A-Z House Buying Guide
Whether you’re a first time buyer, moving home or simply remortgaging, to secure the best mortgage rate deal, your best bet is to get the advice of an independent whole of market FCA regulated mortgage advisor. But you’ll still need to do some things yourself. This guide will take you through the whole process.
1. What can you afford
What can you afford
Before you go looking for houses that you set you heart on, first work out what you can afford to help you narrow the search. This will primarily be a combination of your deposit, your income and your credit score.
Get a Decision in Principle (DiP)
With your independent FCA regulated mortgage advisors help, get a feel for what mortgage lender will grant you. This will give you the confidence to know where your limits are. Your DiP may put your offer ahead of a similar offer from someone who doesn’t have one.
Get your conveyancer primed
If you’re ready to buy your home you’ll need to instruct an approved conveyancer/solicitor for the legal. If you’ve got one ready, it’ll make the transaction smoother and limit the risk of gazumping (losing out to a higher offer before contracts are exchanged).
Your independent FCA approved mortgage advisor will be able to help you source an approved conveyancing firm that the mortgage lender can work with.
2. Discover the home of your dreams (*That you can afford)
Finding your dream home is the most exciting part of the whole process. Make a short list of the ones you like and be sure to visit them a second time before you decide. If you can meet the owners of your favourite and build a rapport then so much the better.
Once you have the area you desire, visit the online property portals to select your initial list. If you’re lucky enough to find your dream home straight away (within your budget), move quickly and inform the owners, the estate agents and of course your independent FCA regulated mortgage advisor so that you can make it happen.
3. Making a dream become a reality – the offer
Your offer should be directed at the agents acting on behalf of the sellor (vendor). There is often a little bit of negotiation to get the agreed price but if both parties are serious (and the offer is reasonable to start with) then the agreed price will be set within a very short time.
Be wary that there may be others potential buyers. The estate agent will make you aware of this at the right time and to give you the best chance of agreeing a sale. Remember that it’s not just a question of price, but also of being in a position to buy quickly that will help you.
Whilst it’s an exciting stage of the process, having an offer accepted does not mean that the property is yours just yet. Be sure to let have your mortgage advisor know so that they can get wheels in motion to get to the exchange of contracts.
4. Time to get that mortgage
Your independent FCA regulated mortgage advisor will now turn your DiP mortgage into a mortage proper. Their relationship with the lender will help enormously at this stage, making sure all the requirements are met to get the best mortgage loan for your circumstances. Remember, if you go direct to a lender, you will only get access to the products they have and not those from the whole of market. As a result you could be paying more than you need to.
Mortgage application process
The process for formalising the mortgage will typically take up to a month if everything is in place. If your mortgage advisor has arranged a DiP then it may be quicker. If you do decide to go to the lender directly, there are a number of factors that could reduce your chances of getting a mortgage. Read our guides on how to prepare if you decide to go this route.
In order to grant the mortgage loan, the lender will have to value the property to ensure the value is reasonable and fair. This will be carried out by the lender at your expense. If the mortgage is approved, your independent FCA regulated mortgage advisor will check the offer to ensure all is correct.
5. Instruct the Conveyancer
When you apply for your mortgage, you should also be instructing your conveyancer. Your conveyancer/solicitor will ensure that the legal requirements of the purchase are fully met so that no challenge can be made when the title passes. Your lender may also obtain indemnity insurance to cover you in the rare event that there is an issue over the title. Your conveyancer will also manage the fund exchanges for the deposit and mortgage loan, the property searches, and any directions that you are bound by.
The average cost of a Conveyancer
Based on an average UK property of £240,000, a Conveyancer would typically charge £1040 as follows:
Conveyancing Search Package
Transfer Ownership with Land Registry
Anti-money Laundering Checks
Bank Transfer Fee
Total Conveyancing Cost
Some conveyancers offer fixed deals regardless of the property so it’s worth asking your mortgage advisor if they can secure a deal before you start the process so that you know what the cost is going to be.
6. Instructing a Surveyor
It’s important to have your future home surveyed to identify potential problems that are obvious now or will become so in the future. If your surveyor does identify a problem, depending on what they find, you can either pull out of the deal at no further cost or you can renegotiate the purchase price.
