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6 February 2019

First-time buyer guide – a step by step guide to buying your new-build home

If you’re a first-time buyer and thinking about purchasing a new-build home, you’ve come to the right place. As the home of new home builds, we’ve used our experience and expertise to create a guide that will help take you through the entire process of buying your first home; from saving to moving into your new home as well as offering advice to make the process as stress-free as possible.

Costs of Buying a Home

One of the first things to think about when buying any property is the up-front costs such as your deposit and stamp duty, mortgage costs and the on-going costs involved when buying and running your own home. 

Before you start looking at properties you need to save for a deposit; this is the amount of money you’ll be putting towards the cost of purchasing your property. Generally, you need to try and save between 5% to 20% of the cost of the property you would like. The more money you can save for a deposit, the better, as it will give you access to a wider range of mortgages and at a cheaper rate. 

For example, if you want to buy a property costing £150,000, you’ll need to save a minimum of £7,500 (5%).

There are several government-backed schemes such as ‘Help to Buy’ designed to give first-time home buyers a helping hand; saving you money, time and inconvenience that are definitely worth investigating.

Stamp Duty
Stamp duty land tax is a lump-sum tax that anyone buying a property or land costing more than a set amount has to pay. This rate varies, depending on the price of the property and is slightly different as a first-time buyer.

As a first-time buyer you’ll pay zero stamp duty on the first £300,000 of any property costing up to £500,000 and only 5% of any proportion between £300,000 and £500,000. 

  • Up to £300,000 purchase price: 0% stamp duty
  • £300,000.01 to £500,000: 5% (on that portion of the purchase price only)

Use our handy stamp duty calculator, which can be found on each of our properties to work out how much you’ll pay.

Other costs
Aside from the monthly mortgage payments, there will also be other costs associated with buying and running your home. These can include:

  • Survey costs
  • Solicitor fees
  • Buildings and contents insurance
  • Removal costs
  • Initial furnishing and decorating costs
  • Council tax
  • Utilities
  • Maintenance and repairs

Getting a Mortgage

Now is the time to do your own research and seek professional advice from a mortgage advisor. There are various mortgage deals to choose from depending on several factors such as your income, outgoings and deposit you are able to put down. By speaking to the experts, they will ensure you receive the best advice on the most suitable mortgage for you.

The Mortgage Application Process
Mortgage lenders now follow a strict and rigorous application process to ensure you are able to make your repayments; even if interest rates rise, or as a result of any planned events which could affect your financial circumstances such as starting a family.

To speed up the process, it’s a good idea to start collecting all the documents you will need for the mortgage application, which might include:

  • Your last 3 months’ payslips
  • Utility bills
  • P60 form from your employer
  • Proof of benefits received
  • Passport or driving licence (to prove your identity)
  • Bank statements of your current account for the last three to six months
  • Statement of two to three years’ accounts from an accountment if self-employed, plus tax returns

To save you time and money, always ensure the information you are providing is accurate and that the information on the application form matches the documents you supply.

Once you have submitted all your documentation your mortgage lender will come back with a mortgage agreement in principle. This is a conditional offer saying you may have been accepted and will give you an idea of the amount of money you can borrow. 

To apply in full for a mortgage you will need to have a property in place, and an offer accepted. 

New Build Homes and Getting a Mortgage

In most cases the mortgage application process is the same regardless of whether your property is newly built. However, there are some things you will need to be aware of, which your mortgage advisor or new build sales office will be able to help you with.

  • Timescales – developers often work to demanding timescales, which can mean in some circumstances a quick turnaround between putting your deposit down and exchanging. 

  • Mortgage offer periods – many lenders offer a mortgage that is valid for 6 months, buying a new-build may mean you need a longer period of time to complete on your house purchase. So, you may need to get your lender to extend the offer or your offer may need to be assessed. 

  • Specialist new-build mortgages - there are also special new-build mortgages available with a longer validity – speak with your mortgage advisor for the best option for you.

Finding Your Ideal Home

Now comes the exciting bit, you know what you can afford and that you can in principle get a mortgage. Now it’s time to start looking for your new home.

It’s a good idea to write a list that has certain criteria you are looking for such as area, number of bedrooms, outside space, near a train station or close by to local schools. If you are moving to an area you don’t know, our team of experts can answer any questions you may have and advise on the best areas that suit your requirements. 

The more you think about what you want, the easier your search will be. If you are unsure what you are looking for, view lots of properties and that way you will soon discover what you like and don’t like, and what are essentials and what you can live without. 

You can use our property search to find your ideal new-build home in Sussex, Surrey and Hampshire, plus register with us to see new-build homes before anyone else and hear about exclusive events and incentives. 

Putting in an Offer
Once you’ve found your dream new-build property, you’ll need to put in an offer and pay a reservation fee – our new homes team will explain and help you through this entire process. It’s good to bear in mind you may be purchasing and committing to a property before it’s even been built.

You may need to provide proof that as a first-time buyer, you can secure a mortgage – this is where you mortgage in principle comes in handy.

When your offer has been accepted, you will need to apply for your mortgage in full and have all of your paperwork organised and ready.

You are now on the home stretch of buying your first home – this bit is mainly managed by solicitors so keep up to date with them and provide any information as quickly as possible to avoid any delays.

Exchanging Contracts and Completion

Your solicitor will now work on the legal and administrative work associated with purchasing a property, known as conveyancing. This includes arranging stamp duty, contacting Land Registry, transferring money and generally acting as an intermediary between you, the mortgage lender and the developer.

Terms of the sale will be agreed including who you are, how much you are purchasing the property for and a completion date for when you can move into your new home.

Your mortgage will now be approved, and you may well need to insure the property as part of the approval process (this is standard practice with lenders). Contracts will be exchanged, which means you are now locked into a legally binding deal, and it’s at this point you will need to pay the deposit.

Once the property is structurally complete, the developer will give you written notice that it is ready and then completion will take place. On completion day, you’ll be able to pick up the keys and start moving and settling into your new home.

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