How to guide: Buying a house

Buying a property is one of the biggest financial, as well as emotional, decisions you will ever make. As a long term investment, there’s a lot to consider when weighing up your options as to whether or not now is the right time to get a foot onto the property ladder.

If, however, you’ve decided to take on this financial commitment you might be left wondering what is the process of buying a house? As property law experts, here at enact conveyancing we’ve pulled together our guide on ‘buying a house’ to give you the ins and outs of what to expect as you embark on this new and exciting journey.

In this guide we’ll cover:

• Understanding your affordability
• Additional costs to budget for
• How long will it take to buy a property?
• Getting a mortgage
• Scoping out the neighbourhood
• How do I put in an offer?
• What to do if / when your offer is accepted
• When will we exchange?
• Pre-move organisation
• Completion and moving in

Understanding your affordability

Affordability is the number one thing you’ll need to lock down when starting your property ownership journey. More than likely you’ll need to secure a mortgage to buy your property so understanding how much you can afford to borrow is the first step. Each lender has its criteria when working out what it would lend you if indeed they will lend to you at all. Typically, a lender will look at your income, the size of your deposit, your regular outgoings and spending habits, and your credit rating.

Thankfully there are plenty of mortgage calculators online which can help give you a rough idea of what you can afford to borrow based on the value of your deposit, typically, the bigger your deposit the more competitive the mortgage deals with lower interest rates are.

It is worth noting that lenders are now a lot more cautious than they used to be about how much they will allow customers to borrow. Therefore, you will need to go into a lot of detail about your income and spending when seeking a mortgage as you will only be offered what you can comfortably afford to pay back.

For first time buyers there are several schemes to help get you onto the property ladder:

• Help to Buy: Equity Loan
• Help to Buy: ISA
• Lifetime ISA
• Help to Buy Wales
• Homebuy Wales
• Rent to Own Wales
• Help to Buy Northern Ireland
• Help to Buy Scotland
• Low-cost Initiative for First Time Buyers (LIFT)

For an accurate estimate when looking to understand what mortgage you could be offered it’s best to get in touch with a mortgage adviser or lender directly. This is especially useful for those who are Self Employed or looking to Buy-to-Let their property as the lenders’ criteria can be a bit more complicated under these circumstances.

Additional costs to budget for

While saving for a deposit it’s worth noting that buying a property is not going to be your only expense. Trying to budget for potential additional fees can help you to avoid eating away at your deposit:

• Stamp Duty in England, Land Transaction Tax in Wales, or Land and Buildings Transaction Tax in Scotland (if you’re a first-time buyer the amount you pay will differ to those who have previously bought)
• Surveys – this can either be instructed by your lender or you can appoint an external party to complete this
• Valuation fee – again this will be instructed by your mortgage lender
• Conveyancing fees – within these they will include search fees and disbursements
• Building insurance – your mortgage lender will require you to obtain this before you move into the property
• Moving costs e.g. storage boxes, van hire or professional house removals e.t.c
• Essential home repairs or improvements
• Mortgage costs e.g. mortgage arrangement fee and life insurance
• Service charges and ground rent in leasehold properties (if appropriate – check out our guide on what the difference is between leasehold and freehold properties here)
• Furniture and appliances – there’s a lot to consider here, especially if this is the first time you’ve moved out of home or have lived in furnished rented accommodation previously

While this list isn’t exhaustive it does give you a starting point when tallying up additional costs that are likely to occur along the way to buying your home.

How long will it take to buy a property?

When looking to understand the different stages of buying a property there’s a fairly standard timeline you’re likely to follow:

• • • Find a property – you’ll more than likely have an idea on what area(s) you want to pinpoint your property search within leaving you to check out the local estate agents and property search websites
    • Put in an offer – found your dream home? Outline what you are willing to offer to the estate agent representing the seller of the property and make any conditions clear at this stage. They will more than likely want to see your ‘mortgage in principle’ too so be ready to have this to prove you have the necessary funds to meet your offer
    • From offer to exchange – typically this is 10 to 12 weeks
    • Yay – your offer is accepted! This is when all the leg work happens. Firstly you’ll need to appoint your conveyancer (a legal representative who deals with the legal process of the transfer of property ownership) that will deal with searches related to the property and any legal issues. In parallel, the mortgage valuation will be undertaken by the instruction of your mortgage lender and if you choose one, a property survey will be undertaken
    • Exchange – this is a massive step in the property purchase journey and one most buyers and sellers want to achieve as quickly as possible. At this stage, you pay your deposit and legally it’s very difficult to get out of the purchase without major financial implications
    • Exchange to Completion/Moving day – this does vary – it could happen immediately, or in 4 weeks, but the usual timescale is about a week
    • Completion – if you’ve taken out a mortgage then your conveyancer will ensure the remaining monies required to purchase the property are handed over in exchange for the keys. Congratulations, you are now a fully-fledged homeowner and the property is now legally yours.