There are four main types of survey depending on what you need:
RICS Condition Report
The RICS Condition Report describes the condition of the property, identifies any risks and potential legal issues and highlights any urgent defects. It’s most suitable for new-build and conventional homes in good condition; no advice or valuation is provided in this survey.
A Condition Report is a very basic ‘traffic light’ survey and the cheapest, costing around £250.
RICS HomeBuyer Report
A HomeBuyer Report is a survey suitable for conventional properties in reasonable condition. Costs start at £400 on average.
This will help you find out if there are any structural problems, such as subsidence or dampness, as well as any other unwelcome hidden issues inside and outside.
The HomeBuyer Report doesn’t look beyond the floorboards or behind the walls.
Some home-buyers reports include a property valuation, so you might be able to revise your offer if the survey reveals a lower price than the mortgage lender’s valuation.
If there’s no valuation included, you could use the report’s suggestions for repairs to renegotiate the price.
For example, if it’s going to cost you £5,000 to carry out work on the property’s damp walls, it’s reasonable to offer £5,000 less than the asking price.
RICS Building Survey
The RICS Building Survey provides the same level of in-depth inspection as a building survey, but uses a simple a clear presentation style and a 1, 2, 3 rating system to ensure that you can easily identify the most serious issues. . This is mainly aimed at larger or older properties, or if you’re planning major works.
A detailed report provides you with an in-depth analysis of the property’s condition highlighting a range of issues which includes advice on defects, repairs and maintenance options. Included with the RICS Building Survey are advice sheets on how to deal with some of the more common problems that have been found at the property including an outline of repair options and the consequences of not dealing with any potential issues highlighted within the report.
The typical cost is around £400-£500.
The building or full structural survey
This is the most comprehensive survey and is suitable for all residential properties. It’s particularly good for older homes or homes that might need repairs. This type of survey typically costs upwards of £600 and provides detailed advice on repairs.
It’s very extensive and in some circumstances worth the extra money but it does not usually include a valuation. Although this survey can’t look under floorboards or behind walls it should include the surveyor’s opinion on the potential for hidden defects in this area.
The surveyor should also provide information on potential repair options. Again, you could try to save money by comparing the details of the repairs required against the lender’s valuation.
New-build snagging survey
A New-build snagging survey is an independent inspection to look for any issues with the property.
Costs typically start from £300 depending on the size of the property.
Developers should fix faults highlighted before you move in.
*Source: Money Advice Service
7. Get Covered
Life insurance is a safety net that pays off the mortgage in the event that one party to the mortgage dies. Depending on the type of mortgage product you have, it can be compulsory although for the financial well-being of your family, it could be essential. Your independent FCA regulated mortgage advisor may be able to provide you with life insurance cover as part of their suitability assessment.
Lenders will always insist that you have buildings insurance to cover the cost of your property in the event that it is damaged or worse, destroyed. You do not have to use a lenders recommended policy but the policy you choose has to be approved by them. Your independent FCA regulated mortgage advisor may well be able to provide you with a competitive buildings insurance rate, meaning less of your deposit is taken.
Contents insurance covers your personal items and is optional but advisable.
8. Exchange contracts
The exchange of contracts is the point of no return, albeit the point where the party that reneges can be charged for doing so. The exchange of contracts normally happens around one to four weeks before your agreed completion date. The exchange will only happen when certain conditions have been met:
The solicitor (or licensed conveyancer) and you are satisfied with the final outcome of all the enquiries Some conveyancers
Any surveyor’s report has been received and any necessary action taken
The formal mortgage offer has been received
Arrangements about the payment of the 10% deposit have been made
The date of completion has been agreed.
You and the seller each have a copy of the final contract which you sign.
This is your moving day. Ownership of the property officially transfers to you on this date. Whilst you can do all you can to make sure everything happens on time, if you are buying as part of a chain, be prepared to accept that events outside of your control may delay your move. It’s still vital to have this target day in everyone’s diary, so at least there is something to aim for.
The mortgage lender releases the money
The deeds to the property are handed over to your solicitor or licensed conveyancer
The seller must hand over the keys and leave the property by an agreed time.
Congratulations, time to open that bottle of bubbly!