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The Buying A House Process
So you've decided to buy a house for the first time, or maybe you already own a house and want to move up the property ladder. You might be looking to move area or maybe you want to become a landlord and enter the buy to let market. Whatever your situation, our comprehensive guide to how to buy a house will help you move step by step through the process. We have plenty of handy guides and calculators ready for you should you need detailed information on any part of the house buying process. And you can speak with one of our advisers at anytime, if anything is not clear.
Buying houses is very popular in the UK, especially because house prices have largely seen an upward trend in the last few years. Yet, is it the right decision for you? Careful consideration must be paid to whether you can afford the property in the long term. Financial security is key and if you don’t think you will be in a stable position to afford your property going forward, then some further thought might be required.
If however, you have done your research, your sums and you know it is the right decision for you, then read on to find out what you you should do next in the house buying process.
If you already own a home, you will need to decide whether you want to sell your property before you buy a new house. Most people sell their property at the same time as buying a house which creates a property chain. However, selling your property before you find a new property to buy does have its advantages as follows:
You will be in a good position to purchase your new house because you won’t be tied to a house chain. A buyer with cash in the bank (or a pre-approved mortgage) is usually the preferred buyer over someone who needs to sell a property before they can purchase.
There is less risk of being gazumped. As long as your offer is decent, the buyer is unlikely to take another offer if you are buying a house without a chain attached.
You will know exactly how much you can spend and buying your new home won’t be dependent on you achieving the expected price on your existing one.
If prices are falling, then houses will become cheaper for you, having sold your previous property at the higher rate.
The disadvantages of selling before you buy a house are as follows:
If you have already sold your property and struggle to find the right property to buy, you might have to rent in the meantime.
If prices are rising fast, by the time you’ve sold your house and sorted out somewhere to rent, a new house will be much less affordable. For example, if you rent for a year, and prices rise by 10% in that year, then you will only be able to afford 10% less
There is also the option to keep your existing property by taking a let to buy mortgage. This would allow you to buy your new home as well as keep your existing home to rent out to tenants. With rental property in high demand in many parts of the UK, let to buy has become increasingly popular. With let to buy mortgages, you are basically remortgaging your existing home to a buy to let mortgage and withdrawing the equity to use as a deposit on a new residential property that you intend to move to.
There are many mortgage fees that could be charged when buying a house and it is important to factor these into your calculations to work out which mortgage deal is the right one for you. Here is a summary of the main ones you might come across but there may be others. For further details please read our guide to mortgage fees.
Booking fee - A booking fee (or application fee) is paid at the start of the mortgage application process to 'book' your loan whilst your application is dealt with.
Arrangement fee -This is paid to the lender to go ahead and arrange the mortgage. This is a mortgage cost not to be overlooked!
Valuation fee - This is a fee charged by the lender to carry out a survey on the property you are buying. It is a basic survey to check the property is adequate to lend on. The fee will be higher if you opt for a more in depth survey.
CHAPS (Clearing House Automated Payment System) fee - Also known as a Telegraphic Transfer fee, this is charged for sending the mortgage funds to your solicitor.
Mortgage account fee - This is a fee charged by your lender for setting up, maintaining and closing down your account.
Higher lending charge (HLC) - If you you have a small deposit and your mortgage has a high loan-to-value, your lender can charge you this mortgage fee to cover any increased risk. These fees are currently uncommon.
Own building insurance fee - This is a more unusual fee so check with your lender whether it is applicable to your mortgage.
Other costs to consider when buying a house are legal fees, mortgage advice and deposit.
Legal fees - Legal fees are paid to your solicitor for completing the legal work involved in the mortgage process. This mortgage cost is also known as a conveyancing fee. Click here to read our guide to conveyancing.
Mortgage advice fees - As mortgage options are so vast and complicated, advice from a mortgage broker can be extremely valuable. Many mortgage brokers will charge a fee for their assistance throughout the process. You can in fact, use our mortgage advisors for free! We will assess your individual circumstances, check through affordability and recommend the most suitable mortgage for you. Our advisers will then be on hand to manage the mortgage application process and be the point of contact between you and the chosen lender. Click here to get advice now.
Deposit - You will also need a deposit. The amount you need will vary greatly depending on your mortgage choice and there is no standard amount. However, the basic principle is that the bigger the deposit you have, the cheaper the mortgage deal will be for you. As a first time buyer you are likely to need at least a 10% deposit but there are options available to you if you are struggling to get a deposit saved. Read our guide to deposits here for further information.
Stamp duty - This can be a significant cost and there have been recent changes to the way it is calculated. See our comprehensive guide to stamp duty to make sure you are fully informed and also use our stamp duty calculator to see how much this might cost you.
Now you know how much you want to spend on your property, the next step in the house buying process is to find the right property to purchase. First you need to decide which area you want to move to. You may already know this or you may need to do some research. When you know which area you want to buy your property in, next you need to decide what type of property you would like. Do you want a flat or a house? Freehold or leasehold? How many bedrooms or bathrooms? Do you need a garden? Once you are clear about what you are going to look for when buying a house, it is time to get searching.
