Guide to Buying a Home

However, since the start of the financial crisis, banks have reigned in their lending, taking a more “responsible” approach. The number of 90% mortgages on the market fell from 492 to just 71 between September 2008 and May 2009, according to financial information company Moneyfacts.

Mortgage approval

While this trend is expected to continue for some time, there are steps that you can take to increase your chances of being approved.

Building up a significant deposit is one of the best ways to get on the property ladder. You should have at least 10%, but a deposit of 25% for example, will get you a far better deal.

However, you also need to make sure that you have a regular income and a good credit rating and don’t default on any repayments.

Are there hidden extras?

Buying a home will inevitably cost more than you think. As well as your mortgage repayments, you need to put money aside for a number of other fees.

These include arrangement fees that can run over £1,500, stamp duty if your property costs more than £125,000 and even early repayment fees of up to 5% if you want to pay your mortgage off early.

You also need to be aware of your home's running costs. You will have to pay for life and buildings insurance, gas and electricity bills, council tax and water rates, and perhaps even service charges and ground rent.

If you don't inspect the property properly you may end up spending a lot more on maintenance than necessary. For example, missing the signs of rising damp can be a costly mistake.

Can I find a bargain?

2010 started out with the Bank of England’s base rate at an all-time low of just 0.5%, making it a great time to get a good deal on a mortgage.

Aside from securing a low rate on your mortgage, one of the best ways to get a bargain is to make sure you know exactly what the extra costs of your home will be; low mortgage repayments are no good if your home’s running costs go through the roof.

If you find a rundown house that you can restore, be realistic about how much this will cost - get an expert to go with you and quote so that you can budget properly.

Ask the seller how much council tax bills are on the property, and if there are any service charges; check whether or not there is central heating and be aware that a house with no furniture can look deceptively large.

If you find a place you like, ask to see it again, and go round with someone you trust to get a second opinion. On the second visit be methodical and take notes. Don't be sidetracked by colour schemes or furnishings - these are superficial and can be changed.

Where do I go for a mortgage?

It really does pay to shop around. Beware of estate agents who offer you financial services or agree to set up a mortgage for you as they are often tied to a life insurance or mortgage firm and will only be offering products from that company.

Also, don’t automatically take a mortgage from your bank as this might not be the best deal.

Whichever mortgage you choose, make sure that it suits your needs and your budget. Don’t inflate your earnings in a bid to get a higher loan as you might not be able to afford the repayments in the long run.

What type of mortgage?

There are a number of different mortgages available on the market, from fixed-rate deals that secure your interest rate for a set number of years to tracker mortgages that reflect changes in the base rate.

However, you also need to decide whether you want a repayment mortgage or an interest-only deal. While you will have lower monthly repayments on an interest-only mortgage, as the name suggests, you'll only be paying the interest on your loan and won’t actually be clearing your debt.

How do I put in an offer?

Your opening offer will often determine the final selling price, so work out how much you want to spend before you start.

If the house is selling for £90,000 and you can afford to pay £85,000, offer £80,000. If the bid is refused, add £1,000 more at a time until you reach an agreed price.

However, if you genuinely think the house is a steal or undervalued, or in a housing hotspot where you might have competition – act fast. Say then and there that you want it, on condition that the seller takes the house off the market. This makes gazumping – when another buyer comes in with a higher offer – less likely. Say that you'll buy it on condition that a survey is done and the property shows no serious faults. But don't let your emotions get in the way; if you can't strike a deal at a price you want, walk away.

What happens next?

Once contracts have been exchanged between you and the seller – a process carried out by lawyers – both parties are committed to the deal.

If you pull out, for whatever reason, you will lose your deposit, which could be as much as 50% of the property’s value. Conversely, the seller cannot accept a higher offer. This is also when the completion date – when you get the keys and can move in – is set. Typically, this is four to eight weeks later, but could be as little as a few days.