Guide to buying your own home
Buying a new home is long and complex process for anyone, whether they are first-time buyers or seasoned homeowners. From searching for a dream property to negotiating a price, and also the legal work involved.
It is a stressful time for any buyer, but it is also one of the biggest financial decisions anyone will ever make. It’s important that buyers are aware of all the steps, as this will make the process much easier to handle.
Work out your budget
It’s possible that buyers have already got their eye on a property before working out how much they can afford. However, it is essential that this is the first step to avoid any disappointment further down the road.
There are a number of things to consider, not only the cost of the house itself, but also the one-off costs associated with buying property which need to be taken into account and set aside.
These costs will vary depending on the value of the house, but can be anything from £2,000 – £5,000. They can include a transfer of money fee, leasehold charges, conveyancing fees, stamp duty, land registry fees, local authority searches, environmental searches and removal fees. All of these will need to be paid.
Before the credit crunch it was possible to get 100% mortgages, but these are now few and far between. This means that buyers need a deposit – at least 5%, but often much more. For most people this means they need to get down to some serious saving and cut down on their outgoings - click here to read our savings guides.
Sale of property
Buyers that are moving from a bought property will be able to reinvest any of the money they receive from their home. This isn’t an option for first time buyers, who will need to save up money first for a deposit or seek other alternatives.
First time buyers
There are a number of government initiatives to help first time buyers get onto the property ladder, including Help to Buy, shared ownership and NewBuy.
Get a mortgage
A mortgage – a loan secured against a property – is one of the most expensive things that most people will buy throughout their life. It is essential that buyers have a mortgage agreement in place before starting the search for a new home.
In 2007, the market was flooded with 95% and 100% mortgages, but since the credit crunch, they are few and far between. It is expected that buyers will be able to put down at least a 10-15% deposit, leaving an 85-90% mortgage.
Buyers that only have a small deposit, less than 10%, might have to pay a Higher Lending Fee or Mortgage Guarantee Charge, but this is down to the individual lender.
It’s worth buyers contacting their bank or building society to see what mortgage deal they are able to offer, but anyone with unusual circumstances may be better suited with a mortgage broker. A mortgage brokers costs can be covered by the mortgage you take it or have to be paid by yourself, so it’s worth checking this first.
A good candidate for a mortgage will have a deposit of at least 15% and excellent credit score (click here for our guide to rebuilding your credit score).
Find the right property
Once buyers have got a mortgage agreed in principle, it is easy to rush into buying a house head first. However, it is important that buyers spend as much time as necessary searching for the right property.
Buyers should consider the number of bedrooms and bathrooms, whether they need parking or a garden, what area they want to live in or whether the property needs redecoration or refurbishment.
It is also important to consider the area, what are the transport links like? Are the local schools any good? What are the council tax bands? Is there a flood risk?
When buyers find a property they like, they will attend a viewing. It’s worth visiting the property at least twice, at different times of the day. This will help get a feel of the area and give people another chance to look around.
Check the general condition of the property, state of repair and keep an eye out for any structural problems inside and outside. Do not be afraid to take notes – this makes comparing properties much easier.
Make an offer
Once buyers have found the ideal property, it is time to make an offer. However, before going in at the asking price, buyers should be armed with all the necessary information.
This could include how long the house has been on the market, whether the current owner is looking for a quick sale, how many people are interested and what season it is.
Despite having an asking price, properties do not have a fixed price. This means that buyers are able to negotiate to find the best deal for both parties. Most buyers go in for a low offer, usually around 10% less than the asking price.
The first offer may be accepted, but in most cases, it is the starting point for the negotiations until an agreement is reached. Once the offer has been accepted, buyers need to move quickly and ask the seller to take the property off the market.
Get a survey
Once a mortgage has been agreed in principle, the lender will arrange for a surveyor to value the property. This is not a full structural survey, which is something that buyers should arrange themselves. This is because the lender survey is done to justify the amount that is being lent at the very least.
Although surveys can be incredibly expensive, it is important that one is undertaken to avoid any unnecessary expense at a later date. There is the possibility that major defects or faults are picked up, in which case buyers may decide not to proceed or negotiate a better price from any problems.
Hire a solicitor
There is a lot of legal work involved, known as conveyancing, in buying a house. While it is possible for buyers to do it themselves, it does require some expertise and can be very time consuming.
Most people hire a solicitor to undertake the conveyancing work, with some mortgage lenders and sellers insisting that a solicitor is employed. Buyers that do not already have a solicitor, should search for quotes and ask family or friends for recommendations.
The next step is for the solicitor to carry out any final searches and finalise the mortgage. Once all the checks have been completed and everything is ready, buyers will be required to sign the contract and pay a non-refundable deposit.
The deposit is usually at least 5% of the price, but can be as much as 10%. Should the buyer pull out of the sale after this point, they will lose their deposit and could even face legal action. A date for completion is usually set for around two weeks after the contracts have been exchanged.
Complete the sale
Buying a house is a long process, it usually takes around 12 weeks from the point an offer is accepted to completion and moving in.
On the day of completion, buyers will be required to pay the balance of the house through the solicitor. The transfer document and title deeds will be handed over and the buyer will receive the keys.