     

   

  Getting a mortgage

  To boost your chances of borrowing money off a mortgage lender you’d be wise to check your credit score. The chances are if your credit score is below average then it’s going to be more challenging to find a mortgage lender that is willing to offer you what you need. However the better your score, the more likely you’ll be offered a range of deals. There’s plenty of services that are free to use that will give you a good steer on how good your credit rating is.

  Once you’ve harnessed this knowledge you’ll be looking to speak to a mortgage broker or mortgage lender to fully understand what you can afford to borrow and before viewing properties you’ll want to get a mortgage decision in principle (DIP) in place. This is a document provided by the lender to show how much you can borrow and in turn, shows the estate agent and seller that you’re a serious buyer.

  It’s worth knowing that to obtain a DIP it can either be a soft search or a hard credit check. The latter means that the more credit checks made against your name, the more likely it is to harm your credit score and in turn, can seriously impact your chances of being accepted for a mortgage, therefore, it’s best to seek advice before getting a DIP.

  Remember, as rates change daily you don’t have to stick with the lender you’ve got a DIP from when it comes to applying for your mortgage as it may be that a better deal comes on the market when you’ve had your offer accepted.

  Scoping out the neighbourhood

  So you’ve got your deposit, you’ve budgeted for ‘additional costs’ and you have your mortgage ‘decision in principle’ in place. Now is the time to hit the ground running and get a feel for where you want to buy your home.

  Understanding the area, if it’s not overly familiar to you, is key as finding your dream home in the wrong area isn’t going to change that it’s not where you want to be. Things to consider are:

  • Is the area clean and tidy?
  • What are the local transport links like?
  • What are the local schools like (while this may not be important right now, it may be something you’re considering in the future)
  • Are there local shops and amenities?
  • What are the local public spaces like? Clean and tidy and free from graffiti?
  • Remember to visit places at different times of day to see how they may differ

  If you’re set on the location and you know what your budget is, then start getting a feel for what the availability is for properties in and around that area. Luckily it’s a lot easier to do this nowadays with the majority of property listings online. However, it’s worth knowing that if you’ve chosen a particularly popular area it wouldn’t hurt to make yourself known with the local estate agents as sometimes properties are snapped up before they’ve made it onto one of this online site.

  Don’t be put off by ‘asking prices’ – this is what the vendor and estate agent have agreed it could sell for but they’re not always true to value. Take a look at the ‘sold prices’ of properties that have recently sold in the area. This can be found on the Land Registry website and will give you a realistic understanding of what properties are realistically selling for.

  When it comes to finding your dream home make sure you think about the characteristics of the property and things that come with buying a property. For instance:

• What type of home do I want e.g. detached/semi-detached/terrace/bungalow/apartment/flat…
• Is there a particular style of property you’re looking for i.e. Victorian terrace, a cottage, a typical 1930s semi etc.
• Would you prefer a new build or an older period property?
• Does the property need to include a garden, garage and/or driveway?
• If there are permit parking zones in the area would you be willing to pay for this?
• What would the potential resale value of the property be if you’re looking for a ‘fixer-upper’ versus what it would cost to do the work?
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  How do I put in an offer?

  Before putting in an offer make sure you find out as much about the property as possible. For example:

  • How long has it been on the market for?
    • If more than three months is there a reason for this, perhaps it’s overpriced?
  • Find out as much as you can about any changes that have or haven’t been made to the property e.g. how old is the boiler? Is the boiler regularly serviced? When was the property last rewired? If there’s a working fire, is this regularly swept? How old are the windows? Has the vendor applied for planning in the past or have they had a work that will have required a building regulations surveyor to check the work and if satisfactory, will have received a completion certificate?
  • Find out what the neighbours are like
  • Are the vendors in a chain?
    • If yes, how long is the chain and is everyone in the same position?
  • How long have the vendors been in the property?
    • If only for a short period is there a reason for this?
  • Perhaps the property has changed ownership frequently over the years, is there a reason for this?
  • Have previous sales fallen through, and if so, is there a reason for this?
  • Is the property leasehold or freehold?
    • Check out our guide if you’re unsure of what the difference is.
  • Make sure you do your due diligence and check out what other properties have sold for in the area

  Once you’re happy with researching as much about the property as you can you’ll be in a knowledgeable position to put in your offer.