How to find houses that are for sale:
Speak to the local estate agents in the area. Register your details with them and ensure they know the types of property you are and aren't interested in.
Run regular searches online.
Check local papers in the area.
When you see a property of interest, schedule a viewing with the estate agent. When viewing a property, the following tips will help you :
Take pictures and write notes. This will help you remember each property when you review what you have seen.
Take a walk around the local area to get a feel about whether it is the right kind of location for you.
If you like a property, ask the estate agent or the owner who is showing it to you plenty of questions.
The top 10 questions to ask when buying a house:
How long has the property been on the market?
Why are the vendors moving?
How many viewings have there been?
Have there been any offers?
Where are the vendors moving to and are they in a chain?
What renovations have been done to the property?
Have there been any neighbour disputes?
What renovations have been carried out and when?
What is the parking situation?
Have there been any structural issues with the property?
Although small issues shouldn't be a deal breaker, it is useful to make a list of things you see so that if you go on to make an offer, you can discuss them with the vendor.
Things to look for when buying a house:
Damp - look for wet spots, peeling wallpaper, condensation on the windows, mould patches, check inside cupboards and wardrobes to see if they smell musty.
Ceilings - look up to check for cracks, slow drips, browns stains
Switches - flick switches as you enter rooms to test they work.
Doors and windows - open and close them to check that they all work
Wiring - check the wiring age and test stoves and ovens.
Power points - note where they are and how many there are. Test sockets
Boiler - ask the vendor to turn the boiler and central heating on. Check radiators get hot and check them for rust and leaks.
Plumbing - turn taps on and off and flush toilets. Test the water pressure.
Locks and keys - Ask the vendor for the keys to test locks work.
Phone - check your mobile phone for a signal
Loft - ask for access into the loft and check for rot, cracks or holes.
Roof - try to see if there are missing tiles or potential problems with the gutters.
Outside walls - check for wall cracks and mould.
Neighbours - look at the condition of the neighbours’ properties.
Whilst you're hunting for the perfect property to buy, it's a good idea to start you mortgage research early in the house buying process, so you're ready with the finances as soon as you find the perfect place.
Research the types of mortgages that are available and start to get a feel for what is available. We have done the hard work for you and compiled all the essential information you need about different types of mortgages in our guide here.
As mentioned you can also use our extensive range of calculators to help you work out how much you can afford to borrow and how much you can afford to pay each month. There are also calculators to help you work out stamp duty or help you compare mortgage rates. Ultimately, the best thing to do in order to work out which mortgage type best suits your requirements is speak to one of our mortgage advisers for free advice.
You can either apply for a mortgage in principle ahead of making an offer on a property, or you can wait until you have found a property and had an offer accepted, before making an application. Getting a mortgage in principle at this stage of buying a house, provisionally lets you know how much you can borrow, subject to finding a suitable home. A mortgage in principle does make an offer more favourable to the estate agent and house owner, so it is worth considering. We can arrange this very quickly for you and discuss the pros and cons, often we find the estate agents are happy to simply take our word on the matter if there are good reasons for not going through the mortgage in principle process at this time.
This is a great time to make sure you are up to date with the paperwork that is required for a future mortgage application. See our 'what do you need to get a mortgage' guide for the full details.
When you find a property that fits your requirements and ticks as many boxes as possible, the next step in the process of buying a house is to make an offer to the seller. You will usually do this through the estate agent and they will liaise with the property owner and let you know if the offer is accepted.
If it is declined, try to find out the reason it was declined and if feasible, you can make another offer or continue with your property search.
If your offer is accepted then you are well on your way to successfully buying a house.
We suggest that you ask for them to 'take it off the market' once the offer is accepted as this definitely helps reduce the chance of gazumping, where the seller accepts another higher offer after the sale has been agreed. Remember, either party can pull out at any time until contracts are exchanged.
You may find that they require you to have a survey or valuation completed on the property before they are willing to take it off the market. You can read our guide to the different types of survey to understand this part of the process better.
With an offer accepted, it is now time to finalise your mortgage arrangements. You should already have your paperwork in good order so that you can get your formal application in as soon as possible. For further information about the mortgage application process, read our informative guide here.
Remember, we will be here to help and guide you all the way through this process so you can concentrate on your day to day life. Once your mortgage has been approved, you can take a sigh of relief because now your purchase is really happening!
It is good practice to instruct a conveyancer to begin work on your purchase as soon as your offer is accepted. Our guide to conveyancing will break down in more detail what they will be doing for you but, put simply, their job is to look out for your best interests throughout the buying process.
From here, the next phase of the house buying process is to wait for the exchange of contracts to take place and then the final completion. Final completion is when you pay for the property and take ownership of it.
Once completion has taken place, your 'buying a house' journey has come to an end and it is time to move!
Before you get to this stage however, it is a good idea to be organised and plan ahead for your big move, as it can be very stressful. Have a read through our guide to moving which provides tips and timelines to help you have a stress free moving day.
You will of course have many questions to ask when buying a house, so if you still feel like you need to discuss it further and need advice and guidance regarding your own particular situation with regards buying a house, then speak with one of our expert advisers for free.