How to buy a property in 6 steps
If you are considering a move whether that be for the first time or you’ve moved before, it is vital that before you begin your search you understand the process involved. We have put together a six step guide outlining all the key areas of buying a property. Guides resources and advice created to help you buy in the quickest time, with the least hassle and at the best price.
Step 1: Understanding Costs
If you are considering a move whether that be for the first time or you’ve moved before, it is vital that before you begin your search you understand the costs involved. There are three main considerations to factor in when first deciding about a new move; if there are any up front costs, your Stamp Duty and Land Tax charges and your mortgage and insurance costs.
Upfront costs
The deposit is crucial to securing the property you would like to purchase. This is the amount you have to put towards the overall cost, prior to purchasing the property. Currently in the UK, you need at least 5% of the purchase price (e.g. £15,000 on a property valued at £300,000).
Valuation fees
When your offer has been accepted on a property, your mortgage lender mandatorily carries out a valuation to check the property you have purchased is worth around the cost you have paid to secure it. This ranges from £150 to £1,500 depending on the value of the property – some lenders might not charge this so make sure you check when arranging your mortgage what this cost will be.
Stamp Duty
One of the key considerations to factor in to your costs when moving, is the amount of stamp duty you’ll pay on the purchase. On the first £125,000, buyers in England and Wales do not pay stamp duty. From 250,001 to 925,000 you will pay 2% on the price between £125,001 and £250,000 and then a further 5% on the rest of the costs. As of November 2017, stamp duty is not owed by first time buyers on property up to £300,000 and you will only pay stamp duty from £300,000 up on properties over £500,000.
Find out how much Stamp Duty you will pay on our Stamp Duty Calculator.
Mortgage costs
There are hundreds of mortgages available and a number of different product types. Around 60% of mortgages come with arrangement fees and other charges for setting up the loan. These fees usually range from around £500 to £2,000. You may have an idea of how much you’re able to borrow but speaking with a mortgage broker early on when you decide to move, and potentially even getting a mortgage decision in principle, can save time later on with your onward purchase. A good estate agent should work with a mortgage broker who will review your financial history and perform affordability tests, before helping you to choose the right mortgage product for you.
Find out how much you could borrow using our Mortgage Calculator.
Survey Costs
A survey is an inspection of a property’s condition. There are various types of survey’s available but the more extensive the survey, the easier it will be to find out the essential information you need to know about the property you intend to purchase.
Mortgage Valuation
A mortgage valuation is carried out on each property to determine whether the lender agrees it is worth the amount you have negotiated. This is something that you will pay for and it will be organised by your mortgage lender. This usually falls between £120 and £350 depending on the property type.
HomeBuyer Report
A HomeBuyer Report is a survey you can opt in or out of however is not mandatary. A HomeBuyer Report is recommended if you intend to purchase a property that appears to be in a decent condition and has not had significant alterations since it was initially built. The surveyor will only inspect visible areas which they can access. The report will help you to make an informed decision on the property you are interested in purchasing. The price ranges between £400 and £1,000 depending on the property type.
RICS Condition Report
RICS offer a survey which is a cheaper version of the HomeBuyer Report however it does not include a valuation. This survey simply shows the condition of the property and is intended to complement the information provided with a mortgage valuation survey.
Once you have had a good look into the finances surrounding your property purchase, before you get your sights set on your property it’s worth instructing a financial/mortgage advisor and secure a decision in principle. This will put you in a much stronger position early in the process and make you more appealing to the vendor selling the property. A mortgage broker is useful at this stage if you need advice on mortgages and they can often get you the best deals by scanning the entire market for the right mortgage to suit hour individual needs and budgets.
Step 2: Start your Property Search
Using our website or the major property portals you can register for property alerts in your chosen location and price range, so you don’t miss the chance to book in a viewing. Keep your search broad initially – keep in mind your minimum bedrooms required but remember if you want a three bed, for example, some two beds may have additional rooms that could be converted so keep an open mind when searching online.
Booking in viewings
With over 90% of people now starting their search online, many now request bookings directly through property websites like ours or Rightmove. We would recommend though that you call the branch your property is marketed with directly as they will register you immediately and your request is less likely to be missed. Even a ten-minute delay can result in someone else booking an earlier appointment which can lead to you losing the purchase if they offer first.
Step 3: Viewings and Making an Offer
If it’s the first time viewing a property, it can be a little daunting. How do you make the most of your 15/20 minutes inside what could be your next property? This could be one of your largest purchases you’ve ever made so it’s important you maximise on your time so you are in a good place to either make an offer, or reject the idea of buying that particular place.
What to look for when viewing a house
First impressions are really important so don’t ignore your first thoughts, even before you get to the property. From the outside alone, and the surrounding area, you often already know in your guy, if the property is going to be for you. Drive around prior to the viewing if you can, what local amenities are there? Can you see yourself living in the area? It’s worth doing this at a few times of day.
Be prepared
Every buyer is different. What is important to you will be different to others viewing the same property so make a list of the things you know are important so you can ask the relevant questions on the viewing. It’s very easy when you’re walking around the rooms to forget about the key things you wanted to ask the agent. This is a key reason we recommend viewings with the estate agent rather than the vendor – any difficult questions, we know you’re more likely to ask the agent. Check when booking who is doing the viewing.
It’s time to make your offer
When you’ve found the property for you, it’s time to make your offer. Take your time when making your first offer.