  Remember the asking price is a guide and you’re not obliged to offer the full amount, however, if you know there is real interest in the property and that the area is popular you may have to offer the asking price in full or perhaps more to secure the property. Make sure you set an upper limit to what you’re willing to offer (based on your affordability) and anything higher you’d be willing to walk away from.

  Whatever you decide you can make your offer over the telephone to the estate agent or if they have a local branch, then in person. But it is also best to put it in writing and list any benefits as to why the seller should pick you e.g. you’re a first-time buyer, you’re chain-free, you have your mortgage decision in principle, you’ve already sold your home e.t.c.

  What to do if / when your offer is accepted

  If your offer is accepted, fantastic, this is another major milestone in your property ownership journey. At this point, you can ask the estate agent to remove the property from its listings as well as any other online sources.

  You’ll also need to appoint your conveyancer to manage all the legal affairs associated with purchasing a property. Your conveyancer will manage your case by making all the necessary ‘searches’ and ‘legal enquiries’. Take a look at our FAQs page for further detail on what these entail.

  If you’d like a free conveyancing quote, get in touch and we’d be happy to help get your property move off to a smooth and efficient start. Remember, whoever you appoint as your conveyancer, ensure you answer any queries as quickly as possible as making sure you’re on the ball will help keep the process moving quickly.

  Now is the time to finalise your mortgage offer. This could be with the lender that offered you your initial decision in principle or, if you or your mortgage adviser find a better deal on the market it could be a different mortgage lender. Whoever that is, you’ll need to complete your mortgage application and more than likely you’ll have a mortgage interview with the lender. It’s best to speak to them directly to understand what this will entail.

  Once your mortgage application is underway the lender will instruct a ‘valuation’ on the property. This is to check that they are happy to lend against the property and it’s not to be confused with a ‘survey’. While the valuation is necessary and incurs a fee from the lender, the property survey is completely your choice and can either be carried out by whoever your lender partners with and you pay the lender or you could appoint a company and pay them directly. Whatever you decide a survey is strongly advised, especially in older properties as it can advise on immediate work required or things that need to be looked at in the future.

  When will we exchange?

  This is a milestone that you and the vendors are looking to hit as soon as possible. The reason being at any point up to exchange of contracts, the agreement to buy or sell a property is not legally binding. This means the seller or buyer can withdraw from the transaction at any time. This uncertainty is one key reason why everyone wants to exchange contracts as quickly as possible but unfortunately, exchange of contracts can only take place when all finances are in place (e.g. a mortgage offer has been received) and the vast majority of the legal work has been completed.

  If you are in a chain of transactions, exchange can only happen when every party in that chain is ready to go ahead. At this point, your lawyer will confirm the amount of the deposit being handed over on exchange. This is usually 10% of the purchase price.

  The good news is, when exchanging contracts, the “completion” date is also confirmed. The completion date, put simply, is moving day. It’s the date on which the seller must vacate the property and you will get the keys and can move in.

  Pre-move organisation

  Once you have your ‘completion’ date agreed you’ll want to get the majority of the things you are moving to your wonderful new property packed up and ready to transport. Work out what you can and can’t live with to avoid having to pack at the last minute. The better prepared you are for moving day the less stressful it will be.

  If you’re instructing a removals company they may include moving boxes as part of their quote or as an additional cost, you could also order boxes online or check out your local supermarket as they often have empty fruit and wine boxes that they encourage customers to take home for free.

  You’ll also want to use this time to notify people of your pending move, for example, utility companies, you may already have these in place and it’s a case of switching them across to your new address, but if not you’ll want to register with a gas, electricity and the regional water provider, and notify them of when you’re due to move into your new home. This is the same for any new/existing landline and broadband contracts you have in place as this can take time to install after moving in.

  The Royal Mail also offers a postal redirect system so for the first couple of months you may want to have this set-up as when moving there are lots of companies and people to remember to inform you’ve changed address and more than likely you’ll forget some of these when caught up in the moment of your big move.

  Completion and moving in

  The final milestone on your journey and hopefully it won’t disappoint! Completion is when your conveyancer or legal representative transfers the remaining funds to the seller’s conveyancer or legal representative, and you take ownership of the property.

  At this point, the moment you’ve been dreaming about, the keys are handed over around lunchtime, at which point you can move in or start building work on your new home.

  We hope you’ve found this guide useful. We wish you the best of luck on your journey to becoming a proud homeowner.