The Process Of Buying A House

The Process Of Buying A House

Knowing what to do when buying a house, especially for the first time, can be daunting. The decisions you make when house buying could either make the process run smoothly or cost you more time and money. Here’s our step by step guide to house buying, with an explanation of what to do when buying a house and a list of all the key stages. We hope you find this house buying guide helpful.

  1. Save For A Deposit

When buying a house, the process must begin with you getting your finances in order. Generally speaking, mortgage companies require you to have saved at least 5% to 20% of the cost of the home you want to buy. For example, if you want to buy a home for £150,000, you’ll need to have saved at least £7,500 (5%). Saving more than a 5% deposit will give you access to a wider range of mortgages with better rates.

If you can’t save a deposit or afford the mortgage on 100% of a home, the Government’s Help to Buy scheme/ Shared Ownership scheme, offers you the chance to buy a share of your home (between 25% and 75%) and pay rent on the remaining share. You can buy bigger shares when you can afford to.

If you are buying a house in the UK for the first time, saving into a lifetime ISA will entitle you to a 25% top-up from the government (up to £1,000 a year) on your savings.

  1. Find Out How Much You Can Borrow

When you apply for a mortgage, the lender will assess your affordability. They will look at your annual salary (which you will have to evidence with bank statements and/or payslips) alongside any other income you receive. The lender will then compare them against all of your outgoings such as credit card and loan repayments, household bills, entertainment, car running costs, childcare, travel and even your weekly shopping bill. They will want to know about all your expenditures.

Lenders will also ‘stress test’ your ability to keep up with payments if your circumstances were to change such as if you lost your job or started a family. They will also consider what would happen  if interest rates were to rise.

The mortgage lender will also check your credit history to assess whether or not you are a reliable borrower or not. They will use all of this information to test your affordability and decide how much they are willing to lend you.

We strongly emphasise that you put together a detailed budget before looking for a property.

Speaking to an independent whole of market mortgage broker is crucial; they are able to compare mortgage products and prices from all lenders and find the best for your personal circumstances. Mortgage brokers do not charge for their advice, in most cases they are paid by the mortgage lender once the mortgage is finalised. Speak to one of our independent mortgage advisors today and find out what mortgage you can afford and the best deal available to you.

  1. Choose A Property

Once you have your mortgage in principle, you’ll know the price bracket of houses you’ll be able to view. There’s no definitive answer as to how long you can expect it to take to find your dream home though. Carefully consider all the options, arrange several viewings and only make an offer once you’re confident it’s the right choice.

Contact a few estate agents who are familiar with the area you are looking in. Some well established agents have spent years getting to know the market and if they know your circumstances may even advise you of new properties before they even come to the market or are advertised. Find out who the best agents in your area are with our online estate agent comparison.

  1. Make An Offer

Once you have found the perfect property, you need to decide how much to offer for it. Do you put in a high offer to secure the deal or make a low offer and risk losing your dream home? Here are a few things to consider:

  • Research the current local house prices and recent sold prices so you know what is an acceptable offer. 
  • Keep a close eye on the property market and be aware how quickly people are buying and selling houses. If they are moving very slowly, and going below the asking price, then you are in a stronger bargaining position.
  • If a property is new to the market, the owners may be unlikely to accept a significantly low offer. If it was listed months ago, it may have been priced too high. The owners might be more likely to consider an offer under the asking price.
  • See how much similar properties in the same area have sold for or are currently listed for. If the asking price is significantly higher than these, it gives you a good idea of what to offer.
  • As with all negotiations, start low. It can be a good idea to start around 5% to 10% lower than the asking price. Sellers often take this into account though and put their house on the market to counter this.
  • Only consider offering more than the asking price if you know the seller has already been offered that, or if you are really worried about not getting your once-in-a-lifetime dream home and you think there will be a lot of interest

  1. Choose A Conveyancing Solicitor

When beginning the process of buying a house, you will need to find a conveyancing solicitor to undertake the legal work.

Costs are classed as either Legal fees which are what you pay for the specialist legal work to be done and Disbursements which are third party charges such as Local Authority Searches, Stamp Duty Land Tax, Land Registry, Environmental and Local Searches.

Moving Buddies work with a panel of trusted law firms and conveyancers to provide the best service to you. Our legal partners work with us to speed up your transaction and make it easy to complete all of the work required in buying and selling a property. Get your Moving Buddies fixed fee conveyancing quote here.

