A First-Time Buyer’s Guide
Whilst buying your first house is, no doubt, exciting, it can be stressful and daunting for most people. With that in mind, armed with our first-time buyer’s guide, you can get your feet onto the property ladder in the knowledge you have everything covered.
Buying your first home is more than simply finding the house, putting in an offer and picking up the keys. For all house buyers, first-time or not, there are important things you must do before you even get to the point of submitting an offer.
Our comprehensive guide takes you through a step-by-step process to aid you in your new home search.
Before you buy
Once your solicitor has submitted your offer and it has been accepted it does become easier.
Before you get to that stage, there are many things you need to do to help you make the right decision and ensure that the entire experience is successful and as smooth as possible.
Estate Agents
You need to remember that estate agents are there to represent the seller. That’s their job. Their challenge is to get the best price possible for the seller. The estate agent has been engaged to help the seller present their house in the best possible light and to persuade you to part with as much as possible in your offer.
If you have questions, please ask the estate agent and, if you have their contact details, speak to the seller. You can always cross check what you are being told with your solicitor.
The seller’s estate agent will give you information, arrange a viewing and follow-up after the viewing. Part of their job is to decide what interest there is in the house and then, in an offers over situation, fix a closing date on which offers are to be received. We will discuss what happens on a closing date later.
However, before even going to see a property you are interested in, it is important you obtain a copy of the Home Report.
Home Reports
The Home Report provides information on the house. All houses put on the market for sale must have a Home Report, with the exception of New Builds. The Home Report is prepared by a surveyor who has visited the property and carried out a review. The surveyor will publish details of the property, comment on the condition and provide a valuation. You can use the valuation in your mortgage application with most lenders. The Home Report also contains a questionnaire that the seller completes giving further information about the property.
When you read a Home Report, make sure you pay attention to the section on the condition of the property. The surveyor will give a score to the state of repair of the property. A score of 1 means no work is needed in the near future. If the surveyor gives a score of 2 to any element of the property, you can expect to carry out repairs to that part of the property in the near future. A score of 3 means that imminent repairs are needed. This means you should expect to carry out and, importantly, pay for that work as soon as you move into the property.
If there are a large number of 3 scores, you might consider using that as a bargaining chip to negotiate down the price of the house. Alternatively, you might ask the seller to deal with some or all these repairing requirements. You may wish to instruct investigative reports regarding these potential repairs before offering.
Viewing properties
When you go to view a property, take the Home Report along with you. As you go round the house, you will be able to see what the surveyor is referring to, especially if repairs are needed.
If the Home Report indicates that the seller has had work carried out to the property and that certificates are available, check with the seller that they have these. These might be things like timber specialist guarantees for treatment of dry or wet rot or woodworm, or they might be in relation to a damp proof course. The seller may have carried out alterations or extensions to the property and, if that is the case, make sure they have any local authority permissions and consents in relation to that work.
If there are areas of common property, ask the seller about these. Things like shared gardens and shared access can have a tendency to raise the temperature in neighbour relations. If the property is a flat, you should find out about the share of the cost of repairs you will pay, what the average bill is and how often this must be paid. It is a good idea to find out if there is a factor for a flatted property. If the property is in a new or modern development, there may be an owners association. If there is, find out about it and if there are any regular charges.
The more you find out about the property in advance of your purchase, the less of a shock it will be if you receive unexpected charges!
Property values
A first-time buyers guide would not be complete without a recommendation on how to check the price of the property. This is especially true when the estate agent fixes a closing date. It is important to gather some general price information before you bid for the house.
A good way to gather information is to go to ScotLIS. This is the property portal provided by the Registers of Scotland. When you visit ScotLIS, you will be able to enter the postcode into the search field and find price information of the properties in the area where you are buying. This information will also tell you when those prices were paid. However, you need to be careful with your price comparisons because the ScotLIS system does not give you information on the type of property but when you click on the address line, it will give you a summary of the property, the price history and, importantly, a location plan showing the boundaries of the property. If you want to know more, you can buy the Title for £3.60 (incl. VAT)
Rightmove also have a house price checker for sold properties as do ESPC, Zoopla and OnTheMarket. These services not only give you some historic pricing but also sometime tell you the type of property and the number of rooms.
The important thing about this is to be armed with price information of similar properties in the area. This will help inform your decision on how much you offer for the property.
Mortgages
When you start your journey into the housing market, you are most likely to need a mortgage. There are a large number of different types of mortgages available. You will need to consume a lot of financial information to decide what is best for you.
You can either approach a lender with whom you have savings and find out what they have available. They will tell you how much they think you can afford to borrow. Alternatively, you can engage a mortgage adviser who will be able to advise you on the best deals to meet your needs across the lending market.
Once you have settled on your lender and the amount and type of mortgage you wish to take on, ask for an agreement in principle. Whilst not a full approval of your mortgage application, it will allow you some comfort to know that the lender will provide a mortgage if all you have told them is backed up with evidence once you make a formal application.
If you are successful with your offer, it is essential you complete and submit your mortgage application as soon as possible. Most of the time it is the mortgage that slows down the purchase process.
Budget
First-time buyers should find out about the whole costs involved at an early stage. Your deposit will not be the only cost you will need to face. Also, when you think about your solicitor’s costs, you need to remember that it is not simply the fee the solicitor will charge. They also need to collect money from you to pay others. You need to pay any Land & Buildings Transaction Tax, Registration Dues and, importantly, VAT. You can read our page about the cost of buying a house for more information on costs.
