Printer friendlyOur step by step buying guide
Buying a house can seem like an overwhelming experience, so if you're wondering where to start then don't, we've broken the process down into bite size chunks for you to make life a little easier.
Where do I start?
The very first thing to do is to work out what you can afford to buy. By adding up what you have in personal savings and what you can afford to borrow from a mortgage lender, you will soon find out what sort of a budget you have to work to.
How much can I borrow?
Most mortgage lenders allow you to borrow anywhere up to 3-5 times your annual salary depending on your circumstances. If you are getting a joint mortgage then it will be anywhere up to 3-4 times your joint salaries.
Independent mortgage advisers can find you the right mortgage but often charge an administration fee on top of the commission they receive from the lender. This commission varies according to the size and nature of the loan. A mortgage adviser's fixed fee is usually between £300 - £500 but can be more depending on your circumstances.
A good mortgage adviser will not only find you the right mortgage, but can also provide handy tips on where to find a reliable solicitor and guide you through the highs and lows of buying or remortgaging a property. Each mortgage lender will need to carry out a basic valuation of the property to ensure that the money they are lending you is reasonable based on the type of property and its location.
You can pay for a more detailed valuation, known as Homebuyer’s report if you want to know more about the property. If you suspect the property is in need of major work it might be advisable to instruct a full structural survey to ensure you know everything about any potential structural issues and problem areas.
Finding the right mortgage
When searching for a mortgage, you can either do the research yourself or use a mortgage adviser. It’s quite a minefield if you’re a first-time buyer, but the more experienced home owner should know where to start. A good, independent mortgage adviser has access to the whole mortgage market and will know the ins and outs of each mortgage and will ensure the mortgage fits your individual needs and circumstances.
Here is a quick summary of the different types of interest rates and mortgages available to you:
Types of mortgage rates
Fixed Rate: The advantage of a fixed-rate mortgage is that it will not change during the specified term, which can be anything from two to five years, or even longer. Many people like the security of a fixed rate as they can manage their budget knowing their biggest monthly outgoing will remain constant. However, if interest rates fall, you might find yourself with an expensive mortgage.
Variable Rate: This rate moves up and down according to changes in the Bank of England base rate. There are several types of variable rate, some which track the Bank of England base rate, and some that change in line with the lender’s policy. If interest rates look like they might go down, then it pays to be on a variable rate.
Mortgage payments
Repayment Mortgage: This type of mortgage is an arrangement that is made with your mortgage lender and is based on the principal that you pay the full amount of the loan back plus the interest over a number of years (it is usually around 25 years).
Interest Only Mortgage: This type of mortgage is appealing for first time buyers as the repayments per month are (in most cases) lower than that of repayment mortgages as you only pay the interest on the loan over a number of years.
Looking for a property
Our first piece of advice to any potential buyer is do your homework! Decide exactly where you would like to live and whether you can realistically afford to live there. You need to think about what type of property you are looking for so that you can narrow down your choice of property when searching i.e. house, flat, flat with garden, number of bedrooms, style of property, proximity to schools etc.
Things to remember when viewing a property
Keep an eye out for any cracks in the walls and around the windows and pay particular attention to the outside of the house. The state of the roof and guttering are important factors to take in to consideration when viewing a property as any problems in these areas can prove expensive! Also, take note of neighbouring properties, how many for sale signs are there, if there are a lot, take note of the agents and see how long they’ve been on the market for. Have any been recently upgraded or renovated?
Another thing to bear in mind when viewing a property is the overall layout and quality of the interior, in particular the kitchen and bathrooms - if there's a shower, check that it works! We would also recommend that you check the condition of the central heating system and the state of the electrics.
Home Information Packs
From around August this year, some homeowners in England and Wales will need to prepare a Home Information Pack (HIP) before putting their property up for sale. This set of documents will provide important information about a property to the buyer prior to purchase. By making them a legal requirement, the government hopes it will help make the buying and selling process more efficient and transparent.
Good questions to ask....
What fixtures and fittings are included?
How long have you lived here?
What are the neighbours like?
Is there a chain?
How many people have viewed it?
Has anyone put an offer in yet and if so, how much for?
Why are you looking to move?
How soon are you looking to move?
I want to put in an offer, what do I do next?
If you have viewed a property advertised on privateHQ.com and you would like to make an offer, then you must contact them directly by clicking on the 'contact seller' button.
