Ten terms first time buyers will want to know

Buying your first home can be quite a daunting prospect, however with the right professionals on your side, it can be a fairly painless process; nonetheless, it's good to be well prepared. Here are a few terms you may hear along the way that you may not have encountered before. It’s likely you will hear these a lot before you move into that very special first home.

Lender or Lenders - this is the collective term for the banks and building societies that provide mortgages in the UK.

Agreement In Principle/Mortgage Certificate - this is the process whereby a lender assesses your willingness to pay by checking your credit history and current financial position with a credit reference agency (most use a company called Experian). Factors such as how much deposit you are putting down, how long you've lived at your address and how long you've been in your job also contribute to an overall 'credit score'. An estate agent may ask you to get one of these upfront though it’s important to be careful, here, as too many credit checks in a short period of time can affect your ability to get a mortgage because it leaves a footprint on your credit file.

Affordability - this is the process by which lenders assess whether you can 'afford' the mortgage repayments. They look at your income and regular outgoings and use a formula – each lender will work slightly differently – to ascertain how much money they might lend you.

Completion/Exchange Of Contracts (EOC) – these are the best words of all! This describes when you legally become the owner of the house and usually when you get your keys. EOC is when you legally commit to buy and the seller legally commits to sell to you, paving the way for completion.

Survey/Valuation - this is where a lender employs a professional surveyor to assess the property, ensure it is safe and worth what you are paying for it. Ideally, you should also obtain your own private survey. The 3 main types of survey survey reports are : Mortgage Valuation, Homebuyers report and Building / Full structural survey.

Conveyancing – is the generic term for the legal process of purchasing your home, usually carried out by a solicitor of your choice.

Stamp Duty – this is government tax paid usually via your solicitor just before you move in. The government are currently waiving this tax for properties worth up to £300k, so you may not have to worry about this.

Fixed Rate - a type of mortgage where you fix the interest rate and your payments for an initial period of time (usually 2, 3, 5, 7 or 10 years). This can be an ideal option if you want to know your payments in advance and protect against rate rises. Other types of rates are also available such as tracker, variable and discount products. Though, once again, it’s important that you take professional advice first.  

Deposit - the amount of money you are putting towards the purchase yourselves, be that savings or a gift from relatives. This is then used to calculate the loan to value (LTV)

Vendor - the person selling the property to you.

We are always happy to help first time buyers find their new home. If you would like any more information, please don’t hesitate to get in touch.

February 2018