Your fi rst homeA guide to buying for the fi rst time

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Your guide to getting it right

You’re planning on buying a place of your own at last. It will be your space and no one else’s. It’s an exciting thought.

Although, thinking about everything you need to do can be a little daunting. There are so many forms to fi ll in and conversations to be had. Most of all, it’s a big decision and you want to get it right.

Well don’t worry, that’s how everyone feels. But the basics of what you need to do are quite straightforward. You just need to take one step at a time.

So we’ve broken the process down, with lots of practical tips. You can also speak to one of our mortgage advisers, they’re a great source of information. And in no time at all you’ll be making your fi rst cup of tea and wondering which big cardboard box to open fi rst.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Simple steps to buying your fi rst home Your 10 step guide

Step 1. Set your budget .............................................................................................................................................. Page 4

Step 2. Decide where you want to live ....................................................................................................... Page 4

Step 3. Find the right mortgage for you .................................................................................................. Page 4

Step 4. Make an off er .................................................................................................................................................... Page 5

Step 5. Apply for a mortgage ............................................................................................................................... Page 5

Step 6. Instruct a licensed conveyancer .................................................................................................. Page 5

Step 7. Arrange your insurance ......................................................................................................................... Page 6

Step 8. Get the property surveyed/valued............................................................................................ Page 6

Step 9. Exchange contracts ................................................................................................................................... Page 7

Step 10. Complete............................................................................................................................................................ Page 7

Your moving checklist ............................................................................................................................................... Page 8

Budget planner ................................................................................................................................................................... Page 9

Jargon buster ......................................................................................................................................................................... Page 10

Why choose Virgin Money? ................................................................................................................................. Page 11

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Want to know more?

Call us on

0800 0285 277*or visit

virginmoney.com

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Step 1 Set your budget First things fi rst. How much can you aff ord to pay?

Get an idea of how much you can aff ord each monthUse our budget planner on page 9 or to view this online, visit virginmoney.com

Get an idea of how much you can borrowWe can give you a quick verbal quote based on your circumstances, which you can write down here for reference:

How much can I aff ord? £

How much can I borrow? £

Extra costs to bear in mindRemember that when you buy your home you’ll incur other costs. These include valuation/survey costs, legal fees, any insurance that is required and Stamp Duty. (This guide will cover these steps in more detail.)

Step 2 Decide where you want to live Start by making a list of your priorities, such as the number of bedrooms, location, type of property, age of property, proximity to schools and transport. Then list these in terms of importance. It’s then time to start looking at what’s on the market:

Search on a property website such as zoopla.co.uk or rightmove.co.uk

Visit or call more than one local estate agent to discuss what you’re looking for and get on their mailing lists.

Look at property ads in local newspapers and magazines.

Step 3 Find the right mortgage for youYour mortgage is likely to be the biggest fi nancial commitment of your life, so think carefully about it. There are several diff erent types of mortgage to choose from, and you need to decide whether you want a rate that changes as interest rates move or one that is fi xed so you know exactly what you’ll be paying each month.

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Step 4 Make an offerSo you’ve found a home you like. You need to be 100% sure this is the right place and you can afford it.

Before you make an offer, consider the following points:

What is the maximum you can realistically afford? Do not make an offer that goes over your limit.

Decide in advance to what degree you are willing or able to negotiate.

Know how much deposit you need for the mortgage you want.

Are there any fixtures and fittings you would like included in the sale? If so, make sure your offer is conditional on these being included.

Ready to offer? All it takes is a phone call to the seller’s estate agent. Remember you can always raise your offer but don’t bid over your limit.

If your offer is accepted, although you’re not legally bound to buy the property (except if you are buying in Scotland), you’ll soon be ready to instruct a conveyancer, which means you will start incurring costs.

Step 5 Apply for a mortgage Right, you’ve had your offer accepted. Time to get your mortgage sorted. There are three main stages:

1. You’re given a Key Facts Illustration (KFI). Read it carefully and query anything you don’t understand.

2. You receive a Decision in Principle (DIP), sometimes called an Agreement in Principle (AIP), once you meet all of the requirements. We’ll need to run a credit check on you to do this.

3. Contact us to make a full application.

If you’re shopping around, you should be aware that getting too many Decision in Principles may have a negative impact on your credit rating.

Step 6 Instruct a licensed conveyancerThe legal work of transferring a property is called conveyancing. Your conveyancer guides you through the process, staying in contact with the seller’s conveyancer, the mortgage company and the estate agent.

They will also arrange for the transfer of the Stamp Duty Tax charged by HM Revenue & Customs.

It’s best to shop around for a conveyancer.

We can help take away the stress of this by getting a quotation for you from one of our trusted conveyancers from our conveyancing panel.

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Step 7 Arrange your insurance It’s important to have your new home properly protected. At the very least you’ll be required to get buildings insurance as a condition of your mortgage and our advisers can help you here.

Why home insurance makes senseSometimes things will go wrong with your home, or you’ll have an accident. If you’re covered with insurance it’s not a problem. If you’re not, it could cost you a lot of money. We can off er you a range of home insurance products which gives you a choice of levels of insurance – just ask us for a quote.

