Home-buying process – steps to buying a new house or flat. Read our guide to find out more.
Before you start house-hunting, it’s a good idea to work out what you can afford to spend on buying a house or a flat and your monthly mortgage payments. This is where we come in, we work with you and the lenders to work out how much you can afford to borrow.
Consider how you’ll cope if your financial situation changes, or interestrates rise, and be careful not to over stretch yourself. We will provide you with a monthly outgoings sheet for you to complete and send back to us.
Remember, your savings will have to cover not just the deposit, but expenses such as mortgage fees (typically anything between £0-£2,000) and Stamp Duty on properties costing more than £125,000 in England and Northern Ireland. In Wales, you will need to pay Land Transaction Tax on properties over £180,000.
It’s never too early for you to start thinking about arranging a mortgage. We will help you to find the best mortgage product based on your individual lending criteria and circumstances.
Once we have found a mortgage product you like, we will go to the lender and agree it as a mortgage ‘in principle’. This tells you how much money the lenderis likely to offer and the interest rate you’ll pay. Most estate agents want to see this in place before you get an offer excepted on a property.
Before we apply for your mortgage, we need to check your credit report forany errors and to get an idea of your score. Lenders will look at it when considering your application. If you don’t have one or have never looked don’tpanic. We will send you a link so you can get started. Or we have one at the top of our website.
Once you’ve found a home you want to buy, the next step is to make an offer, usually through an estate agent. We can assist you in doing this and make the offer on your behalf and liaise with the estate agent for you. You only pay for an estate agent if you’re selling property. The fees usually range from 0.5% to 3%, plus VAT, of the selling price.
The solicitor will handle the legal work around the property. Your solicitor will tell you how much you can expect to pay and might ask for a deposit upfront – this is typically 10% of their fee. Typical cost: £500-£1,500 + 20%VAT. Your solicitor submits searches tothe local council to check whether there are any planning or local issues that might affect the property’s value. Typical cost: £250-£300
The surveyor will survey the property to check for problems, which might affect the cost of the home. Don’t worry we will help you do this as part of the mortgage application.
This survey is done by the lender to make sure the property is worth the price you’re paying before they approve the mortgage. It is not an extensive survey and will not identify all the repairs or maintenance that might be needed. Typical cost: £150-£1,500 depending on the value of property. Some lendersmight not charge you for this, depending on the type of mortgage product you select.
You should commission a survey on the property to help you avoid hidden costly problems in the long run. It’s your property, so it’s in your interest to pay for a decent survey at this stage. It can also help you to re negotiate the price. For example, if the survey reveals a problem with the home that will need £5,000 to pay for repairs, you could ask the seller to lower the price by that much.
There are several types of survey available
· RICScondition report – basic ‘traffic light’ survey and the cheapest. It’s most suitable for new-build and conventional homes in good condition. No advice or valuation is provided in this survey. Cost: £250.
· RICShomebuyer report – suitable for conventional properties in reasonable condition. This is a much more detailed survey, looking thoroughly inside and outside a property. It also includes a valuation. Typical cost: £400+.
· Building or structural survey - the most comprehensive survey and suitable for all residential properties. It’sparticularly good for older homes or homes that might need repairs. Typical cost: £600+
Once the survey is complete you might want to go back and renegotiate the price of your new home.
There are two reasons for this:
It’s this stage in the process that is often most stressful. Delays and problems can arise from such situations as:
When problems occur, it’s worth making the effort to stay in touch with the seller via your solicitor and estate agent. It’s often possible to rescue the situation by keeping the lines of communication open.
If everything has gone according to plan, then your mortgage will be sent to the underwriter for final checks. The underwriter will asses the case we havepackaged up for them and should then issue a mortgage offer.
After you have received a binding mortgage offer, your mortgage lender must give you at least seven days to think about whether or not this is the right mortgage for you.
If you’re sure that this is the right mortgage for you then please tell us so that we can look into the mortgage deal and see if there is something better out there for you.
Our typical mortgage fee is charged this point and this information can be found in your fee agreement.
It is better to pull out rather than risk buying a property that might cost you more than you can afford in the long run. If you decide not to buy, you can pull out and cancel your mortgage application before you have exchanged contracts. But you might lose some of your money depending on how far you’ve gone in the process
If there are no problems or delays, then you should receive the contract to sign and complete the sale. Before signing the contract, go through it with your solicitor to check that all the details are correct. Make sure you’re happy with what the sellers have agreed to leave in the property and that all your queries have been answered.
At this stage, you and the seller are committed to the sale. At this pointthat as a minimum you will need Building insurance cover in place, we can help you with this and will provide you with a quote. The seller might also ask you to pay a holding deposit – typically £500-£1000 to show intent.
If you’re purchasing an additional home or a buy-to-let property, you’ll have to pay an extra 3% on top of each Stamp Dutyor Land Transaction Tax band.
