Buying your first home
For advice on your own personal circumstances please contact:
Homelessness and Housing Advice Service Helpline 01922 653405 or email housingadvice@walsall.gov.uk
How much money do I need?
Obtain advice from your bank, building society or independent financial advisor on the amount they are prepared to lend you and the way you will have to pay back the loan.
The loan will be limited to the value of the property and your income. The maximum is usually three times your annual income and one times your partner's annual income, or 2.5 times your joint annual income. The amount of loan and term of repayment may vary according to the housing market.
Always under assess your income, and over assess your outgoings.
There are two main types of mortgage:
Repayment
The mortgage is repaid in monthly instalments over an agreed number of years. Part of the repayment repays the capital (the amount borrowed), the other part is interest. You may wish to take out a mortgage protection insurance policy (or the building society may insist) to pay off the mortgage if you die, or help with payments if you lose your job.
Endowment
Interest only is paid during the period of the loan. The capital is paid back in a lump sum at the end of the mortgage period. An endowment life insurance policy is taken out to provide this sum, but this is not guaranteed and depends on the ups and downs of the money market.
There are some other issues and costs that you should consider:
"One off" costs:
- Indemnity insurance (for most mortgages over 75% of the purchase price)
- Valuation fee
- Homebuyers report
- Legal costs
- Solicitor's fees
- Land Registry Land search fees
- Stamp duty (where applicable)
Recurring costs
- Mortgage repayments
- Endowment/mortgage protection insurance premiums
- Building insurance
- Service charge and/or ground rent (for flats)
- Repairs and maintenance
- Council tax
- Water and sewerage charges
- Gas and electricity etc
- Contents insurance
Remember! Do not borrow more than you can afford to repay. Allow a safety margin for any possible changes in your financial position.
Finding a suitable property
Contact local estate agents and check the local press for details of properties within your price range.
When you have found a suitable property, make an offer through the estate agent and make your formal mortgage application.
The survey
Before offering a mortgage, the lender will require you to pay for a survey or valuation. This survey will tell the lender whether or not the property is worth the amount you are asking to borrow and, if the property is likely to last as long as the mortgage period.
For your own peace of mind, especially if you are worried about the structure of the property, you can arrange for a full structural survey to be carried out. This survey is much more thorough than a normal survey and is more expensive.
Using a solicitor
If your offer is accepted, you should choose a solicitor to carry out the necessary legal work on your behalf. Before engaging a solicitor, obtain written quotation of fees and remember that it often pays to "shop around" and compare prices. You should ensure that your solicitor has explained to you all your obligations in relation to the ownership of the property.
Once the mortgage is confirmed and the survey is completed satisfactorily you can instruct your solicitor to proceed with the purchase, called the "conveyance"
Contracts
Sign and exchange contracts when your solicitor advises you to do so. On the date that the contracts are exchanged you must normally pay 10% of the purchase price as a "down payment"
Preparations for moving
You will need to make arrangements for removals, gas, electricity, water, telephone, Council Tax registration etc.
Completion
Completion usually takes place two to four weeks after exchange of contracts but may be completed sooner if required. The remainder of the purchase price is paid on the day. Once completion has taken place you can collect your keys and move in.
This page was last updated on 19 June 2009