It is all about negotiating and agreeing a price that both you and the seller are happy with so don't be afraid to offer what you think the property is worth. To help you get a good idea, go to www.nethouseprices.com to find out the price of similar properties in your street as well as www.landregistry.co.uk (note: there is a £2 charge) to get a more detailed breakdown of the property.
If you're worried about negotiating a price then it doesn't matter! Some people are better at it than others and if you're not comfortable with negotiating the price of a property with the seller, then why not ask a friend or a family member to act as the go-between? After all, who would you trust more - someone you know really well or a local estate agent?
When in the process of finalising the deal, don't forget that your position as a buyer can prove more attractive to a seller for a number of reasons as listed below. If any of these apply to you, then use them to your advantage:
First time buyer: If yes, then you have an advantage over any competitive bid because you have no chain and therefore the sale can go through a lot more quickly and it's less likely to get held up.
Large deposit: Don't worry if you haven't as this won't affect your chances but will help when it comes to borrowing money and getting mortgages approved. The more money you have to put down the more attractive a proposition you are!
Flexibility: Are you flexible about moving dates? The more flexible you can be to the seller's needs, the more likely this will work in your favour.
IMPORTANT: When you put in an offer make sure that you state in writing that it is subject to contract and survey.
You can also ask the vendor to take the property off the market which reduces the risk of being 'gazumped' (an expression commonly used when the seller accepts a higher offer after he has accepted yours)
Please note that privateHQ.com cannot assist with the arrangements for the sale or purchase of a property; we cannot field questions regarding the property from a buyer or a seller, advise on the purchase price or get involved in the negotiations between a seller and a buyer.
Final checklist
- be clear with the seller on exactly what is included in the sale i.e. fixtures and fittings, furniture, curtains etc
- finalise your mortgage offer
- instruct a solicitor
- decide on a date for exchange (deposit on the property)
- decide on a date for completion (normally 4-6 weeks after exchange)
What the solicitor does
Once you have had an offer accepted you need to instruct a solicitor or a licensed conveyancer. The cost of a solicitor in London for a straightforward purchase can be anywhere between £600 to £1,000. Most charge a fixed fee though some do charge a percentage of the value of the property. On top of this, there are other things that a solicitor may charge you for. These are known as disbursements and include bank transfers, postage, VAT and stamp duty. Ideally, it is best to go to someone who is recommended to you.
The solicitor will:
- draw up a contract of sale.
- apply for the title deeds from the seller
- liaise with the seller's solicitor and answer any questions they may have
- carry out searches on behalf of your lender. These will include local authority search (this shows any planning permission given on the property you are buying and any plans to build roads with 200 metres of the property), water search, drainage search (whether waste water goes in to a private or public sewer) and a land charges search.
Surveys
There are different levels of survey that you can get done on your property. The most basic is the valuation survey (carried out by your mortgage lenders), a homebuyers report (most common for homebuyers) and the more advanced building survey (for very old buildings).
Homebuyers Report: It is easiest and often cheaper to ask your mortgage lender to arrange for the surveyor doing the basic valuation to carry out a homebuyer's report at the same time.
This is a much more detailed survey than the basic valuation (required by the mortgage lender) and is not compulsory but recommended for your benefit. It will give you a good indication of the state of the property and its level of repair and maintenance, report on all visible parts of the property, such as the condition of the roof and points out any particular areas that need work straight away or at a later date. It will also tell you if you need any specialist surveys such as damp evaluation and give you a valuation of your property.
The homebuyer’s report inspection should be carried out no more than five days after you have instructed it. It takes a couple of hours to complete and you should have the report within 5 days. It costs around £250 to £500 but may be more, depending on the price of the house and comes in a 8-20 page standard report sheet.
Building Survey or full structural survey: This is the most comprehensive survey and the most costly! It is suitable for any building but is recommended for those that are either 75 years or more in age, constructed out of unconventional materials such as timber or thatch or has been renovated, altered or had an extension.
A full structural survey is a much lengthier process than for a homebuyer's report and you will probably have to wait up to two weeks after the inspection for the report, for which there is no standardised reporting format. A buildings survey costs anything up to £1,000 and can be more, depending on the price of the house.
Stamp Duty
Stamp duty is a government tax charged on any property bought and is charged on the property price within the following band widths:
0% - properties upto £125,000
1% - properties between £125,001 - £250,000
3% - properties between £250,001 - £500,000
4% - properties above £500,001
