Investments

Home-buying process – steps to buying a new house or flat

Buying a home is a huge financial commitment and can be daunting – especially if you’re a first-time buyer. Use our timeline to find out more about the steps to buying a home, including the process, key stages and what fees to expect.

Stage 1 – Find a property you can afford

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.

Think about costs

Consider how you’ll cope if your financial situation changes, or interest rates rise, and be careful not to overstretch yourself.

Remember, your savings will have to cover not just the deposit, but expenses such as mortgage fees

Choosing the right mortgage

It’s never too early for you to start thinking about arranging a mortgage as this can be time-consuming.

You can get a mortgage from an Independent Financial Adviser (IFA), mortgage broker or lender.

Once you’ve found a mortgage product you like, agree it as a mortgage ‘in principle’.

This tells you how much money the lender is likely to offer and the interest rate you’ll pay.

Check your credit report

Before you apply for a mortgage, check your credit report for any errors and to get an idea of your score.

Lenders will look at it when considering your application.

Stage 2 – Make an offer

Once you’ve found a home you want to buy, the next step is to make an offer, usually through an estate agent.

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.

Stage 3 – Arrange a solicitor and surveyor

The solicitor will handle the legal work around the property.

The surveyor will survey the property to check for problems, which might affect the cost of the home.

Your solicitor submits searches to the local council to check whether there are any planning or local issues that might affect the property’s value. Typical cost: £250-£300

Valuation survey

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.

Some lenders might not charge you for this, depending on the type of mortgage product you select.

The property survey

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 renegotiate 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.

Stage 4 – Finalise the offer and mortgage

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:

  • The lender might value the property at a lower price, leaving you with a shortfall. This means you won’t be able to match the asking price or what you originally intended to offer.
  • Your survey might uncover problems with the property that will be expensive to fix. You can use this information to ask for a reduction in price.

It’s this stage in the process that is often most stressful. Delays and problems can arise from such situations as:

  • The seller withdraws the property from the market.
  • The seller accepts a higher offer from another buyer (known as ‘gazumping’).
  • Your mortgage application is rejected.

Communication is important when things go wrong

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.

Finalising your mortgage

If everything has gone according to plan, contact your lender or mortgage adviser to proceed.

There is often a fee, usually called an arrangement fee, to set up the mortgage.

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.

You can use this time to compare this offer with other mortgages.

If you’re sure that this is the right mortgage for you, you can let the lender know in less than seven days that you want to go ahead.

It’s still not too late to change your mind

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.

Stage 5 – Exchange contracts

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.

 

 

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