First Property Purchase
Making your first property purchase can be a daunting task, understanding the process and what is required can leave most people who are not in the industry confused. I have written this short simple article to help you feel more comfortable with the process. Please note that I am not a financial advisor, but I do purchase property on a weekly occurrence as part of our business strategy.
Unless you were born into a wealthy family or won the lottery most of us embarking on our first property purchase will require a mortgage to make the purchase.
I would suggest as a first step visit a comparison website like www.moneysupermarket.com select mortgages and enter details of purchase price and the deposit you can afford. Play about with this calculator to give you a clear idea of monthly mortgage payments you can afford.
Now that you are starting to build up a picture of what you can afford with the deposit you have; the next step is to arrange an appointment with an independent mortgage broker. Please take my advice, do not go to your bank like most uneducated people will do. An independent mortgage broker can compare the whole of the market and get the best product to suit you. They will take your personal details, including currently employment, salary and expenditure. It would be handy to show up to this appointment with 2 forms of ID, 3 months bank statements, 3 months payslips and your p60 for the previous year. You may not need the bank statements and payslips for the first stage but you will as you progress.
Your broker will input your details into the system and ensure you get a DIP (decision in principle) this is basically to see if you are eligible for a mortgage. The broker will have worked with many lenders so they are in a position to give personalised advice to you if you have specific requirements. Some people have bad credit or self-employed, the broker can advise who are they preferred lenders to go to.
Now the fun part begins. You are now armed with a budget so you know what you can afford to buy and what you will get lending for.
This is now down to personal choice and circumstances of what type of property you require. Key things to take into consideration are; Location, Price, Property structure/Type, does it require any work and does the property come with additional costs such as a factor?
The easiest way to carry out searches for your first property purchase are on websites like www.rightmove.co.uk or www.zoopla.co.uk you can search by location, price, bedrooms and type of property. This can narrow your search down to exactly what you want.
Once you have found the properties that are suitable contact the estate agent to arrange a viewing. At the viewing ask some key questions to find out more about the history of the property and current owners (their clients). The estate agent will most likely ask you some questions, if they don’t inform them you have your mortgage in place and don’t have anything to sell. This puts you in a good position as a potential purchaser.
Now you have found your property
You have viewed property with estate agents and have decided it is the one for you. My advice is make sure you go back for a second viewing. Once you are sure the next step is to contact a solicitor and ask them to note your interest or make an offer on the property. This is the exciting part! The solicitor firm will act on your behalf and have your best interests. They will officially make an offer to the estate agent. When the price and a date of entry has been mutually agreed, you have got your self your first home.
Offer has been accepted
Don’t panic or get too excited as the property doesn’t belong to you yet.
You now have to go back to your mortgage broker armed with the information on the property, the purchase price and the agreed date of entry. He will then start the mortgage application process. This time you will need your most recent payslips and bank statements. This is to prove to the lender you can service the debt. The mortgage offer will usually take around a couple of weeks to come through.
While you wait on this process, you may be asked to sign documents or require to give further information to the broker. You will also have to prove where your deposit came from to satisfy money laundering laws.
At this time, it is worth arranging the correct insurance cover to protect your property. You will usually require two-part insurance, buildings insurance and contents insurance. Buildings insurance is to cover the building itself, you will need to provide estimated build cost to reinstate to building and the year it was built this information is detailed on the home report. The content insurance is simply to protect your contents in the property in the event of any damage or theft.
Approaching the Date of Entry
On the week running up to the date of entry (usually a Friday) your solicitor will have your mortgage offer through to him and will ask you to make payment for the deposit, his firms fee, stamp duty/LBTT if any and additional searches carried out. This is to get everything in place to sign the missive. The missives are the legally binding contract that binds you to the purchase.
On the date of entry your solicitor will communicate with you to when everything has been completed and you can collect the keys from the estate agent or where mutually agreed. Congratulations on your first property purchase enjoy your new home!
I hope you have found this article useful, if you are looking for a mortgage broker or solicitor to assist you in this important journey we would happily make an introduction to our preferred ones. We have used them for a long time and confident they can help you greatly in this process. Please click here to contact us.