The ten step guide to buying a home
Our informative 10-step house buying guide provides guidance on buying a property as well as practical tips and insights to help you navigate the process.
The steps
1
Save a deposit
The first step in your journey is to save up a deposit. It is worth having a quick browse of the type of properties and the areas you are interested in, so that you have an idea of some ballpark figures that you will require. It is usually considered that 10% is a good target for a deposit, although 0% deposit mortgages are available for some first time buyers.
Lifetime ISAs
Many banks offer government backed Lifetime ISAs, where the government will top up your deposit and really help you to maximise your savings. Be aware that some accounts such as the Lifetime ISA will charge you to withdraw your money if it is not used to purchase a property.
Additional moving costs
Once you have set your savings goal based on the approximate property values and the amount of deposit you wish to pay, you will need to allow for additional costs such as conveyancing, building surveys, removals and stamp duty. Roughly speaking, you will need to budget around £5,000 for additional costs, excluding stamp duty.
TOP TIP: try to put a little money aside every month into an ISA or other savings account. Setting up a standing order from your current account to a savings account (such as a Lifetime ISA) will help you with this.
2
Find out how much you can borrow
Most estate agents and sellers will want to see a ‘mortgage in principle’ before they will consider your offer.
A mortgage in principle is a theoretical offer from a mortgage lender stating how much they would be prepared to lend based on the answers to a few simple questions such as how much you earn, the size of your deposit, any current mortgages you have, your address history, any debts you have and any other income you receive.
Credit checks
A mortgage in principle usually does not involve a full credit check, so will not affect your credit rating and does not carry any obligation to take out a mortgage with the same provider. You can either search online with the various providers, or you can contact a mortgage adviser. Some mortgage advisers are free (they get paid commission by the mortgage providers), and some will require a fee. You should shop around for the best offer and service.
Click here to find a local mortgage advisor
Manage your credit rating
It is a good idea to be careful with the number of purchases that involve credit checks around this time. New mobile phone contracts, car finance or credit cards can affect your credit rating. Try to pay off any debts you may have prior to your final mortgage application. A mortgage in principle is not the same as a mortgage offer and the full mortgage application will involve much more in-depth checks, which is worth considering now. The last thing you want is to find your ideal property and then fail in your mortgage application, so this is the right time to get your finances in order.
TOP TIP: Set up a direct debit to clear your loans and credit card each month. Using credit will boost your credit rating, but make sure it is cleared every month. Companies like to see that you can responsibly borrow money and pay it back.
3
Find a property
Before you start looking for properties, it would be a good idea to identify and write down your key requirements as this will help you focus your search.
Unfortunately, many homebuyers find that properties within their budget do not meet all of their requirements, therefore, it is a good idea to prioritise the elements that are most important to you.
There are many helpful online tools for searching for your ideal property. These all work on the same principles of applying your chosen filters such as budget, number of bedrooms, type of property, shared ownership and location. The most popular of these sites are www.rightmove.co.uk, www.zoopla.co.uk, and www.onthemarket.com.
Using an estate agent
An alternative is the more traditional approach of signing up to a local estate agent and letting them know exactly what it is you are looking for. They will usually arrange a brief consultation to establish your budget and specific requirements, and then send you any matching properties as they come onto the market. The advantage of this approach is that estate agents will often send through properties prior to them being listed on the major comparison sites, meaning that you are at lower risk of someone else snapping up your ideal property before you even see it!
TOP TIP: many estate agents will want to see your mortgage in principle before they will send you appropriate properties, so if you skipped the previous step, make sure you have this in place first. Estate agents will sometimes push you towards using their own surveyors and conveyancers. Whilst there is nothing wrong with this in principle, don’t feel pressured to make a hasty decision. Don’t worry, these two items are covered later in this process.
Find out more
4
Make an offer
Once you have found your ideal property, you will need to consider how much you are prepared to offer. It is worth remembering that sometimes you will be bidding against other potential buyers so you may need to increase your initial offer.
This can be a tricky process and there are now many different ways of bidding, including ‘best and final offers’, sealed bids, and modern methods of auction. It is worthwhile familiarising yourself with the different forms of bidding for a property. It is also possible to purchase property at a traditional auction, but this process is too specialist for us to cover here. If you are considering an auction property, we recommend you take specialist advice.