Mortgage Related Life Insurance It’s also worth considering Mortgage Related Life Insurance very carefully, especially if you have dependents. It will ensure your mortgage is paid off should you die, so your partner or family won’t have to worry about mortgage repayments. Not something you want to think about, but something defi nitely worth sorting out for a small sum each month.

Step 8 Get the property surveyed/valuedBefore you formally agree to buying your new place, you need to make sure it’s a sound investment. There are three diff erent types of report that do this to diff ering degrees of thoroughness.

Mortgage valuationThe most basic. We’ll need this to be sure the property is really worth what you’ve agreed to pay for it. It’s not a comprehensive survey of the property, however.

HomeBuyer reportThis tells you about the condition of the property and includes a valuation. It will point out areas that need urgent attention and ongoing maintenance issues that may aff ect the value of the property.

Building surveyThe most detailed survey report. It investigates the construction and condition of a property but doesn’t normally include advice on value, so you’ll still need a mortgage valuation as well.

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Step 9 Exchange contractsThe contract is a legal document that describes the legal title of the property and the price, and sets a date for completion. It sets out what will happen if either side fails to do what they’ve agreed, and mentions anything you have agreed (e.g. that fi xtures and fi ttings are included in the sale). In Scotland this stage is called ‘concluding missives’, but the purpose is the same.

Make sure you read through the contract and query anything you don’t understand, because once you’ve exchanged contracts you’re legally bound.

This stage is complete once:

1. The conveyancer has approved the contract

2. You have signed it

3. The two conveyancers exchange contracts

4. Your deposit money goes to the seller’s conveyancer

After exchange you are responsible for the property’s buildings insurance – please ask one of our advisers about this if you’d like more information.

Step 10 CompleteYour conveyancer will have prepared the mortgage deed before completion day, and you’ll need to have signed it in advance. But the conveyancer still typically has a lot of work to do on completion day.

As a fi rst time buyer you don’t have to wait until you receive the money from selling your own property, so that’s one less thing to worry about.

Once the seller’s conveyancer has received the balance of the purchase price from your mortgage lender, the estate agent gives you the keys. You’re now the proud owner of your fi rst home.

Talk to a mortgage

adviser todayCall us on

0800 0285 277*or visit

virginmoney.com

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Leading up to the move

Make sure you’ve arranged insurance for your new home

Book time off work

If you’re currently renting, read the meters before you leave so that you’re only charged for what you’ve used

Contact your utility companies to tell them you’re leaving and pay any outstanding bills

After you’ve moved in

Let important people know you’ve moved – such as your bank, GP, family and friends

Set up a mail redirect from your old home

Read the meters as soon as you move in

Contact utility companies and add your name to the electoral register

Chat to neighbours – it’ll help you settle in

Your moving checklist

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It’s essential to have a really good, honest idea of how much you can aff ord to pay for your mortgage each month. Working this out carefully is the only way of knowing for sure what mortgage you can aff ord.

Budget planner

Income per month

Monthly income from employmentAfter tax and National Insurance (include any overtime or bonus)

£

Other monthly incomeFrom savings and investments, pension, benefi ts

£Total monthly income: £

Spending per month

Utility billsElectricity, gas, water £

Council tax £

Telephone, InternetTV & satellite & mobile contract £

Buildings & Contents insurance £

What you can aff ord

To fi nd out the level of monthly mortgage payment you can aff ord, simply take your total monthly spending from your total monthly income.

Total monthly income: £

Total monthly spending: £

Estimated amount left to spend on mortgage: £

Please note: this is an estimated amount and may not refl ect the amount we will lend you. Your mortgage adviser will be happy to discuss this with you in more detail.

Don’t forget the other costs to consider

when you move, such as Stamp Duty, valuation and

conveyancer’s fees.

Total monthly spending: £

Personal costs per month

FoodGrocery shopping, meals at work, school meals

£

Clothing, footwear, essentials £

HealthcarePrescriptions, dentist, optician £

ChildrenChildcare, pocket money, school trips, school/college fees

£

PetsFood, vet bills, pet insurance £

Loan and hire purchase £

Life and health insurance £

Pension and savings contributions £

Credit & store cards £

Overdraft £

Travel and transport per month

CarInsurance, tax, MOT, breakdown cover

£

Petrol/Diesel £

Public transport expenditure £

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Jargon buster

Affordability check – Carried out by a lender to determine the amount you can borrow, depending on things like your income and expenditure.

Application fee – When you take out a mortgage, there may be a fee to pay to cover the cost of arranging your deal.

Annual Percentage Rate (APR) – The interest you pay per annum on your mortgage.

Arrears – Someone is in ‘arrears’ when they have missed mortgage or debt payments.

Borrow back – A facility offered on Flexible mortgages which allows any overpayments to be returned to the borrower.

Change of parties – A request to change the people named on your mortgage account.

Consent to let – A request to let out a property currently on a residential mortgage.

