Steps to buying your own home

Buying your own home is likely to be one of the biggest decisions you ever make. From evaluating the flooring to checking out internet speeds in the area, there’s a lot to consider and a large part of the process is getting your finances in order.

Here are some steps to help you get started.

1. Check your credit score

Credit reference agencies compile information about your financial history and generate credit scores. Banks then use the information from these agencies when making a decision about whether to give you credit and determining what amount you may be able to repay.

You can see the credit scores and credit ratings that agencies have for free or for a small fee. Since lenders and reporting agencies score differently, a report won't tell you whether you'll succeed in a mortgage application, but it can be a good idea to check to make sure there are no mistakes.

Explore more: What is a credit score?

2. Know what you can afford

It’s tempting to jump straight onto property search sites to find your dream home, but it’s key to take the time to work out how much you could afford to borrow for a mortgage.

Explore more: Use a calculator to see how much you could borrow 

If you’re unable to meet your repayments your home may be repossessed, so it’s important to be confident you’ll be able to afford your repayments – even if your circumstances are to change.

3. Figure out which mortgage you want

There are several mortgage options and it’s important to find one that suits you based on your circumstances and goals. Types of mortgages:

  • Tracker mortgages
  • Fixed-rate mortgages
  • Discounted variable rate mortgages
  • Capped rate mortgages
  • Offset mortgages

Note: HSBC does not offer discounted variable rate mortgages, capped rate mortgages or offset mortgages.

4. Work out your deposit

A larger deposit may help you find a lower interest rate, at the same time, you may want to be prepared to hold some money back in case you wish to complete work on your new home.

There are other costs to consider in the process of buying a property such as stamp duty and conveyancing.

5. Start saving

If you don’t have all the money for the deposit saved already, put together a plan to save. Based on your current rate of saving, when would you be able to afford the deposit? If that timeline looks too far off, try drawing up a budget to see if there are any areas where you could cut back and begin saving more.

Explore more: How to create a budget

5. Get an agreement in principle from your lender

Getting an agreement in principle can tell you what you can potentially borrow.

Also known as a decision in principle, this refers to an initial agreement from the lender based on your basic information, however it does not mean that the mortgage will be approved.

What next?

HSBC Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register number: 114216). HSBC Bank plc is a company incorporated under the laws of England and Wales with company registration number 14259 and its registered office at 8 Canada Square, London E14 5HQ. HSBC Bank plc’s registered VAT Number is GB 365684514.