Buying your First Home

Buying your first home can be stressful but with planning you can help avoid the pitfalls.

Here's our guide to buying in England and Wales. See below for buying in Scotland.

1. Choosing a location
Cost is often the deciding factor but the more flexible you are, the better the choice. Use websites from individual agents and aggregate sites. You won't normally pay an estate agency fee when buying.

Things to consider: Is the area convenient for work and transport links? What about schools, parks and safety? Do you need a garden and is the property big enough for your short and long-term needs?

2. Take your time
Unless you want to end up in a home you're not happy with, do your research. Visit a property several times and at different times of the day, check out the neighbourhood and take a camera.

Take our printable checklist to keep a record of the places you visit. If you're buying on your own, take a friend or relative for that valuable second opinion.

3. Getting the money
Buying a home isn't cheap. You'll have to pay such things as legal fees, a surveyor, Stamp Duty (if applicable) and moving costs.

And then there's the mortgage. How much you can borrow will depend on your circumstances - your income, employment status, credit history, outgoings, the deposit and whether you're buying alone or with a partner for example.

Never borrow so much that you can't deal with the unexpected, such as a new baby, increases in interest rates and so on.

Use our budget planner to help you work out how much you can afford to pay each month.

4. Which mortgage?
The range of mortgages on the market can be bewildering but our mortgage specialists will be able to explain them in more detail. Alternatively, see our guide to mortgages.

Generally, you choose between repayment (capital and interest) and interest-only. Your choice of mortgage type, the interest rate, the amount of the mortgage and term will determine your monthly repayments.

Other factors to consider are whether the mortgage includes early repayment charges if you choose to move your mortgage to another lender; any fees you may have to pay if you switch mortgage with the same lender; any application fees; repayment holidays; the ability to make under or overpayments; cashback or other offers; and whether you will still be able to afford the repayments once a fixed or discounted rate is over.

Your lender should be able to give you an idea of the amount you can borrow, based on your circumstances, before you start hunting and provide you with an Agreement in Principle. This isn't a definite commitment to lend but is helpful when putting in an offer.

5. Putting in an offer
Once you've found a property, decide how much you're prepared to pay and tell the estate agent. Ensure that any offer you make doesn't leave you stretched and unable to meet your mortgage and other commitments. And beware of bidding wars as you don't want to end up offering more than the property is worth.

The sum you offer is not laid in concrete at this stage. For example, if a survey finds extensive work needs doing on the roof you could negotiate the price down to compensate you for the future expense.

6. If your offer is accepted
You or your estate agent will need to write a letter to confirm your offer. It has to be headed 'subject to survey and contract' and that applies to everything you write or sign until contracts are exchanged.

You might be asked to pay a deposit as a sign of your serious intent to buy. If the purchase doesn't go ahead due to circumstances outside your control, you should get it back as the deal is not legally binding until contracts are exchanged, but once they are your deposit will normally be non-refundable.

All this and the other legal work should be carried out by a solicitor or Licensed Conveyancer and the job is called conveyancing. Ask friends or family to recommend one. Alternatively, ask your lender, the Law Society or the Council for Licensed Conveyancers. Get quotes from several firms.

7. Surveys and valuations
Once your offer has been accepted, you'll need to complete your mortgage application. Your mortgage lender will carry out a valuation of the property to ensure it's worth the sale price. This normally carries a fee and is usually basic so it won't highlight all the things that might cause you problems.

You may therefore want to appoint a surveyor to check the property. There are different types of survey.

8. Spread the word
In the run-up to moving, arrange insurance if needed and inform the utility companies of your move. You'll need to redirect mail and inform others (your bank, insurance companies, HM Revenue & Customs, etc) of your new address.

Once you and your solicitor are happy, contracts can be exchanged. You and the seller are now legally bound to follow through with the transaction. If you pull out you could lose your deposit.

Completion is the day when the balance of the money owed is paid to the seller - this is arranged through your solicitor - and the day you pick up the keys and can move in.

When you buy, you'll pay a Land Registry Fee. You also pay Stamp Duty if the property is priced over £125,000. Your solicitor will arrange this. Rates are:

Property value & Stamp Duty
Less than £125,000 - nil
£125,001 to £250,000 - 1%
£250,001 to £500,000 - 3%
£500,001 and over - 4%.

9. How long does it all take?
This depends a lot on how many people are involved in your chain.

Most people who are selling a property are also buying another. So if the people you're buying from find that the people they're buying from can't get a mortgage to purchase their new property, for example, there'll be a 'break in the chain' and they may have to drop out. That means you'll feel the 'domino effect' - you won't be able to move in because your seller won't be able to move out.

10. Home-buying packs
Under government plans, everyone selling a house from 1 June 2007 will have to provide prospective buyers with a Home Information Pack or 'sellers' pack'. It will contain the basic information you need about a property before you put in an offer.

Sellers' packs will be free for buyers but will cost sellers to prepare. In 2006 the government removed a requirement for the packs to contain a home condition report.

Buying in Scotland
The property-buying process is different in Scotland. Here's how it works:

• Appoint a solicitor before you start looking for a property as the process can move quickly. Once you find a property, tell your solicitor to 'note interest' - this is informing the seller's solicitor that you're interested in buying it.
• You'll be told the asking price and invited to make a secret bid in writing above this amount - a verbal offer isn't enough. This is called the 'offers over' system. The highest bidder will be legally obliged to buy the property.
• You must apply for a mortgage before making a bid so that you know exactly how much you can afford. You should also have a survey carried out before you make a bid as the result may affect the amount you offer.
• A closing date for bids will be announced once the selling agent has been notified of all interested parties. Your solicitor will submit your offer and a proposed 'date of entry' (the date by which the money will be transferred and the keys received).
• If your bid is successful, you 'conclude the missives'. This is when both parties' solicitors exchange letters agreeing the date of entry and so on. Once the seller's solicitor sends you a letter of acceptance, you should insure the property.
• You then sign the title deed and receive the 'disposition document' and keys, once your funds have been transferred to the seller's solicitor.