Make sure you get a complete breakdown of the costs from your lender or mortgage broker and your solicitor before you go ahead. The last thing you want to do is have to abandon your purchase because you have not budgeted properly!
We should also mention that you will be asked questions about your ID and where your deposit is coming from. Your lender or mortgage adviser and your solicitor will ask you about this. Please do not delay in providing the information. Importantly, if you are receiving a gift from a relative or friend, you should let your solicitor know about this as soon as possible. The reason for this is that they must carry out checks about your source of funds before they can go ahead with your purchase. They are not being fussy or rude or intrusive. They simply need to record this information because of the regulations they operate under. That means if you are getting money from someone else to help with your house purchase, your solicitor will also need that person’s details – and that will include a copy of their Bank Statement and details of the origin of their funds.
Appointing a solicitor
Whether you are a first-time buyer or not, you will need to appoint a solicitor or residential conveyancing paralegal to deal with your house purchase. It is best to appoint a solicitor/residential conveyancing paralegal as soon as you set out on your search for a property. They will help guide you through the entire purchase process and answer any questions you might have.
When you find a property that you would like to buy, tell your solicitor right away. They will then contact the estate agent and note your interest in the property on a formal basis. This means they can discuss whether the estate agent is able to accept an offer now or whether a closing date will be fixed. The estate agent will advise your solicitor of any closing date and your solicitor will keep you advised about this.
One of the more challenging aspects of buying a house in Scotland is the offers over position. This is where you must submit a blind bid and hope that you are successful. Your solicitor will discuss with you how much over the asking price you might have to go.
Once your offer has been submitted, your solicitor will let you know if it has been accepted.
After your offer has been accepted
Your offer is the first stage in setting up the contract to buy the house. Your solicitor signs the documents on your behalf and sends copies to you. If yours is the successful offer, you will first receive a verbal acceptance. This is simply an indication that the seller is happy with the price, date of entry and extras being included.
However, any property purchase in Scotland must be in writing. The offer your solicitor submitted on your behalf will contain many conditions. The seller will decide which conditions they are prepared to accept, which they wish to change and which they wish to reject. To do this, their solicitor sends your solicitor a qualified acceptance. That is an acceptance that deletes, changes or adds conditions. If those are acceptable to you, your solicitor can send an acceptance and that ties up the contract.
If, however, the changes the seller is looking for are not acceptable, your solicitor can go back to the seller’s solicitor indicating which conditions are acceptable, which are not and which need further change. This process can go back and forth between solicitors until there is a final acceptance issued by one to the other.
It is important to note that during all this time, either the buyer or the seller can walk away from the transaction without penalty.
Solicitors call this process missives and the aim is to reach a point where missives are concluded. At that point you have a contract to buy from the seller who is contracted to sell to you.
The conveyancing process
Whilst the missives process is ongoing, your solicitor will review the seller’s title. They are likely to send you a copy of the title plan and the conditions of title. When you receive the plan, please check that the boundaries match your recollection of the property. If in doubt, visit the property to check. Your solicitor is very unlikely to ever have seen the property so it is up to you to make sure you are happy with the extent of the property you are buying.
Read the title conditions to make sure there is nothing that is likely to cause you any problem.
Your solicitor will check a range of reports the seller must provide. There are reports on the property and the sellers as well as local authority and coal authority reports. If there is anything adverse mentioned in any of these, your solicitor will draw that to your attention.
Your solicitor will also prepare the deed, called a disposition, that transfers ownership of the title to you.
If you are obtaining a mortgage
If you are obtaining a mortgage over the property, your lender will send loan instructions to your solicitor. Your solicitor will then prepare a standard security document for you to sign. The standard security is the document that is registered against the title to the property in the Land Register. Should you fail to repay your mortgage or otherwise breach the mortgage conditions, your lender can use the powers contained in the standard security to repossess and sell the property. Also, when you come to sell, the mortgage must be repaid and the standard security discharged.
Approaching settlement for first-time buyers
Your solicitor will ask you for your deposit and the purchase costs around one week before settlement. This date is called the date of entry. You should arrange to send these over to your solicitor by bank transfer using the bank details they will give you. They will then request your loan from your lender and, on the date of entry, pay the purchase price to the seller’s solicitor.
Getting your keys and moving in
Once your solicitor has paid over the price, the seller’s solicitor will authorise the release of the keys to you. You can then go ahead and move into your new house or flat.
In exchange for the price, the seller’s solicitor will send your solicitor the signed Disposition.
Your solicitor will then pay any Land and Buildings Transaction Tax. After that, they will then send the Disposition and Standard Security for registration in the Land Register. When the Disposition is registered, the title is transferred into your name.
In the meantime, your solicitor will send you an account showing what they received and what has been spent and what it has been spent on.
Once the registration process has been completed, your solicitor will send you a copy of the title showing it has been transferred into your name.
It is not only first-time buyers who find this process challenging. Even the most hardened house movers can find the process stressful!
It is important that you ask questions if you have any concerns at any point in your purchase.
Specialist conveyancing solicitors in Dunfermline and Kinross, Fife
Our solicitors have many years of experience in advising clients about all aspects of buying and selling property. They can guide you through the entire process and give you help and advice along the way.
If you would like to speak with one of our experienced solicitors or residential conveyancing paralegals you should get in touch today.