Buying a house is one of the biggest financial decisions that most of us make in our life. It can be a lengthy and complicated business, often fraught with stress and worry. Luckily there is a lot of good advice around which can help make your home-buying experience a smooth one.
It is important to find a good Agent and Solicitor to guide you through the process and help you to avoid some of the most common problems associated with home-buying.
We hope after reading this you are feeling prepared and ready to go!
The home-buying process in England and Wales involves:
Working out a realistic budget:
The maximum price you can afford to spend on a home will be the combination of the amount you can borrow from a mortgage lender and the amount you can raise yourself. Don't forget to take into account of the costs involved in house buying, and you're normal living costs as these might eat into your budget and affect the amount you can afford to spend.
You need to decide whether you want to spend to your maximum, or buy a cheaper home and have more flexibility with your finances. It may be tempting to borrow as much as possible when the initial cost is manageable, but remember interest rates can go up as well as down and you could get into difficulties and lose your home if you can't keep up your repayments.
When deciding how much you can borrow, many lenders will take into account your other financial commitments, as well as your income. If you are getting advice, advisers have a duty to take reasonable steps to ensure you can afford the mortgage they are recommending, they are required to lend responsibly and will try to make sure you do not overstretch your finances.
Once you have worked out your price range, the next step is to find a property!
Decide where you would like to live and the sort of property you want. It's easy to get carried away when you begin your search, so it is useful to make a checklist of what it is you want from the property and don't be tempted to overstretch yourself.
View the property several times at different times of the day so you get a clear picture of the area. You may find you have to compromise on some points - however if you do make any major compromises, be sure you can live with them.
You can find out about available properties from Estate Agents, the internet and local newspapers. It may be a good idea to set up an "Alert" for yourself on property websites so you don't miss out on new properties coming to market.
It is a good idea to visit local estate agents in person to discuss your requirements. They will be able to discuss suitable properties they have available, and can send details of any other properties that come to market. The agent will act on your behalf to arrange viewings and will pass on any offer you make to the seller. By keeping in regular contact with the agents you won't miss out on your dream property!
Once you have found a property you like, make sure you find out as much as possible about it. Even if it seems perfect, try to think about it from all angles. write everything down - the best house-hunters take notes on each property which they can compare later.
- Check what fixtures and fittings will be left.
- Consider the layout of the house - are there any unusual shaped rooms that it would be difficult to fit furniture or appliances into? Are there are enough power points?
- Don't be put off by the decor - try to imagine the house how you would want it.
Making an offer:
Before you put forward an offer, it is a good idea to make sure you are in a position to proceed, this way your offer will be taken seriously.
- If you are a Cash buyer you will be asked to provide proof of funds.
- If you have a mortgage you should provide details of the Lender/Financial Adviser
- If you are using the proceeds of a sale you will be asked for the selling agent's details so any chain can be checked and verified.
You need to decide how much you are prepared to pay and make the offer via the selling agent. Any offer you make is "subject to survey and contract". The sale of the property is not legally binding until exchange of contracts. If you are not in a position to proceed any offers you make will still be put forward, however the property generally stays on the market until you are in a position to buy.
When making an offer it is a good idea to state what items, if any, you would like included in the sale price. Once your offer has been accepted by the seller, you will then need to formally arrange your mortgage (if required) and appoint a solicitor/conveyancer.
Getting a mortgage:
Ideally, you will already have a mortgage Approved in Principle so that you can proceed quickly once your offer has been accepted.
There is so much variety in the mortgage market that you need to find a lender and a type of mortgage that suits you. Your main options are to search the information available on the internet, find an independent Financial Adviser, or speak to the Mortgage adviser at your bank.
Before approving your mortgage application, the lender will need to check the property's value. The lender will arrange for a qualified valuer to inspect it. You normally have to pay for the valuation, even if you do not go on to buy the property. However, some lenders are willing to waive this fee, so check.
Getting a formal mortgage offer:
When the lender is confident that you will be able to repay the mortgage, and is satisfied with the valuation report on the property and the results of legal searches, it will issue a formal mortgage offer (known as an "offer of advance"). If you want to go ahead and get the mortgage to buy the property, you must accept the offer of advance. The legal work then needs to be completed.
Conveyancing (the legal work)
"Conveyancing" is the legal process that transfers the ownership of the property from the seller to the buyer. The legal aspects of buying a home can be complicated so you need to appoint a solicitor as soon as possible after your offer is accepted.
The fees charged by solicitors will vary so it's worth getting several estimates, also check if they have a "no sale-no fee" policy. Your solicitor will guide you through the process of House selling or buying, but if you do not understand anything you should ask.
The whole process can be time-consuming and generally takes between 6 - 12 weeks. Your solicitor will apply for "searches" information that could affect your property from the relevant local authority and sometimes other agencies.
Once the conveyancing work has been completed, you and the seller need to sign the agreed contract that sets out the terms of the sale. The solicitor will then exchange contracts and at this point both you and the seller are legally committed to the sale.
You will have to pay a deposit (about 10% of the purchase price) and, you will need to take out buildings insurance on the new property from the date of exchange. Your solicitor will advise on how and when this should be arranged and be put into effect.
If you are dependent on the sale of an existing property to buy the new one, make sure that you exchange contracts for both properties at the same time, and agree the same completion date. Otherwise, there is a risk you might be legally committed to buy before you have access to the money you need to do so.
Once you have your completion date, you will need to think about organising moving in. Removal firms can sometimes get very busy, so it is worth getting quotes in advance, pencil in dates but do not confirm until exchange of contracts has taken place and your completion date set. Don't forget to set up a redirection for your mail and notify all utilities.
Completion and moving in:
You will become the legal owner of the property once the money for the property is transferred from your bank/mortgage lender to the seller. The solicitor is responsible for checking that the funds have been received before allowing the keys to be released. Often, in practice, it will be the estate agent who hands over the keys and they will contact you to let you know when you can collect them.