt
When you apply for a mortgage, lenders will look at your income and regular outgoings to decide how much they can lend you.
Reducing credit card balances, loans or other borrowing before you apply can improve your affordability and may increase the amount you can borrow.
Check Your Credit Score
A good credit history can help improve your chances of getting a mortgage. To help maintain a strong credit record:
- Make sure you're registered on the electoral roll.
- Pay bills and credit commitments on time.
- Keep credit card balances well within your limits.
- Check your credit report regularly for any errors.
Step 2: Work Out Your Budget
Before you start viewing properties, it's helpful to understand how much you can afford to spend.
Get a Mortgage Decision in Principle
A Mortgage Decision in Principle (sometimes called a Mortgage Promise) gives you an indication of how much a lender may be willing to lend based on your income and expenses. Having one in place can:
- Help you set a realistic budget.
- Show that you're a serious buyer.
- Speed up the buying process once you find a property you like.
Set Your Maximum Budget
Decide on the highest amount you're comfortable spending and stick to it. Knowing your budget from the start helps you focus on homes within your price range and avoids wasting time viewing properties that may be unaffordable.
Identity and Proof of Funds Checks
As part of the home-buying process, solicitors and mortgage lenders are legally required to verify your identity and check where your money is coming from. These checks help prevent fraud and money laundering, ensuring your purchase is secure.
During the transaction, you may be asked to provide documents that confirm your identity, address and source of funds. This could include evidence of savings, proceeds from the sale of a property, inheritance funds or gifted deposits from family or friends.
Providing these documents promptly can help keep your purchase moving smoothly, while delays in supplying the required information may slow down the process.
Leasehold and freehold
When considering a property purchase, it is really important that you know whether the property is freehold or leasehold.
A freehold property means you own the property and land outright.
A leasehold property means you only own the property for a fixed number of years. You have the right to live in that property, but you will need to follow any rules laid down in the terms of the lease. Flats are often leasehold, but houses can be too.
If you buy a leasehold property you may have to pay regular ground rent and service charges to your freeholder.
• The ground rent is a sum you have to pay to your managing agent/landlord if it is a condition of the lease.
• The service charge is paid to the managing agent or landlord towards the costs they incur for the services they provide, like repairs, gardening or cleaning of common areas. It can also include building insurance.
Step 3: Explore the buying schemes and support available
There are more ways than you might think to get your foot on the property ladder. Help is available for eligible first-time buyers in the UK - from government-backed schemes to developer incentives designed to help you make your first move
Step 4: Start Your Search with Confidence
Once you know your budget and have your finances in order, you'll be ready to begin searching for your first home with confidence.
