Buying a new home can seem a bit daunting, but it doesn’t have to be. Have a read of our guide below to get an understanding of the buying process and hopefully make your experience an enjoyable one.
These are the steps to becoming a first-time homeowner in Scotland
First-Time Buyers – Carry Out Your Homework
The majority of people don’t have enough in savings to purchase a house, so generally have to apply for a mortgage. The term ‘mortgage’ is a loan for buying a house.
The mortgage is secured against the property which means if at any stage, you can’t keep up with the repayments, the lender will repossess the property and sell it to get their money back.
It’s important to think about more than just whether you can afford the monthly repayments, before you even consider approaching mortgage lenders. You will have to factor in all of your other monthly outgoings to be sure that you could still meet your payments if interest rates were to rise unexpectedly or if your circumstances were to change.
Get a Mortgage ‘In Principle’
When it comes to finding a mortgage you have several options including mortgage brokers, banks or searching online. Again, it’s important to research all of them properly and check out which will give you the best deal.
Once you have found the best mortgage deal for your circumstances, the lender will give you what is called an ‘agreement in principle’. This is also known as a ‘Decision in Principle’ (DIP), ‘Mortgage Promise’ or an ‘Agreement in Principle’ (AIP). A mortgage in principle is a certificate or statement from a lender to say that ‘in principle’ they would lend a certain amount to a particular prospective borrower or borrowers based on some basic information.
Find a Solicitor
You’ll need to hire a solicitor or a conveyancer to take care of all the legal aspects of the sale. They will also carry out checks for any planning or local issues that may affect the property’s value.
Home Report and Survey
Before marketing the property for sale, sellers have to arrange a Home Report to show to buyers interested in their property.
This has to include:
- Single Survey – an assessment carried out by a qualified surveyor from the Royal Institution of Chartered Surveyors (RICS) pointing out the condition of the property, where repairs are needed and a valuation of the property. A mortgage valuation may also be included.
- Energy Performance Certificate (EPC) – An EPC is a Certificate that states the energy efficiency of a building based on the standardised way in which a building is used. CO2 ratings are shown in bands from A-G. A being very efficient, G being very inefficient. The performance of the measured building is benchmarked against current Building Standards and recommended cost effective improvements.
- Property Questionnaire – This is completed by the seller or their agent asking about their ownership of the property and can be done online or offline. It provides a range of useful information, for example, the council tax band, length of ownership, existing service providers, parking facilities and alteration commentary.
When you receive the Home Report for the property you want to buy, make sure to read it carefully. It will give you a good idea of the running costs of your new home. You can also use it to ask the seller about utility bills.
Making an Offer as a First-Time Buyer
Once you have found the property of your dreams, you’ll have to make an offer for it. This is done through the estate agent or solicitor acting on your behalf.
You can make an offer on a property without already having an agreement in principle in place, but having one means the offer is more likely to be accepted and everything going according to plan. If the seller agrees to the offer, then the buying process can begin.
However, it’s worth noting that you won’t be obliged to go through with the deal if there’s a problem with the survey or contract. You are not legally bound at this stage.
Agreeing the Contract
Once all the contract details have been agreed, the two solicitors exchange letters. These letters are known as ‘conclusion of missives’. Both parties are now legally committed to the sale.
Completion and Final Steps
This is where the property actually becomes yours! You get the keys and the deeds, but there are still some fees to be paid. The seller’s solicitor will ask your lender for the remaining money owed:
- Usually, 90% if you had to pay a holding deposit) in preparation for the date of entry
- Your solicitor or conveyancer’s fees.
- LBTT (Land, Buildings and Transactions Tax). The Government has a tax calculator which can be used to calculate the rate of tax the payments will be arranged by your solicitor or conveyancer.
Congratulations, enjoy your own first home!