Making an offer
Assuming a traditional bidding process, you will need to submit an offer to the estate agent, who is then obliged to pass this on to the seller; if you verbally provide an offer, it is a good idea to follow this up with an email so that there is a record. To make an offer, you will need to have a mortgage in principle or agreement in principle (AIP). If you did not do this previously, click here to see our advice on this process. The estate agent will then let you know whether your offer has been accepted or rejected. If it is rejected, you will usually be invited to submit an increased offer. It is worth bearing in mind that whilst price is usually the deciding factor, there are other variables that can affect the attractiveness of your offer. If you have your mortgage in principle, you are a first time buyer, you have no chain, or if you are able to complete quickly, these can all be desirable to the right seller, so make sure you emphasise all aspects of the offer.
TOP TIP: Set yourself a limit and do not exceed this amount. There are times where properties are subject to bidding wars, or you may be pressured into increasing your offer by the seller or estate agent (remember they are working for the seller to try to get the best price). You should set yourself a limit and only offer what you can afford. Although disappointing, walking away may be in your best interest.
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5
Apply for a mortgage
So now you have saved your deposit, found the right property, and had your offer accepted. It is now time to apply for your mortgage. This process can take quite some time, so it is worth applying straight away.
You can apply for a mortgage directly with a lender, which can either be done online or via a consultation, or you can make use of a mortgage broker, who will search the market for you to find the best rates. Mortgage brokers do not usually charge you directly, instead they earn their fee from the lenders for the referral. It is usually worth searching yourself for the best deals and then comparing to those found by your mortgage broker.
Full mortgage application
Unlike a mortgage in principle, the questions asked for a full mortgage application are in-depth and this process will involve a ‘hard search’ to establish your credit rating. For this reason, we recommend engaging a mortgage broker, who will offer a consultation and will usually only recommend mortgages that you are eligible for. This can save a lot of wasted time and avoid multiple credit searches, which can negatively impact your credit score.
Click here to find a local mortgage advisor
TOP TIP: make sure you have all of your documentation in order prior to applying for your mortgage; this can really speed up the process. A non-exhaustive list of items you may require is: three months payslips, passport and/or driving license, proof of address (e.g. utility bills), P60 (or other proof of employment), bank statements for the previous six-months, tax return and company accounts (if you are self-employed).
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6
Appoint conveyancer
Congratulations on having your offer accepted. Your next step in the process is to appoint a conveyancer.
A conveyancer is a legal adviser who specialises in the legal aspects of buying and selling property. Their job is to obtain, review and issue you with the paperwork involved in buying a property. Typically, the conveyancing process can take between 6-10 weeks, however this is only a rough guide.
Conveyancing information
The conveyancer will also request various pieces of information from you, such as proof of ID, proof of address, confirmation of mortgage offer, proof of funds etc. Make sure you have this information to hand to help speed up the process.
Conveyancers will also undertake local searches to find any restrictive covenants, previous mining activity, rights of access, planning applications etc. and will provide this information in a report later in the process.
Please click here to find a local conveyancer
TOP TIP: The majority of conveyancers require purchasers to provide proof of ID in person. This means that you will be required to visit their office, most likely during typical working hours. We recommend finding a local conveyancer to you to ensure any potential visits are easily managed.
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7
Book a survey
You will now have appointed a conveyancer and they will be undertaking their searches, so your next step is to book a building survey.
Purchasing a property is a huge investment, and you are committing a large sum of money to a physical asset, it is therefore important to understand the property’s condition and whether it has issues which may affect the value or your enjoyment of the property.
Types of survey
There are, broadly speaking, three different types of survey and the surveyor should be able to advise you on which survey is most appropriate for the type of property you are buying. We have advice on the different types of survey here.
TOP TIP: There are various surveying companies out there, so make sure you do some research and check online reviews. It would be advisable to find a local surveying company who employs surveyors in the same area as the property you are buying. Local knowledge is hard to beat!
We recommend you obtain at least three quotes for a survey and proceed based on the cost and reputation of the company, as well as their proposed turnaround times. Remember, you tend to get what you pay for and therefore going with the lowest cost may not always be the best decision.
Please click here to find a local surveyor
Outcome of home survey
Once you have selected a surveying company, they will arrange the inspection with the seller. It is likely the report will contain phrases that you may not understand, and we recommend you follow up with a phone call to the surveyor. Depending on the outcome of the inspection, should an issue or several issues be identified, you should discuss these with the surveyor. The surveyor should be able to give you a rough idea of the cost to correct the issues, but this will only be an estimate. You may wish to obtain a builders’ quote to confirm. Depending on the cost, you may consider writing to the estate agent to make them aware of the issues and potentially revise your offer. Remember this is open negotiation and you are free to revise the offer as you see fit….and the seller is free to refuse.
As before, if the potential repair cost is too high, it may be in your best interest to walk away and find and alternative.
If there are no issues, or your revised offer has been accepted, you can proceed with the next step in the process.
Find out more
What is the cost of a building survey?
Tips for choosing the right building surveyor
Choosing the right type of survey
8
Review and exchange
Roughly 6-10 weeks after instructing your conveyancer, they should be close to finishing their searches. When their searches are complete, they will send you a bundle of documents to review. This stage can be quite overwhelming, particularly for first time buyers, so a good idea would be to break down the bundle into smaller manageable amounts.
House purchase documentation
The documents will include information such as the draft contract, title deeds to the property, the land registry searches, local environmental searches, local authority and drainage searches, fixtures and fittings questionnaire (completed by seller) and seller’s property information form.
Your conveyancer should flag up any issues they find during their searches, however this is not always the case. We recommend you ask your conveyancer if any concerns have been identified, or if you should seek any specialist advice before agreeing to sign the contract.
Exchange
Once you are satisfied with the information provided, you will be required to sign and return the contract (this is known as exchange). Once the contract is returned, you are then legally bound to purchase the property and withdrawing from the contract would cost a significant amount of money.
TOP TIP: Sellers, conveyancers and estate agents have been known to pressure a buyer into reviewing and signing the contract quite quickly. We recommend you take your time, make sure you have reviewed all the information and have received answers to any questions you have asked.
Finally, once you return the contract, you will need to take out property insurance as you are now responsible for the property.
9
Prepare to move
You are almost there! Once the exchange has been completed, you will be asked to agree to a ‘completion date’. The completion date is when the money is transferred between the conveyancers and the day you will be able to collect the keys.
TOP TIP: If you are renting a property, make sure you have ended your tenancy. You will likely have a notice period (typically four weeks). It is advisable to set the completion date a few days before the end of your tenancy, so you have time to move your items. Furthermore, practically all leases require the tenants to organise a professional clean of the property and this is best done when all your items are removed.
Once the completion date is agreed, you will need to start preparing for your move. You should have organised your property insurance, but if you haven’t, head back to the previous stage and click the link to find some recommended insurers. There are several other things you should prepare in order to make your move as easy as possible, these include taking your meter readings (if moving out of a property), setting up broadband (this can take up to three weeks!) and booking in a removals firm. We recommend you give yourself plenty of time to arrange these.
Please click here for a removal company in your local area.
Find out more
Why use a removals company – a quick guide
10
Completion
Completion is the date you agree to pick up the keys, and the final step in the house buying process. Your conveyancer and the seller’s conveyancer will ask you to agree a date with the seller to complete, so make sure this date works for you.
On this date, the conveyancer will transfer your deposit and mortgage to the seller’s conveyancer, and once this has been received, you will be able to collect your keys. Typically, the transfer of funds can take a few hours, and most key collections are done in the afternoon.
Once you have collected your keys, we recommend you visit the property before you begin to move your belongings and check the property is in the same condition as when you previously viewed it, and that all the appliances/fixtures and fittings are as reported in the seller’s fixtures and fittings questionnaire.
TOP TIP: Before you start moving into your property, you should record the water, gas and electricity meter readings. This will ensure you are paying the correct amount when you’re billed at the end of the month. You should consider searching for gas and electric offers once you have moved in.
Congratulations on completing the house buying process. Everyone at HouseNous wishes you all the best in your new home!
We hope you have found this process helpful and informative, and we would love to hear from you. Please do leave us any feedback and we hope you will recommend us to friends and family.