  1. Get A House Survey

Surveys are inspections that are carried out on properties to give you an idea of its condition. Mortgage lenders often require a survey to be carried out as part of the process of buying a house. They highlight any issues and can save you money further down the line if you need to make repairs. It can also provide a bargaining tool should the results throw up any unexpected repairs needed and how much it will cost. There is more than one type of survey to choose from, most surveyors provide three types of survey: a condition report, a HomeBuyers report and a building survey. 

A RICS HomeBuyers Report for the average UK home costs around £500, though it could be between £325 and £900 depending on the size of your home and where it is. The homebuyers survey cost will vary depending on the size, location and price of your house. 

  1. Organise Removals

In 2022, the average removal company costs are £1,181. This is based on a 3-bed house travelling 50 miles in the UK. This price includes professional packing services and materials as well as the dismantling and reassembling of furniture at your new home.

If you don’t have a lot of big/heavy furniture, then hiring a self-drive van could be a good money saving idea. For smaller removals, a man-with-a-van service is likely to be cheaper than a removals company. In either case, check the mover is insured so that your belongings are financially covered if they get damaged in transit.

Ultimately moving takes much longer than you imagine and can be very stressful so often the cost of removals is worth the lack of stress. 

  1. Arrange Insurance

When buying a house, the process involves arranging insurance for your new property. This covers you for any damage to the structure of the building. Most lenders insist on this in the terms of your mortgage. Buildings insurance can cover permanent fixtures like fitted kitchens, carpets and bathrooms. How much buildings cover you need must be enough to rebuild the property if it was destroyed (this is not the same as the price you pay for the property). Buildings insurance needs to start on the date you exchange contracts. 

Contents insurance covers you for loss or damage to your personal possessions. Many providers are flexible and let you choose cover that suits your needs. You do not have to have this but it will protect you from costs if something unexpected happens. Most people take buildings and contents insurance together. 

  1. Exchange contracts

When you buy a house in the UK, the exchange of contracts and completion happen at the very end of the transaction. This brings both parties the security that the sale will no longer fall through and is now legally binding making it one of the most significant steps to buying a house.

To ‘Exchange contracts’ both sets of conveyancing solicitors swap the signed contracts of sale and the buyer pays a deposit.  This is the point at which the agreement to buy or sell a property becomes legally binding and neither party can back out of the deal without significant financial loss. 

Quite often, exchange takes place over the phone, while both solicitors read out the contracts and immediately send the documents to one another. If there is a property chain, the solicitors must wait until every party in the chain is happy to proceed before exchanging contracts. If there is a problem anywhere along the line, this could delay all of the exchanges.

The time between having an offer accepted and exchanging contracts can take anything from a few weeks to several months.  When contracts are exchanged however, the solicitors will agree on a completion date. Since conveyancing firms can be sued if they fail to meet the agreed date, you can be fairly certain you will definitely complete on the date agreed. 

  1. Completion

Completion often occurs a week to two weeks after exchange but the decision about exactly when to complete will largely depend on how many properties there are in the chain and each party’s circumstances. 

It’s possible to exchange and complete on the same day but rare. It would allow you to move without delay and omit the need for the exchange deposit. However, it can be hard to plan everything in advance. There isn’t much time to fix things if anything goes wrong either. This option is less risky if both you and the seller are chain-free, with no other parties involved. It’s also easier for cash buyers. 

On completion day, the money will be transferred to the seller and you can then collect the keys from the estate agent and move into your new home.

  1. Utilities

Once you have collected the keys to your new home there are still quite a few things that need to be organised. For example,

  • Setting up the utilities for gas, electricity and water.
  • Setting up council tax
  • Setting up a new broadband provider
  • Setting up a new TV provider

Did you know that Moving Buddies help you with this, so you don’t have to worry about it and we also find you the best market deals saving you money along the way. 

  1. Planning For The Future

Now that you have secured your home, it’s a large asset that you will want to protect. No-one knows what the future holds and ensuring your home is protected and secure for the future is sensible and important. Moving Buddies works with a leading Wills and Estate Planning company, Family Matters, who provide independent advice on protecting your home and protecting your loved ones.

We hope that these steps to buying a house in the UK have helped you understand the process. To learn more about what to do when buying or selling a house, take a look at our Moving Home Library for more information. There is info about all stages of house buying and selling to help you on your journey.

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