Buying your first home is not all that complicated.If you are lucky enough that say your parents have gifted you the price of a house then the process is simple. Armed with a swollen bank account you can spend some pleasant days visiting estate agents and the various houses they are trying to sell. Then you simply pick one house and hire a solicitor to buy the property for you. You sign the contract, transfer the money to your solicitor and wait to receive the keys. Then you move into the property or you can rent it out.
So the steps when buying a property in cash are as follows:
But most people do not have the money to buy a house in cash like this. In fact most people will have less than 5% of the total value of the property they are seeking to buy. This is why people tend to borrow the money they need and pay it back over many years – this is a mortgage.
So at this stage you are starting to think about buying your own property. You could be living with your parents or maybe renting your own place. You will need to take a look at your finances and examine how much money you can save for a deposit for a mortgage and how much you can realistically afford to pay back every month. You will also have to think about whether you are actually an eligible candidate for a mortgage.
Questions to ask yourself
Armed with the financial information from stage one you can start visiting banks websites in your country. You can use their online mortgage calculator to figure out how much you can borrow and at what rate of interest and your likely monthly payments. You can also obtain an agreement in principle from some banks so that you have confidence you can get a mortgage for the amount you need.
Once you know you can get a mortgage then you can start viewing properties. You can select several properties you are interested in and make offers on some of these properties. If one of the those offers is accepted you can go back to your bank and proceed with a full mortgage application. You cannot proceed with a full mortgage application until you know what house you want to proceed with.
Your bank will need all your financial information plus the details of the property you intend to purchase. You will probably have to attend a meeting in person. While in person meetings are declining due to technology the banks will still need to confirm you identification to prevent fraud. They will go through the whole application and then submit the application internally for review and approval or rejection. The bank needs to ensure that 1) you are likely to pay back the mortgage 2) if you do not pay back the mortgage that the property you are buying can be sold quickly and the bank will still make money.
The bank will process your mortgage application but they will also try to upsell you the following products:
Once your bank has approved your application the next step is the conveyancing. This is where your lawyer takes over the process and speaks to the lawyer of the seller.
You attend a meeting and read all of the documents.
The conveyance will ask you if you are happy to proceed and then you will sign the contract.
Contracts are exchanged usually over the phone between the two conveyancing.
You now have formed a binding legal contract to buy and sell the property.
Once the contracts have been exchanged you will be asked by your conveyancer to sign the mortgage deed and the document which transfers the house to you. The conveyancer will then apply to the bank for the mortgage money which will be transferred to the sellers conveyancer. Once the conveyancer has completed the legal process you can then pick up the keys to the property.