Buying a home is a complicated process and can seem overwhelming to first-time buyers, our step-by-step guide explains what you need to do to buy a home.

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How to buy a house can be broken down into nine steps:

1. Define your budget

Defining your budget is the first step. It can be a bit overwhelming if you’re just starting out, but it’s important to be realistic and not over-stretch, especially when rates are low.

Deposit

You will typically need 10-20% of a home’s value saved before you can qualify for a mortgage. So, taking the average UK house price of around £ 190,000 (or £ 500,000 in London), you would need around £ 19,000 to £ 38,000 (£ 50,000 to £ 100,000 in London) savings.

But keep in mind that generally the larger your deposit, the lower your interest rate will be. But the ranges for the lower rates are usually multiples of 5%, so if you’re a few thousand under 20%, it’s worth trying to save to push your deposit over the edge.

If you have trouble getting a down payment

If you don’t have a 10-20% deposit, you have a few options

  • Purchase assistance The Help to Buy equity loan is available to first-time buyers in England and Wales and can effectively increase a deposit from 5% to 25%.

  • Guarantor mortgage A guarantor mortgage might allow you to borrow without a deposit because friends or family can keep you safe, but beware, this option is not for everyone.

  • Shared ownershipThis government program allows you to buy a share of a property and rent the remaining share to the local housing association.

Affordability criteria

Traditionally you are offered a mortgage loan for four times your income, if you earn £ 25,000 a year a lender can quadruple that number to come up with a mortgage offer of £ 100,000.

If you are applying with a partner, your income can be combined in one of two ways:

Lenders tend to use the method that gives the highest number.

But many mortgage lenders often take your expenses into account when analyzing how much you can borrow. These include things like:

  • Existing debts and liabilities (i.e. repayments you are already facing)

  • Child care expenses (or alimony)

  • Housing tax and utility bills for the house you want to buy

  • Insurance payments

Simply put, affordability criteria exist to help you meet your monthly repayments. Our guide to how much mortgage you can get explains this in more detail.

Other costs

You will also need to take into account various fees and other mortgage fees when purchasing, such as:

2. Compare the properties

Once you have an idea of ​​your budget, you have a better idea of ​​what properties you can afford to buy. Get a feel for the market and identify the areas you would like to live in.

Property comparison sites like Zoopla offer statistics and neighborhood information to help you make a decision.

3. Get an agreement in principle for a mortgage

An agreement in principle will help you make an offer, sellers will take you more seriously because you are more likely to close the deal.

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Check your credit report is in good standing before you apply because lenders will review your credit report when deciding whether or not to lend. Asking for an agreement in principle will leave a mark on your credit report, so it’s best not to request it multiple times as it could damage your credit score.

Also note that this is not a formal offer and it is not an absolute guarantee that you will get this mortgage back for that rate.

4. Find a home – approach sellers and real estate agents

If you find a home you like online, you will need to contact the real estate agent, but you may need to contact the seller directly and make an offer with them.

In either case, you will also need to find a lawyer who offers real estate services and “transfers” before proceeding any further.

5. Make an offer

Before you make an offer, you should ask and research a few key questions about the property and the area:

  • Are the sellers part of a chain (are they buying another house)?

  • Has there been any construction work recently?

  • What will be included in the sale (i.e. furniture and accessories)?

  • How long have the sellers been in this house (i.e. how many times has the property been bought and sold?)

  • Is this freehold or leasehold property?

  • In which housing tax bracket is it located?

  • Are there any major developments planned in the region?

  • Is there a risk of flooding or other natural disasters?

Make sure that when making an offer you make it clear that it is both contracted and investigated, meaning your offer may change once the building investigation is complete.

Make sure they take the house off the market if they accept your offer. Also, keep in mind that nothing is legally binding until you have traded contracts and the seller can opt out at any time.

6. Formally apply for a mortgage

You can apply for a mortgage either directly with a lender or through a broker (although a broker may charge you a fee).

If you’re a first-time buyer, you’ll probably be happy to get a mortgage, but make sure you’re getting the best possible rate. You should also think about:

  • The type of mortgage you want – fixed, variable or tracker

  • If there is any booking or prepayment charge

  • Customer service offered by the lender

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Once your request is approved, you can proceed with the exchange of contracts.

7. Swaps and transfer of funds

You will need your lawyer to handle the exchange of contracts and the transfer of money from your mortgage lender to the seller. This process is known as the transfer of ownership.

Once this operation is complete, you are now the legal owner of the house and all you have to do is organize your move.

8. Prepare to live in your new home

You will now have to make monthly payments on your mortgage for the duration of the term (usually 25 years).

But don’t waste time sorting out a few utilities and bills either:

  • Set up a levy for your housing taxes and your water bills

  • Switch to the cheapest energy offer

  • Get your bills ASAP – it can take weeks or months to set up a broadband connection

  • Go out Home Insurance to protect your assets and mortgage protection life insurance to help your loved ones keep your home in the event of death

If you want to borrow to make improvements to your home, a personal loan can help, or if you just want to spread the costs of moving, a 0% buying card could help you breathe a little bit.

9. When to remortgage

Keep an eye on your rate, if you have a variable rate it can be affected by the base rate set by the Bank of England and other market forces. If it starts to increase, you should consider remortgage and set a new rate.

Most importantly, you need to remember when your mortgage discounts or fixed periods have expired to avoid seeing your rate increase.

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Compare a wide range of first-time home mortgages on our comparison charts