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Buying

The purchase of your first home can be a daunting experience. But doing your homework will help you avoid the pitfalls that many first time buyers fall in to. Our step by step guide below will guide you through the process....

Step 1: Work out how much you can borrow
There are many mortgage calculators online to help you. Based on your salary and existing monthly commitments, they can give you an idea of how much you'd be able to borrow.

Step 2: Identify the right mortgage for you
It's vitally important that the mortgage you choose fits your individual circumstances. We've created a mortgage selector tool to help you work out which is the right mortgage for you.

Repayment options
You must understand and be comfortable with the way you choose to pay back your mortgage, either on a repayment or interest only basis. You can also combine these methods on a part repayment and part interest only basis.

Repayment mortgage
With a repayment mortgage, you pay off the amount of money you've borrowed plus the interest charged. You will gradually pay off the amount borrowed over an agreed term. Your monthly payment covers the interest we charge for the loan and also repays part of the money borrowed. In the early years of your mortgage term, the bulk of your monthly payment is interest. However, in time, as the mortgage balance reduces so does the proportion of interest. So as you approach the end of your mortgage term, most of your monthly payment is paying off the amount of money you've borrowed. Assuming that you maintain the payments, the mortgage will be repaid at the end of the mortgage term.

Interest only mortgage
There are a variety of interest only mortgages, but the monthly payment you make is only covering the interest charged for the mortgage.
If you choose an interest only mortgage it will be your responsibility to ensure that you have adequate means to repay the capital at the end of the mortgage term. This could be via such methods as an investment plan (e.g an ISA), existing shares, an inheritance, sale of the property, or the sale of a Buy to Let property. We recommend you consult an Independent Financial Adviser (IFA) to discuss the right repayment method for you.
What expenses are there when taking out a mortgage?
There will be other costs that you will have to bear in mind when you take out a mortgage including:

  • Deposit: In most cases there will be a minimum 5% deposit. So, if you were to buy a house for £200,000, you'll need to have at least £10,000 to put down as a deposit.
  • Conveyance fees: You'll need a solicitor and/or conveyancer to handle the legal elements of buying a house, such as checking the land registry details, conducting any necessary searches and changing of names on the title deeds.
  • Local Searches: Your conveyancer/solicitor will get local information about the property you want to buy and the surrounding area. This is obtained from the local authority to ensure that there are no potential problems that could devalue the property, such as new road plans or local boundary disputes.
  • Disbursements: Your solicitor or conveyancer will incur various fees as they request information from the land registry and from various other sources in the case of searches. These fees will be passed on to you.
  • Lenders' Valuation: Your lender will conduct there own basic survey. This will allow them to assess the value of the property, ensuring that the value of the property will give sufficient security for the mortgage. You can also choose to have a Homebuyers Survey, a more detailed report that provides more information about the overall condition of the property.
  • Fund Transfers: The transfer of money electronically from one banking or finance institution to another can also incur charges. Make sure you confirm what these charges may be based on the amount you will be transferring.
  • Stamp Duty: You will have to pay the Government tax on purchase of most properties valued above £125,000.
  • Moving costs: You should remember to budget for the cost of packing, removal and potentially storage of your belongings before you move into your new home.
     

Step 3: Gain Approval in Principle
If you want to proceed, then the next step is to ask your lender for an Approval in Principle. This is when you find out if, in principle, your lender will offer you a mortgage and confirm how much they'll lend you.

Step 4: Find the property that's right for you

Once you've got an Approval in Principle, you'll know the maximum price you can afford to pay, allowing you to look for your dream first home.

Choosing an area
Location, location, location is very important, that's why all our offices are located in some of London's most popular locations! Although Price is often the deciding factor, the more flexible you are in the areas you consider, the better the choice you are likely to have. Consider whether the area is convenient for your commute to work? Do you need local transport links? What about schools, if you have a family to consider? Do you need a garden? Is the house/apartment big enough for today and whatever tomorrow may bring?

How to buy
You will need to contact Nelsons directly and register your details with one of our negotiators, who will listen to your every requirement and match a property that will be ideal for you. If there is nothing that catches your attention immediately, don't worry, our dedicated marketing team should find you your new home within a few weeks.

Step 5: It's time to make an offer
Decide how much you would like to offer for the property and let our your personal negotiator know. If the seller accepts your offer, it will be 'subject to contract'. This means that both you and the seller have agreed in principle to proceed with the deal, but neither of you are legally bound. Once the seller has accepted your offer, and you have received a Key Facts Illustration for your chosen mortgage deal, you can apply for your mortgage.

Step 6: Engage a solicitor and apply for your mortgage

Now is the time to choose a solicitor. If you don't already have one, you may wish to consider - who can arrange this for you.
The next step is to arrange a valuation report, which you will have to pay for. This report ensures the property is worth the amount you want to borrow. This is a basic valuation and may not highlight potential problems that might arise with the property. You should consider carrying out a more detailed survey.

Step 7: Exchange and completion
Once your solicitor has completed all the checks, both parties are ready to exchange contracts. This means signing identical copies of the contract for sale which the solicitors exchange. This is when you pay your deposit through your solicitor. At this point, both parties are legally bound to proceed with the transaction. If you pull out after exchanging contracts, the seller is entitled to keep your deposit.

However, before you can complete (in other words actually take ownership of the property) you'll need to sign the mortgage deed and the document that transfers the property over to you. Make sure that any buildings and contents insurance are in place for the exchange date.

Step 8: Moving day
Prior to moving, inform the utility companies of your move. You'll need to redirect mail and inform others (your bank, employer, mobile company etc) of your new address. Don't forget to let all your friends and family know your good news!

How long should the process take?
This is impossible to say as it mainly depends on how many people are in your chain. Most people who are selling a property are also buying another. So if there is a 'break in the chain' somewhere up or down the line, this affects everyone! You can't move in because your seller can't move out. However if there is no chain then the buying process can often be completed within 2 to 3 months.
Once you've completed - Congratulations! You're the proud owner of your new home. You can collect the keys and move in to your new home and open that bottle of champagne!