Buying a home

Buying your home could be the most important purchase you ever make.

Key steps when planning to buy a home

When you're buying a home for the first time, it can be difficult to know where to start. Here are a few things to keep in mind before you start house hunting:

• Make sure you've fully thought through why it makes sense for you financially.
• Consider if you'll still be able to manage your finances if interest rates go up.
• Get a solicitor or licensed conveyancer to help guide you through the legal process. They'll explain what's happening and what to expect next, so make sure they're someone you feel comfortable talking to.
• Your new home is the beginning of a new chapter in your life. Think beyond the move - for example, insurance and savings for a rainy day.
• Think ahead to take out the stresses. Planning your new life in a new home is something to enjoy!

Planning ahead will help you make progress towards your goals and show lenders that you are prepared, which could make it easier for you to get a mortgage.

Unless you've sorted out your home-buying fund, you will need to start saving, cut down on any borrowing and make sure your credit record is as good as possible.

Build up a solid savings balance:

Mortgage lenders now require a deposit, usually a minimum of 10% of the property price. The more money you can put in as a deposit, the better the mortgage deal you can get. This could mean a lower interest rate.

Reduce your debts:

Most lenders work out how much you can borrow based on your outgoings as well as your income, so it's worth looking at any existing credit agreements you have to see if these can be repaid before applying for the mortgage.

Improve your credit rating:

Your credit rating can have an effect on the mortgage rates available to you. If your rating isn't good, you should take steps now to improve it. Here are some ways you can do this:

• Be on the electoral register
• Keep up to date with payments on loans and credit cards
• Check your credit rating with a credit rating agency such as Experian and Equifax to make sure it's accurate
• Remember, any missed or late payments will be reflected on your credit report and could stay there for years, so be sure to keep paying on time, even if it's just the minimum amount. Also make sure you cancel any unused store cards, credit cards and bank accounts

What can you afford?

The checklist below is quick and easy way to help you work out how much you can afford to spend on your mortgage each month. Subtract your total spending from your total income and the amount left over might give you some idea of how much you could afford for your monthly mortgage payment.

• Total - What you earn each month
• Minus - What you spend on household commitments each month
• Minus - Your everyday spending each month
• Minus - Your occasional spending on things like holidays
• Total available to spend on your mortgage each month

Extra costs when buying a home

Moving home is expensive and there are costs that we often forget but could have a real impact on your decisions. You can make things easier by budgeting for them.

Deposit

You’ll need a deposit, usually a minimum of 5% of the property price. Generally the bigger the deposit you have, the better the mortgage deal you can get. This could mean a lower interest rate. So the sooner you can start saving the better. Get started by opening a separate savings account and setting up a monthly standing order.

Arrangement fees

Many lenders charge an up-front fee for setting up a mortgage.

Mortgage Product Fees

Most lenders have a selection of mortgages with a product fee on certain deals.

Mortgage valuation

Most lenders charge a fee for valuing the property you’re buying. 

You should always look at the area around the home you want to buy to understand potential flood issues. For more information on flooding, check out: Check for flooding - GOV.UK (www.gov.uk)(opens in a new tab). And for Scotland: Flood Maps | SEPA - Flood Maps | SEPA(opens in a new tab).

If your home is in an at-risk area, there are things you can do to limit the impact. For more information on protecting your property from flooding, visit:

• Protecting property from flooding - Met Office(opens in a new tab)
• How Can I Flood Proof My Home? - HomeOwners Alliance (hoa.org.uk)(opens in a new tab)
• For an idea of how much it might cost to improve your flood defences, please visit:  Property Protection Advisor – National Flood Forum(opens in a new tab)

Property Protection Advisor is a charity that creates bespoke reports following a quick 30 second survey.

Legal searches and fees

You'll need a solicitor or licensed conveyancer to take care of the legal details.

Higher Lending Charge

If you're borrowing a high percentage of the value of the property, the lender may charge a fee to take out insurance cover. This protects them in case you can't pay back your loan and they have to sell your house at a loss.

Stamp Duty Land Tax

This is a tax you pay when you buy a residential property such as a house or flat. You usually pay Stamp Duty Land Tax (SDLT) on increasing proportions of the property value at the time when your purchase takes place. SDLT applies only to properties over a certain value so check out the government website for details on the current rates and thresholds applicable.

Removal costs

You may be happy to hire a van and move things yourself. A removals firm will cost more but can make the whole process much less stressful.

Estate agent's fees

If you're also selling a house and decide to use an estate agent, they'll charge commission on the price your house sells for.

Home insurance

Don't forget buildings cover before you exchange contracts.

Find out more

At TSB, we understand it’s important to protect what you value the most. That’s why we offer a range of insurance products to look after what’s important to you, whether it’s home or life insurance.