Everything you need to know about buying your first property: a Q&A with Peterkins
Everything you need to know about buying your first property
Buying your first property is an exciting milestone, whether you’re a couple hoping to lay down some roots, or an individual ready for more independence. However, we know that the process of stepping onto the property ladder can be a little daunting, with a lot of financial jargon and important decisions to make sense of.
At ASPC, we’re here to help buyers and sellers in the North-east make their move, including hopeful first time buyers ready to take this first step. To support you in your journey, we recently ran a Q&A feature on our Instagram channel with ASPC member, Peterkins.
In this blog post, we’ve shared the range of questions first-time buyers asked, and the expert advice from the team at Peterkins…
Is it common to go over the limit for a Help to Buy ISA when buying a first house?
Sean Sinclair, Mortgage & Protection Advisor: “You can no longer open a Help to Buy ISA, but if you have a Help to Buy ISA already, you can continue to pay in up to £200 per month and receive a 25% bonus from the government when buying your first home. This is up to a maximum of £3,000 on a total pot of £12,000.
“If you don’t have a Help to Buy ISA, you may wish to consider saving into a Lifetime ISA, as they offer similar benefits and are ideally suited for those saving to purchase their first home.”
Should I first save for a deposit or book a mortgage advice appointment?
Sean Sinclair, Mortgage & Protection Advisor: “It’s never too early to speak with a mortgage adviser or a solicitor. Even if you’re just considering buying your first home, an adviser will make you aware of all options open to you and help you map out a plan for buying your first home. They can talk you through what size of deposit you require, how the process works and what you need to know as a first time buyer.”
How much deposit will I generally have to save before buying a home?
Sean Sinclair, Mortgage & Protection Advisor: “When you’re looking to secure a mortgage, most lenders will require a minimum of 5%, although a typical savings goal for first time buyers is 10% of a home’s purchase price. For instance, if the purchase price of a property was £150,000 and you were hoping to pay a 10% deposit, you would be aiming to save £15,000.
“There are a limited number of options which may allow you to buy a property with no deposit, depending on your circumstances.”
Is it still a good idea to buy or should I continue to rent?
Robert Davidson, Partner: “We regularly get asked this question and the decision will ultimately depend on your own unique circumstances. As rent prices continue to increase, it can still be seen as a good time to buy.
“The market is generally quieter at the moment, so this can mean less buying competition and the chance to purchase your first property at a reasonable price.”
What financial schemes are available and are they worthwhile looking into?
Sean Sinclair, Mortgage & Protection Advisor:
“The LIFT Open Market Shared Equity scheme may allow a first time buyer to borrow up to 40% of the purchase price of a home, however, this is subject to status and the property being suitable.
“It is well worth considering saving into a Lifetime ISA to qualify for up to a 25% bonus on your savings if you are aged 18 – 39 and planning to buy more than 12 months in the future.”
What's the most accurate credit score provider?
Sean Sinclair, Mortgage & Protection Advisor: “There are three main credit agencies in the UK and the information held by each is similar. Lenders will access data from one, two or all three of these agencies when considering a mortgage application. One provider allows members to generate a free multi-agency report - you may be able to access a free trial here.”
How long does it take for everything to be processed when buying a property?
Robert Davidson, Partner: “The normal timescale from putting in your offer, to the final stage of ‘settlement’ - when you get the keys to your property - is around 6 to 8 weeks. This should leave enough time for the following;
- Finalising your mortgage
- Concluding missives - this is the binding contract between you and the property’s seller which amongst other things confirms the price of the property and the date of entry
- Conveyancing to be carried out – this is essentially the legal process of transferring ownership of a property from one person to another which includes checking the title, and dealing with the security requirements of the mortgage lender
What expenses should I prepare for outside of my mortgage payment?
Rhiannon Widger, Trainee Solicitor: “When buying a home, there are a number of additional costs involved as well as the home itself. Initial upfront costs include your deposit, solicitor fees, LBTT, title registration dues and various outlays you have as a homeowner.
“As well as monthly mortgage payments, you should consider the costs of council tax, gas and electricity, TV, broadband and phone bills, and home (buildings and contents) insurance - all of which will depend on your desired location and the property itself. There may also be premiums to pay for other insurances such as life assurance and mortgage/income protection.
“If you are currently renting, you will likely already be paying most of these and will therefore have a rough idea of the costs. However, if you are moving out for the first time there are price comparison websites to help you compare quotes from different providers.
“You will also need to be able to afford the costs of maintaining and repairing your home, and there may be an appointed communal factor or resident’s association who will look after the maintenance of a block of flats or the wider development. This is more common with newer properties and there will be additional costs associated – referring to the Property Questionnaire section of the Home Report will provide details.”
How much will council tax be?
Rhiannon Widger, Trainee Solicitor: “Council Tax bands can be found in the Property Questionnaire which forms part of the Home Report - and is usually displayed clearly in a property’s listing. The charge for these bands can then be found on the Council website.”
How do I know if I’m ready to buy?
Jamie Craig, Partner: “Buying your first property is one of life’s most exciting and expensive milestones, so it’s important to put a lot of thought into whether or not you’re ready for such a commitment. This would all depend on your personal circumstances and whether you are in a strong enough position financially.
“If you have the financial stability and feel ready for a sense of independence and to step on to the property ladder, then you are ready to buy. If you’re on the fence, talking it through with people you trust personally, and with a professional mortgage advisor can guide you in the right direction. Most solicitor firms will have either an in-house independent mortgage advisor or someone they can recommend who would be happy to discuss affordability with any hopeful first time buyer.”
Do I have to pay my solicitor before I buy the house? Does this come off my mortgage payment?
Jamie Craig, Partner: “The solicitor’s outlays and fee are generally collected alongside your deposit just prior to buying your property, so you need to factor this into your savings target. It does not come off your mortgage, which will normally have the first payment due one month following the purchase of your property.”
Does LBTT apply to all properties? Will it apply to buying my first property?
Robert Davidson, Partner: “LBTT - which stands for Land and Buildings Transaction Tax - will normally apply to all residential properties where the purchase price is more than £145,000. For first time buyers, there is relief which increases this starting threshold to £175,000 - so no LBTT is paid on the price of your property up to this amount.”
I’m a first time buyer, who should I speak to first to kickstart the process?
Rhiannon Widger, Trainee Solicitor: “The best place to start if you are ready to buy your first property is to get in touch with a solicitor. If you have found a property you wish to pursue, contact your chosen solicitor and they will help note your interest and/or discuss making an offer. Or, if you are not quite at that stage yet and just want to discuss the process in more detail, a solicitor will be able to help.
“If you are trying to sort out the money side and understand your financial standing, getting in touch with a mortgage advisor will help you get a better picture of what’s possible and what you would need to do to improve your position.”
For more advice and top tips take a look at some of our previous blog posts: