Step by Step Guide To Buying a House
1. Save for a mortgage deposit
A deposit will be one of the biggest things to save for in the process of buying a house. You will need to save at least 5% of a property, but you might find better mortgage deals if you have 10, 15 or 20% saved. Speak with a mortgage broker as well as financial advisor to see what you can afford with your income.
You should also consider the additional costs associated with moving and ensure that you have more than just your deposit available.
2. Establish your moving costs
After accounting for your deposit, you should realise that there are also a number of other costs for buying a house. The total amount for buying a house can cost you anywhere between £1000 and £6000. It is really important to have additional funds set aside because of the variability of certain prices.
The costs start building as soon as you begin the purchase process. You will likely find that mortgages have arrangement fees or other charges attached. There are some fee-free mortgages available. However, these mortgages come with higher rates, meaning you will be paying back more.
An additional cost from the mortgage lenders might be a valuation survey. These surveys are requested to confirm the current value of a property. This is to secure the amount that your lender has agreed to provide you with and ensure you are buying a house for the correct price.
During the survey a licenced surveyor will visit the property. They will inspect the property for its aesthetic value as well as a number of issues such as damp, damage, structural or electrical concerns. The inspection will cover the internal and external features of the property. Number of bedrooms and any refurbishments or modernisation will also be noted. The house will also be compared against surrounding properties and the value of the area.
The results of the survey will provide the mortgage lender with an accurate valuation of the property at that point in time. It will be relevant to the current property market and the value of similar properties in the area.
Whilst your mortgage lender may arrange this survey or request that it is completed, you are often still liable for the costs.
Unlike valuation surveys, it is completely your choice to have any other survey performed on a house. After placing an offer on a property, you may choose to have a survey completed to check the integrity of your investment. Your survey will have to be completed by an accredited surveyor. The Royal institute of chartered surveyors endorse surveyors to guarantee a thorough and secure survey
RICS Condition Report – £380 (avg)
This is the lowest level of detail you can receive in a home survey, hence the lower price tag. You will receive similar information to the details of a valuation report. However, whilst that survey goes straight to the mortgage lender, you directly receive the details of this report.
You surveyor will inspect the property and its general condition. Any hazards or risks will be highlighted. This survey is recommended for homes in good condition or new build houses that are only a few years old.
RICS Homebuyer’s Report – £ 400+
The price of this survey will depend on the size and value of your property. A homebuyer’s report is far more intensive than a valuation or condition report and tends to be the most common survey ordered by property buyers.
During the survey, your surveyor will perform an inspection of the interior and exterior of the property. They will assess for damp, visible structural issues and any hidden problems. Whilst the survey is more detailed, it is non-invasive. The surveyor will not look behind walls or underneath the floor boards.
The survey will give you all the required information to negotiate with the sellers regarding any serious issues within the property. You may be able to haggle a lower price or agree that issues should be fixed before completion
RICS Building Survey – £600+
For the most comprehensive evaluation of a property, a building survey will be the priciest option. These surveys may be required for properties which are in disrepair or are much older. Again, the survey is non-invasive as the owner typically still resides within the property. However, your surveyor will assess the building in further detail than a homebuyer’s report.
There are a number of criteria within a standardised checklist to ensure the safety and structural soundness of property. You will also be presented with more advice on how to address certain problems. This I something that is unique to a building survey as far more detail is provided than within alternative surveys.
Conveyancing is typically the longest process in the purchase of a property. This is because of the extensive number of checks and searches against the property that your solicitor will carry out. As well as drawing up and negotiating contracts.
You will likely find that your conveyancing fees will cost between £800-£1500 as well as the costs of disbursements. The disbursements are the additional checks that we just mentioned. These can range from just a couple of pounds, to a few hundred pounds. For example, anti-money laundering checks can cost between £6-£20. Whereas the Land Registry fee for changing ownership will cost around £200/£300.
We have provided a guide for each of the individual disbursement fees and solicitors costs here.
Stamp duty Land Tax is charged by the government on a purchased property. The amount you pay is dependent on several factors regarding your property. For properties up to the cost of £125,000 you won’t pay any stamp duty. Once you reach the threshold for payment, there are bands that determine what percentage of the property you will pay in stamp duty.
Read our article on the Cost of Stamp Duty to find out more.
After accounting for each of these potential fees, it is important to have enough in your budget to cover them all. It would be disappointing to find your dream property, have an offer accepted but not be able to afford the surveys and conveyancing fees after paying your deposit. You would lose the house and all the time and energy spent on preparing to purchase. You should also consider that you will need to pay rent or the mortgage up to the point of moving out of your previous property and you should be aware of the future costs of those next few months. Don’t leave yourself short by prematurely buying a house as you have finally saved enough for a deposit.
3. Get a Mortgage agreement in principle
Before even looking for properties, you need to know how much you are going to be able to borrow from a mortgage lender. This will help you appropriately set your budget so you can view a specific price bracket of properties.
An agreement in principle is a statement from a mortgage lender that says ‘in principle’ they would lend you a certain amount for the purchase of a property. This amount is based on your credit file and financial history to assess whether you would be able to pay the loan back.
You won’t need to complete a full mortgage application yet. But it is incredibly important to secure a mortgage AIP before buying a house so you aren’t caught out. Your estate agent can also recommend that you have an AIP before presenting an offer on a house.
You should be aware that a mortgage agreed in principle is not a formal guarantee for mortgage acceptance. It would be best not to start any financial obligations or credit agreements in between your AIP and applying for a mortgage.
4. Start looking for properties
With the finances checked and secured, you can actually begin looking at properties. Ensure you stick to a strict budget and keep an open mind for different types of properties. Although you likely have a strong list of ‘must haves and don’t wants’, it is important to be flexible. What you think is the perfect property, probably doesn’t actually exist. You need to be reasonable and realistic about what is available in your location and price range.
Certain areas, types of house or aesthetic quality might not be what you are looking for. However, you may find yourself opening up to certain compromises if the price or size of the house is what you want.
Check with multiple local estate agents as well as online ones to get a comprehensive idea of the properties available in a particular area. Searching for property online can be especially useful as you are able to filter properties by area, price, size and various other factors.
5. Attend a viewing
After shortlisting a few properties that you really like the look of, contact the estate agent and book in for a viewing.
Remember to keep an open mind when viewing a property. Although a house may look a certain way whilst somebody else is living there, underneath is a completely blank slate for you to make your own. Every house can be deep cleaned, repainted and redecorated. Buying a house gives you the complete freedom to do almost anything you want with the property. You can use the space however you like and redecorate as many times as you want.
During a viewing it is also important to have an eye for detail. Check that floors are level; fixtures are secure and the quality of any built-in appliances. If there are any snags or damages to the property ask to take photos so you can refer to them later in the decision process.
Further on in this article you will find a section entirely focused on ‘things to look out for when viewing a house.’
6. Make an offer
Once you’ve found a property that ticks all your boxes, it’s time to make an offer. You don’t want to hang around too long, otherwise somebody might buy the property before you. It is also important to not feel rushed into making a decision however. There is a fine balance between making the right decision and acting quickly to ensure your offer is picked over another potential buyer.
Whilst pricing their property, sellers typically add 5% or 10% to the actual value of the property. This gives you space to give a lowball offer. If you aren’t accepted straight away, you will have to offer more money. This tactic is more efficient than starting high and the sellers trying to get more and more money from you.
You may be able to offer reasoning or negotiation with your offer. If you think the house requires serious repairs, explain that the amount offered is to ensure you are able to cover the costs, should the exchange occur.
When making an offer, informing the seller that you are a chain free buyer can be an added bonus. You will likely be selected from a group of buyers if you have given a fair offer and are the only chain free candidate.
Once you successfully have an offer accepted on a property, ask the estate agent to take the property off the market immediately. This can help to prevent gazumping and indicate that you aren’t likely to drop out of the sale.
7. Complete mortgage application
There is plenty to consider when choosing a mortgage to apply for. A mortgage broker can be really useful in helping you make your decision. They should be licensed to give you advice which should ensure you are offered fair information.
You will need to prepare a variety of documents to apply for a mortgage. This will include proof of ID, details of your employment and typically up to 6 months of bank statements. When considering buying a house, it can be a good idea to switch from paperless billing to traditional postal statements. This is because paperless statements can cause complications which slows down the approval process.
At the beginning of the application, your lender will likely ask to have a valuation report completed on the property. This confirms that the property is worth the amount you are asking to borrow. After this, you should wait up to four weeks for a formal mortgage offer. Once you have this offer, your conveyancing solicitor is able to request the funds to be transferred from the lender to the seller.
It is important to get this stage done early so the funds are available at the earliest convenience. Conveyancing can take around 8 to 12 weeks but a mortgage offer is typically valid for around 6 months. Having your mortgage confirmed ticks one thing off a very long list so is convenient to get it sorted as soon as possible.
8. Instruct a conveyancing solicitor
As mentioned amongst the conveyancing fees, the role of the conveyancing solicitor is to draw up and negotiate exchange contracts, as well as perform several legal and financial checks against you and the property.
During the conveyancing process your solicitor will take care of a number of responsibilities. These will include:
- Development of the contract: Your conveyancer will write up and provide a first draft of the exchange contract. This will include the particulars of sale, conditions of sale and the agreed completion date. During this stage you are able to propose amendments to be negotiated with the seller.
- Guarantee availability of funds: After exchange of contracts, a deposit is to be paid for the purchase of property. Exchanging contracts is a legally binding agreement for which the deposit acts as a failsafe. Your solicitor will carry out the transfer of funds between buyer and seller. Towards completion they will also request funds from the mortgage lender and ensure the safe transaction to the seller.
- Confirm sale completion: After completion there are still several steps in completing the exchange of property. This includes payment of certain legal fees as well as transfer of the deeds. Your solicitor will take care of these final stages and inform you once the process is complete.
Choosing which solicitor to work with can be a daunting task. The process can include visiting numerous legal offices or completing several quotes. It can be complicated and tedious task. An alternative to consider is the services of online conveyancing solicitors. Online conveyancing offers a convenient and efficient transaction of property. All whilst offering lower fees than the high street equivalent. Compare prices for online conveyancing services here.
9. Property survey
We have already discussed the costs and details of home surveys earlier in this article. Now is the point to perform one if you want to secure your investment. Surveys are extremely important when considering financial costs that could occur further down the line. Without a survey you would be blindly committing to buying a house. You would have agreed to the asking price, likely using your entire budget. However, if structural issues become apparent or major repairs are needed on the property your own naivety may have costed you hundreds or thousands of pounds.
Surveys may be able to highlight future issues that might not be a current hazard but become dangerous in future months and years. This would give you the authority to negotiate for a lower price for the property in order to arrange for remedial work.
10. Home insurance
Securing buildings insurance cover is necessary before exchanging contracts. Failing to secure an insurance policy by the time contracts are exchanged can risk your mortgage falling through. This is something you certainly want to research in advance and be prepared to sort out during the conveyancing process.
Buildings insurance is important when buying a house as it covers protection of your property and investment. It should cover the structure of the property, permenant fixtures and fittings. Should any damage occur to your property, your policy will cover the cost of repair or costs to rebuild the property.
Being able to rely on this insurance can be vital in the case of fires, floods, fallen trees and many other unlikely yet possible situations. It means you still have access to a home as well as a saleable asset.
11. Exchange contracts
Exchange occurs once both parties have agreed to and signed the contract. The transaction of property then becomes legally binding.
As a buyer, if you pull out of before completion you are almost guaranteed to lose your entire deposit. The seller may also sue the buyer for any loses.
Any time before the contracts are exchanged, the buyer is free to leave the transaction without consequence. During this stage you want to ensure you are fully committed to the purchase and ensure all funds and preparations are ready for completion. You should never sign the contract without being all in on the property.
12. Arrange removals
After exchanging contracts, you should have knowledge of the completion date. Whilst you don’t necessarily have to move into the new property on this date you should consider arranging removal services early. This is because during peak times or at short notice, removals can increase in price. This occurs during periods of high demand and low availability. To secure the day that you want to move, you should look for quotes and book a service as soon as you can.
At long last you have reached completion day and the house is finally yours! Buying a house can be a long and complicated process, thankfully completion day is typically the most straightforward transaction. The morning of completion, your conveyancing solicitor will transfer your funds to the seller. Once this has been received the transaction is complete and you are the legal owner of the property.
The seller will hand the keys to the estate agent who can transfer them to your ownership. From that point your property will be vacant and you are free to move in whenever you please.
The time of day that this occurs can vary depending on whether you are chain-free or part of a chain. The length of the chain will determine how late in the day you will actually gain access to the keys.
For a full insight into what occurs on completion day, check out our article on the subject.
14. Move in
By this stage you should be extremely proud of yourself and incredibly excited to move into your new home. Hopefully you have booked a removals company to take some of the pressure off you on the big day. For all the tips, tricks and information you could need regarding moving house, check out our homepage to make your day stress-free and simple. You conveyancing solicitor will finalise the last stages of buying a house whilst you settle into your new home.
7 Top Tips for Buying a House
Tip 1. Create a list of must haves
After setting your budget there are still hundreds of properties to choose from in that price bracket. You should create a list of things you really want in a property to be able to narrow down your search criteria. This prevents you from looking at properties that you won’t even consider.
Some common things that buyers look for when house hunting can include:
Local schools: Even if you don’t yet have a family, many couples relocate and consider nearby schools in the eventuality that they could start a young family whilst at this property. The important thing to consider is your future plans and how long you intend to stay in this home for.
Local amenities: For some people it can be really important to be close to shops, supermarkets, pubs and restaurants. For others, they may prefer a much quieter pace of life and want to ensure they have access to the essentials but are far enough from the hustle and bustle. Picture your dream home and the proximity to each of these things, do you want to be in a busy city, a lively suburb or a quiet village?
Parking: Living on a busy terraced street might not be your cup of tea if you want parking at the front of the house. Or, you might want complete security for your vehicle and a garage is high on your priorities. Even things like this can really help you narrow down the type of house you are looking for. After finding a property that you like the look of, search for the street name street name on an internet map. Travel along the road on street view to gain an insight into parking availability.
Bedrooms: This tends to be one of the most common factors that buyers use to narrow down their search parameters. Make sure you account for how much space you need. Are you going to need a spare room for a home office, a nursery or a place for friends and family to stay?
Tip 2. Keep an open mind
After creating your list of ‘must haves’ make sure you allow yourself to step outside the lines every so often. Yes, we did suggest it is important to refine your search to speed up the house hunting process. But this doesn’t mean you should rule out any property that doesn’t have a front lawn.
Most buyers will have a specific image of their perfect property but this doesn’t always exist. Finding your perfect home can often appear when you least expect it. If you’ve been working with an estate agent to view some of their marketed properties and they suggest something you might be interested in, go and view it. Even if it doesn’t match your criteria at first, you might find more to love about a house than you thought.
Tip 3. Check out the neighbourhood
Online maps can be especially useful before viewing a house to locate local amenities, your workplace or schools. It can also be useful to assess nearby main roads, any sources of noise or local green space.
You may also be interested in checking local crime statistics to confirm the safety of a potential new home. Local police maps can show the number and nature of crimes in a specific area across a month.
Local social media and newspapers can give an insight into the goings on within the area. If there are any prominent local issues you are sure to find out this way. It may also be useful in locating social opportunities, community activities and recommended local amenities.
Tip 4. Things to consider when viewing a property
Your first few viewings may not be the most useful in terms of gathering information about a property. If it is something you have never done before you might be caught off guard by the novelty of criticising somebody else’s home. However, to properly assess whether a house is right for you, you need to be confident in assessing a property for a number of factors that are important to you. We have included some questions you should consider during a viewing:
Is there damp?
By keeping an eye out for damp, you could save yourself a lot of hassle and damage in the future. Whilst the seller may have gone to some effort to cover it up you still might be able to spot it though mouldy smells, flaking paint or plaster and watermarks on the walls or ceiling.
In some cases, a small amount of damp isn’t unexpected, older properties that need waterproofing can be susceptible. However, if you are concerned that there is a large amount of mould in a property, you may have issues with repairs as well as repercussions for your health.
What direction is the house and garden facing?
For many homeowners, a south facing garden is a something to be proud of. Its main advantage is the amount of sunlight that is enjoyed. For this reason, many potential buyers will look out for the direction of the garden when viewing a property.
Something else to consider is the direction of the house and location of the windows. After determining the direction of the garden, you should be able to find your bearings for the rest of the house. This will give you an idea of which rooms will get the most light and where in the house might be hottest after a bright sunny day.
Are the rooms big enough?
There is no shame at all in bringing a tape measure to a house viewing. Occasionally sellers can you staging to make rooms seem bigger than they actually are. This involves using smaller than standard furniture to fill out a room and skew your perception of the dimensions.
If you know you have some large pieces of furniture to move with you and want to ensure they fit comfortably within a space without being cramped then you should certainly spend some time measuring up to ensure your needs are met.
Does the plumbing work as it should?
Most sellers should be happy with you testing the water pressure in the property. This can be as simple as turning on the tap in the kitchen and testing the shower head in the bathroom.
You may also want to look up at the ceilings once you have located upper floor bathrooms to check for damp spots from leaky plumbing. Whilst these are not always obvious, as they may have been painted over, it is worth checking and enquiring if you do spot anything suspicious.
What sounds can you hear?
Whilst it might seem quite odd to ask for a moment of silence when visiting the property, try to find a quiet moment to assess for any sounds within the property. If you are able to hear main road traffic or noisy neighbours, this could be a decisive factor. Also consider the time of day that you view a property at. During a working day is likely the quietest time for many properties as children are in school and adults are at work, the roads will be quiet as cars are parked elsewhere.
Tip 5. Second viewings
In most circumstances you’ll find yourself attending a second viewing once you have had an offer accepted on a property. The purpose of this visit is to measure up in case you hadn’t already, to get a feel for the space and prepare for making it your own.
However, there might be occasions where a property you had previously visited is still on the market after you had previously disregarded it. This could be through their own sale falling through or it has remained on the market whilst you have pursued other houses.