Before you make an offer, also find out the seller’s position. If they have had the property on the market for a long time they may be willing to accept a lower offer. On the other hand, a seller who is in no hurry to move may be more prepared to hold out for a higher price. Balance this with your needs and make the best offer you can to secure you the purchase.
If more than one party offers on the property, you may get taken to best and final where you will have to put down your maximum bid. The highest then will be accepted.
Step 4: Instructing a solicitor
There are several documents and processes that have to be completed prior to buying your dream home. In order to make sure this goes through smoothly and the sale reduces the risk of falling through, conveyancing process is vital. Conveyancing is the term that is used when the ownership of your purchase property is transferred to you. You will need to instruct a conveyancing solicitor to handle the paperwork and legal work involved in this process and whilst some try and do this without, it is highly recommended that you choose a solicitor to do this work.
How much will a solicitor cost?
- Legal Fees: Their time spent doing the work for you as the client
- Disbursments: Third party costs including searches, Stamp Duty, and land registry fees
Make sure you ask your solicitor if they offer a no move no fee offering, meaning if your sale falls through you won’t pay them the legal fees. Remember – until your property has exchanged, the sale is not legally binding.
Costs can vary significantly dependent on the service offered and location of the purchase. It is useful to get a few quotes before instructing a solicitor. Don’t choose a company that confuses you with their quote. Make sure the quote is fixed for your work and includes everything you need.
How to choose the solicitor for you?
The main thing to look out when choosing your conveyancing solicitor is that they have been awarded the Conveyancing Quality Scheme (CQS) certificate; this signifies they have the knowledge and expertise with property and offer you the best standard of work.
Here are some questions to consider asking a conveyancing solicitor
- Do you have a “no move, no fee” offer?
- Are your fees fixed and does your quote include everything?
Step 5: Offer Accepted
You’ve made your offer and finally had it accepted by the vendor. Your purchase is now complete… not quite. When you have your offer accepted, the purchase isn’t legally binding until you have exchanged and other buyers can still make their own bid whilst you are trying to get your purchase through! It’s important when you’ve made your offer, you ask your agent to remove the property online and from their windows so you can reduce the chance someone else might see it. Having your solicitor and mortgage broker in place already, as recommended, will help speed up the process and get you to exchange as quickly as possible.
Two things to watch out for and ask your agent about are
- Gazumping: When another buyer offers more money and the seller decides to go with them
- Gazanging: When your seller decides to stay in their home, often because they see prices going up and want to wait a little longer
Offer accepted – What’s next?
If you are buying with a mortgage, you are now ready to instruct your mortgage lender to apply for your mortgage. You may have arranged a decision in principle to secure your property, but now is the time they will help you find the best product for your property purchase. Most of the forms you submit can now be done online so if you’re on the ball, much of the documentation can be done on the day your offer is accepted.
Your mortgage lender will conduct a basic property valuation by one of their surveyors which will confirm the value of the property is in line with what you have paid. This doesn’t however go into much detail so it is still recommended you instruct a survey of your own on the property. If you are purchasing without a mortgage, you will also have to do this.
There are several types of survey so choose the one that matches your circumstances
- RICS Condition Report: This describes the condition ad identifies any major risks and legal issues. No advice or valuation included – £250 approx
- RICS HomeBuyer Report: This survey is for properties in decent condition. It will identify any structural problems (subsidence or damp) and any other items that may cause a legal problem. The HomeBuyer Report doesn’t look beyond the floorboards or behind the walls. – £400 approx
- RICS Building Survey: This uses the same level of inspection as a building survey identifying the serious issues, moderate, and light issues. This is mainly aimed at larger or older properties, or if you’re planning major works. £400-500 approx
- Building or full structural survey: This is as comprehensive a check you can get and is recommended for older homes and ones that are in potential need of repair. £600 approx
Once the lender has assessed your application, the survey and all the supporting documentation to their satisfaction they will give you your offer. This is usually sent to you, your solicitor and your estate agent.
Step 6: Exchange, Completion and Ownership
Exchange contracts
When you are in a position when the paperwork has been done, your mortgage offer has been received and your solicitor has received everything – it’s time to exchange contracts with the seller. Before you exchange contracts, you need to agree a completion date with the seller, about four weeks after the exchange. The first thing you’ll need to do is get your deposit money to your solicitor. Spend the couple of weeks before you are due to pay this getting your money into one bank account, this makes the transaction easier to send over. When received, your solicitor will get you to sign the contract, this is where you have committed to buying the house and the sale is legally binding – you are liable at this stage and can lose your deposit if the purchase falls through as a result of you pulling out.
Make final agreements
You need to make arrangements for the supply of electricity, gas, water and telephone service, and make sure that the seller has got readings made for when they leave the property. At first it is probably easier to change the account name for the existing suppliers to the property, rather than change suppliers, which you can do at a later date.
Complete your purchase
Completion is when you pay for the property and take ownership of it. On your completion day, money is transferred and the deeds of the property are transferred, between each side’s conveyancer. Your solicitor will give you a completion statement with a clear breakdown of the money you need to give the solicitor. This will include any outstanding deposit, stamp duty land tax, solicitors’ fees etc. You’ll usually have to pay these on or before your completion date.
Following completion, you will have 30 days to send the Stamp Office your transfer deed along with your Stamp Duty payment. This is in your completion statement though so is normally just paid on your completion day also.
Own your new home
Your solicitor will register your details with the Land Registry. Your solicitor will get the new title deeds from the Land Registry and forward them to your mortgage lender (or you if you’re mortgage-free). You now officially own your new home – relax and unpack slowly, decorate and put your stamp on the property and settle down for the next few years.