How first-time buyers can find their feet

THE complicated business of buying a home is accepted as if it were as natural as night following day. There could be a more efficient system but solicitors, estate agents and surveyors have a vested interest in maintaining the status quo.

For first-time buyers wanting to join the property-owning democracy, here is an outline of what's involved.

q Work out what you can afford. In most cases you will need to have saved up at least 5 per cent of the purchase price. You will need cash for solicitors' and surveyors' fees.

Visit several mortgage lenders to find out how much you can borrow. You might be allowed to borrow up to three times your salary. Add about five per cent contribution. If you are borrowing more than 75 per cent of the property's value, you have to pay for a mortgage indemnity guarantee, an insurance policy giving lenders extra security.

q Find out what the monthly repayments will be. Bear in mind that mortgage rates could rise. Estimate other costs, such as council tax, water rates, insurance and, for leasehold properties, ground rent and service charges. Can you afford the monthly costs?

q Appoint a solicitor at an early stage so that you can give details to your mortgage lender and the vendor as soon as you are ready to make an offer.

Ask the solicitor about the likely cost. This includes not just the basic fee plus VAT, but disbursements (fees to local authorities and the land registry) and stamp duty.

q Start viewing properties. Put your name on the mailing lists of all estate agents covering the area you want to live in. State your requirements forcefully. Estate agents act for sellers who pay them.

q When you have found the right property, make an offer. Don't be afraid to pitch well below the asking price. It is still a buyers' market. Estate agents usually tell you there's another interested buyer but even if you lose the property, there will always be others. Ask about the seller's position. Have they found somewhere to live?

q Finalise the purchase. Once an offer has been accepted, visit the property again to make sure you want to go ahead. It usually takes about four weeks to sort out the mortgage, the survey and the legal work. Solicitors carry out a local authority search, to make sure that, for instance, the property is not in the path of a planned motorway. This can cause a delay, but it is easily overcome if the solicitor carries out what is called a personal search.

The mortgage lender will usually have the property valued. The valuation may be lower than your offer. Mortgage lenders usually lend no more than 95 per cent of the valuation. If there is any shortfall between what you need and what the lender will lend you'll have to find the money yourself or renegotiate the price.

For a higher fee, you can ask for a home-buyer's report. This gives more details on the condition of the property. You might instead want a full structural survey; the extra expense will be money well spent if it unearths some horrors.

After four weeks or so you should be in a position to exchange contracts. This is when you hand over 10 per cent of the purchase price. If you don't have the money, the mortgage lender may have a scheme to help. Alternatively, ask your solicitor to negotiate a 5 per cent payment.

It is only at this stage you are legally committed to buying. It is then customary to delay completion for another four weeks. Completion day is when your lender transfers funds for you to pay the remaining cost of the property. Once this is done you can collect the keys and move in.