First time buyers guide

Planning to buy your first home can be exciting, but perhaps a little daunting. This guide is designed to take you through the process and explain the ins and outs in more detail. We hope you find it useful along the way.

1Plan for a new home

In an ideal world, buyers would have a large deposit saved. Not everyone, however, can afford to save a hefty percentage of the property price. When it comes to repayments, a larger deposit could mean lower monthly repayments. This is because, in general, you’ll find that the bigger the deposit you have, the cheaper the mortgage deal – and you don’t need to borrow as much. A longer lending period can also help to reduce the monthly repayment although you will pay more interest over the longer term compared to a shorter term.

While thinking about a deposit, it’s prudent to take into consideration the fees that come with buying a home. There are usually several to bear in mind, such as product fees, lender’s valuation fee, conveyancing fees, removal fees and, depending on your property price, stamp duty land tax. Why not find out more in our ‘What else should I budget for?’ article.

2Check how much you can borrow

It’s important to have an idea of what you are likely to be able to borrow before you start the search for a property. Most lenders have online tools that will be able to give you an indication of how much you may be able to borrow by doing a high-level affordability assessment. See how much you may be able to borrow with our useful calculator.

Online tools are helpful as a guide, but for a more accurate view, you should apply for a ‘Decision in Principle’ (DIP). This will tell you how much, in principle, a lender may be able to lend you. Do remember that this is not a guaranteed offer, as at this stage you have not gone through the full application process. A DIP is useful, however, and makes you appear more attractive to estate agents, as it shows you are serious about buying and are on your way to securing a full mortgage offer. It also gives you a much better idea of your maximum budget and what price bracket you can search within. Our DIP process is a ‘soft search’ in its assessment, so no footprint would be left on your credit history.

3Start looking for a new home

So, you have a budget in mind. Now the fun begins! There are a number of online sites which list properties for sale – they are easy to use and can send you helpful alerts when properties that might interest you come onto the market. In Scotland, solicitors tend to sell the majority of properties and at sspc.co.uk (Scottish Solicitors Property Centre) you’ll find links to regional property centres throughout Scotland. These sites are full of important information such as school catchments and local amenities.

Looking at houses can be exciting, but to get the most out of your viewings it is useful to go armed with a list of questions. Why not take a look at our house hunting checklist for some hints and tips?

4Making an offer

So you’ve viewed a few properties and found THE ONE. It’s time to make an offer. Depending on what part of the country you’re buying in, you might choose to offer less than the asking price. Before you do, however, decide what your next offer will be if the first one is rejected. Sometimes, offering the full asking price means you avoid the risk of a bidding war. If your offer is accepted, it’s a good idea to ask the estate agent to take it off the market. This reduces the chances of another buyer viewing the property and trying to tempt the seller with a higher offer!

It’s worth remembering that in Scotland, the offer process is different to the rest of the UK. In Scotland, offers are made as a ‘sealed bid’ and often houses are marketed at a ‘fixed price’ or ‘offers over’ – in which case you may choose to bid over the asking price. It’s worth reading our article Making an offer in Scotland for further details.

5Assign a solicitor/licensed conveyancer

You will need to appoint a solicitor or licensed conveyancer to carry out the conveyancing – or in other words, handle all the legal aspects of the purchase. The solicitor or licensed conveyancer will also be able to act for M&S Bank in relation to the mortgage providing they meet certain criteria. Ask friends or relatives for a recommendation. Alternatively, you may choose to ask the seller's estate agent to recommend one. The most important thing is to choose a solicitor or conveyancer that you are happy with.

6Complete your full mortgage application

To complete a full mortgage application, you can approach a lender directly. They will be able to give you mortgage advice, but only regarding their own range of products. You could choose to use a mortgage broker, who will provide you advice on mortgages from a number of lenders but is likely to charge you for their service. Some brokers are tied to specific lenders, some have a ‘panel’ of lenders that they can use and offers will look at the whole market for mortgage deals. Your mortgage adviser will take you through the ins and outs of the mortgage that suits your needs and talk through the total cost of the mortgage, including fees and charges. There are various types of mortgages – why not take a look at the different types of mortgages that M&S Bank offer?

7Complete valuation and searches

As part of the mortgage application process, your lender will require a valuation of the property you wish to buy. This is to ensure that the property will be an adequate security for the amount they are lending. This is known as a mortgage valuation. This type of valuation is conducted on behalf of the lender and sometimes there is a fee payable to your lender for this part of the application. You may wish to instruct a surveyor to inspect the property on your behalf and to prepare a more in depth survey which, depending on the type of survey you choose, will give you a detailed report on the structural condition of your chosen property and flag any potential issues. In Scotland, sellers are required to provide a Home Report. This gives information on valuation, energy efficiency and covers basic structural checks and internal features.

Meanwhile, your solicitor or licensed conveyancer will be conducting searches. These identify any issues in the surrounding area that may affect the value or amenities of your property. These might include, for example, the granting of planning permission for a new development or building control issues.

Our article on Understanding surveys provides further information.

8Exchange contracts and pay deposit

Once all the details have been agreed, the two solicitors/licensed conveyancers exchange contracts (if the property you are buying is in England, Wales or Northern Ireland) and both parties are now legally committed to the sale. If the property you are buying is in Scotland, this stage in the procedure is known as ‘conclusion of missives’.

On exchange of contracts/conclusion of missives, you are likely to have to pay a deposit. If you withdraw from now on, you are likely to lose your deposit and may also be responsible for other fees and charges.

9Complete mortgage and move in

At last, it’s completion day. Your lender releases the funds for the cost of the property to your solicitor or licensed conveyancer and ownership is transferred to you. The sellers or vendors are required to vacate the property and you can collect the keys. The property is now yours and you can enjoy moving in and starting life in your new home. Congratulations!

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The material contained in this article is intended for information purposes only and not as advice.

You should obtain professional legal or other advice if you are unsure about the effect on you of any matter in this article.

Published: 26 January 2018

Your home may be repossessed if you do not keep up repayments on your mortgage