If you had previously considered the property, it may be worth another viewing. This gives you the opportunity to figure out why it hasn’t yet sold. Estate agents occasionally receive feedback from previous viewers, if you seem interested in buying the house, they may share this information with you. Use the opportunity to evaluate each of the features in and out of the property.
If there are minor problems that you are unbothered by but are preventing the house from selling, you may be able to provide a lower offer to the buyer. They are likely to accept a low offer at this point as most people want their home sold quickly.
Tip 6. Sealed bids
A sealed bid is a type of auction that a seller can choose to implement when there is significant interest in their property. In the case of sealed bid, you will be informed by the seller’s agent to submit an anonymous bid. The seller will compare bids once they have all been returned and typically the highest bid is selected. The decision can also be based on other factors such as the status of the buyer, whether they are part of a chain or a cash buyer.
There is no set formula to win sealed bids, but it is a frequently asked question. Whilst high offers do help, it isn’t always the what wins you the property. Other factors that can help include offering flexibility, demonstrating that you are serious about buying a house by demonstrating your funds are in order, making clear why you are more appealing than another buyer.
Whilst gazumping it common in this situation there are also some tricks you can use to give you an advantage. When the price of a property is £295,000 for example, there may be a variety of buyers that offer £300,000. Instead, bid something like £301,234. Not only will this make you stand out from the crowd, but it could mean you are offering a little bit more than everyone else. Make sure you provide evidence that you are a serious buyer otherwise they might take a random price as a joke. Include details of your solicitor and your deposit availability so they know you are prepared.
Tip 7. Gazumping
Being the victim of gazumping can be really disappointing and disheartening but isn’t completely uncommon. Its not something you should be prepared for, but you should be aware of it.
Gazumping occurs after you have had an offer accepted by a seller but a third party provides a higher offer and is accepted. This can occur at any point up to exchange which can lead to you losing out on time and money.
Asking the estate agent to take the property off the market can be a quick fix. When an offer is accepted and the property is labelled as sold subject to contract the estate agent can still receive offers and interest on the property. The agent is obliged to pass this information onto the seller who then may reconsider you offer, knowing there is other interest.
Things We Wish We Knew Before Buying A House
Get a financial advisor
Buying a house tends to be one of the biggest purchases you will make in your lifetime. It’s no surprise that a financial advisor can come in handy during this high stake’s financial transaction. You will likely receive lots of useful advice from estate agents as well as your mortgage broker. However, financial advisors will take your personal circumstances into account and consider future financial obligations to ensure you are able to provide your mortgage amounts alongside other expenses.
It’s a good idea to meet with a financial advisor before you start house hunting. They can give you advice on how much of your income you should dedicate to mortgage payments. They may also be able to find you some of the best deals for mortgages and advise you on what size deposit you will be able to afford. The purpose of this information is to ensure you still have enough money left over whilst spending as much on a house as you are able to. This means you still have left over funds for savings and emergencies.
Ask all the questions!
Why is the owner selling?
This is one of the key questions that you want the answer to. The point to this isn’t even about discovering issues within the property. In fact, if this was the reason, the estate agent is unlikely to tell you. However, the answer could be that the sellers are relocating for work, there was a separation in the family or they are going to travel around Europe. Any reason that implies the owner wants the property sold quickly is great for you. You can offer them a fast sale for a lower offer.
If you happen to run into the next-door neighbours this can also be a valuable source of information, they typically have no interest in the sale of the property so might be more honest with their details.
Beware of estate agent tactics
Estate agents are paid based on their ability to sell a house. This has encouraged them to develop a number of tactics or skills that encourage sales to complete quickly.
One of the most common white lies used by estate agents is that ‘This house has had a lot of interest!’ You may be one of the first few people to view the property yet you will likely hear this from the agent. Their tactic is to put you under pressure to make a decision. If you are considering making an offer and believe that someone else will take is before you, you’ll be much more inclined to act quickly. The key is to stay cool and work at your own pace.
It’s okay to change your mind
Never feel pressured into buying a house that you don’t want to purchase. Buying a house doesn’t happen very often and is a complicated and difficult process. You want to make sure you choose the right home so you’re not selling it on 6 months later. The process also costs a lot of money so it is important that you ensure you are happy with a property before losing lots of time and money.
Exchanging contracts is the point of no return, after which you shouldn’t consider pulling out of the transaction unless it is for a genuine reason. Up to this point you are free to leave the purchase at any point you wish. You may have felt pressured into giving an offer by an estate agent and decided it isn’t right for you after viewing the property for a second time. Stand your ground and make the right decision for you, rather than buying a house that you don’t want.