Jacob Law Articles

What are the first steps if you are a First Time Buyer?

Making the decision to buy your first home is a real exciting experience, but it can also be very daunting. Stepping onto the property ladder for the first time can be like entering into a labyrinth of procedures and terms that you were not expecting nor understand.

Step 1: Read up on the current first time buyer government incentive schemes

The current schemes include the Help-To-Buy Incentive and the First Home Shared Equity Scheme. These schemes may be used to bridge the gap between the cost of the chosen property and the amount of mortgage you can borrow. This is a key first step for first time buyers.

Step 2: Head to your local mortgage broker OR do research on mortgage lenders

Before you start looking for your dream property it is prudent to work out what you can afford. Meeting with the local mortgage broker will give you this information. Before you meet be sure to have your financial information written down. The mortgage broker will need to know your salary and that of your partner if you plan on buying a home together. Further, the broker will need to know your full employment status, full time, part time, temporary, permanent etc. Know your savings balance and what you have available to use as deposit for your mortgage. The broker will then be able to inform you of the likely amount of mortgage you can apply for.

See this link which outlines the parameters for amount of mortgage you can borrow.

Step 3: Decide on the mortgage lender and complete your loan application

Once the mortgage broker goes through the different mortgage lender options, he/she will guide you on the most suitable lender for you based on your preferences. For example, you might want a variable rate mortgage which means the interest rate will rise and fall with the market. In contrast, you might prefer a fixed rate mortgage so you know exactly what you will be paying every month for the next five years. Each mortgage lender/bank provide different interest rate options. When you start repaying your mortgage every month, the payment is made up of capital and interest. The capital part reduces the amount that you borrowed, whereas, the interest part is the fee the lender/bank charges for facilitating the mortgage.

The monthly repayments in the early years of your mortgage are mainly interest payments with a small part reducing your original borrowing. However as the borrowing starts reducing the interest becomes less meaning the monthly repayments go more towards reducing the borrowing than paying interest to the lender.

Once you decide which lender/bank you want to apply to, the broker will help you complete the application. Accordingly, it is at this stage, you will need to have the supporting documentation required for the application i.e. payslips, letter from employer, anti-money laundering (“AML”) documents etc.

Step 4: Agree on a solicitor and engage his/her services

The earlier you engage your Solicitor, the faster the legal process will be to buy your first home. Just like the mortgage application process, you will need to gather documentation for the solicitor which can take time.

With Jacob Law solicitors you can be sure you will not pay over and above for your legal process. As a first time buyer, it is important you keep your costs to a minimum.

Jacob Law solicitors will stay with you through the entire legal process.

In most cases, you will not have to pay any fees until the property purchase is complete so it makes sense to start the solicitor engagement as soon as you can. It is proven that the earlier you engage your solicitor the smoother and faster the legal process takes.

Step 5: Get your mortgage in principle from your lender

Once the mortgage lender/bank has approved your application, you obtain a mortgage in principle. This mortgage in principle means the lender/bank are confirming they will give you the agreed mortgage amount and this allows you to fire ahead with your property search.

Step 6: Start actively looking for a property

There is currently a shortage of properties. Hence, there are more buyers in the market than sellers. Accordingly you are competing against a lot of other buyers so you need to be in a position to act fast if you find your desired home. Consequently, it is imperative that you have the mortgage in principle in place. Being a first time buyer means you will be experiencing your first bidding process too and to have a chance of success, preparation is key. Informing the estate agent that you have mortgage in principle in place is an advantage for you.

Think with your head and not with your heart if you fall for a house during a viewing. Hide your excitement and resist making an offer during the viewing. Overnight go back over your finances and study the asking price. If it still looks promising, make your bid. Likewise, to ensure the estate agent knows you are serious about the bid, ask can you arrange a surveyor to inspect the property and inform him your solicitor is in place.

Step 7: Engage a Surveyor

Jacob Law solicitors can arrange this for you, giving you the comfort of knowing an experienced and registered surveyor will be inspecting your property.

FAQ: What is the difference between the mortgage broker and the mortgage lender?

The mortgage broker is the person who will give you all the different mortgage options available and can explain what the current mortgage lenders are offering first time buyers. The mortgage lender is the actual bank or lender that you end up borrowing from. Basically, the mortgage broker helps you chose a mortgage lender and then guides you through the mortgage application process.