Credit check – A report on your credit rating.

Credit scoring – When you apply for any form of credit, the lender will usually ‘credit score’ your application, to help them decide whether to accept your application.

Decision in Principle (DIP) – This informs the borrower if, in principle, a lender will provide the money and what amount.

Deposit – A payment made to demonstrate the intention to fully purchase the property at a later date.

Early Repayment Charge (ERC) – A charge you may have to pay if you pay back your mortgage early and/or move to another lender while in a special rate period.

Endowment – An investment plan that you usually pay in to every month which will pay out a lump sum at the end of a fixed period, or on death, whichever is sooner.

Equity – The difference between the current value (or market value) and the amount of the loan or mortgage that is still outstanding – i.e. the notional amount you would receive if the property were sold.

Everyday mortgage – A simple mortgage from Virgin Money.

Fee Saver Option (FSO) – A mortgage deal with no product fee to pay, which may mean that you have to pay a slightly higher interest rate.

Fixed Rate mortgage – A mortgage where the rate of interest is ‘fixed’ over the term you choose, regardless of changes to the Bank of England Base Rate.

Flexible mortgage – A mortgage from Virgin Money with additional options such as the ability to make unlimited penalty-free overpayments.

Further borrowing – An additional amount borrowed, with the mortgaged property as security.

Income multiples – The factor by which your earnings are multiplied to work out how much you can borrow.

Interest rate – The amount of interest paid or charged (usually given as a percentage).

Interest only mortgage – A mortgage where you only pay back the interest charges each month. As the initial loan amount is not being reduced, this will need to be repaid in some other way at the end of the term.

Key Facts Illustration (KFI) – A document from the mortgage lender in a standard format allowing you to compare their service, product and offer.

Legal fees – A fee you pay to a conveyancer for their services.

Loan – A sum of money which is provided with the expectation of being paid back.

Loan to value (LTV) – The ratio between the size of the loan and the value of the property.

Mortgage – A loan to finance the purchase of a house.

Negative equity – When the amount you owe your mortgage lender is more than the value of your home.

Outstanding balance – The amount left on your current mortgage.

Overpayment – Any additional payment made on top of the contractual monthly mortgage payment.

Part and part mortgage – A mortgage where you pay back part of the initial loan and part of the interest charges. When the term ends, you will still need to pay off some of your original loan, but this will have reduced over time.

Payment holiday – A break in mortgage repayments that may be agreed with the lender and subject to an affordability check.

Porting – This is the process of keeping your existing mortgage when moving home.

Product fee – When you take out a mortgage, there may be a fee to pay as part of the mortgage product you select.

Remortgaging – Moving your mortgage from one lender to another without moving home.

Repayment method – The three ways you can manage the repayment of your loan - repayment, interest only, or part and part.

Repayment mortgage – A mortgage taken out where you pay back both the initial loan and the interest charges. Once all of the payments are made, the mortgage will be fully repaid.

Repossession – A legal process which involves a lender taking possession of a property which was used as the security for the loan.

Secured loan – A loan (such as a mortgage) with property or other assets as security.

Stamp duty – A tax on certain house and land purchases and some transfers of property.

Standard Variable Rate (SVR) – The lender’s normal mortgage rate which you will revert to after any discount or special rate period. It moves up or down at the lender’s discretion.

Term – The period over which a mortgage is scheduled to be repaid, often 25 years.

Tracker mortgage – A mortgage with an interest rate linked to a particular base rate, which it moves up and down with.

Underpayment – A reduction in mortgage repayments that may be agreed with the lender.

Valuation – Part of the process of getting a mortgage, involving arranging a valuation report.

To help you understand the terminology you might come across when buying your home, here’s a handy mortgage jargon buster.

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Why choose Virgin Money? A diff erent kind of bank with a fresh,

clear approach

A wide range of mortgages to meet your needs and great rates

Free advice

Friendly, helpful customer service

UK-based contact centres with knowledgeable staff

Useful guides that make everything straightforward

What to do nowSpeak to a mortgage adviser today, or fi nd out more about

how else we can help.

Call us on

0800 0285 277*or visit

virginmoney.com

We’re on a quest to make banking better

How will we be diff erent? By doing what banks should do:

By genuinely caring about you and your money. Not rushing in to sell to you.

By putting customer service ahead of cost cutting. People ahead of account numbers.

By creating straightforward, no-nonsense products. With the re-assurance there’s no sting in the tail.

By making a fair profi t. Not an excessive one.

Above all, by using our expertise with money to do some good in the world.

We won’t get there straightaway. But we won’t rest until we do.

It’s time for a better kind of bank.

It’s time for Virgin Money.

At Virgin Money, we have an ambition to build a better kind of bank. A bank which aims to make everyone better off – our customers, staff and shareholders, our business partners and the communities we serve.

It’s a huge ambition, but one which we believe we have the passion to achieve.

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Valid from 08.11.13 VMP363V2

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Find out today how we can help you

become better off Call us on

0800 0285 277*or visit

virginmoney.com