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How to Buy a House
Buying a house isn’t something you do everyday. Let’s take you through the process of buying, so you’ll know what to expect as you jump in.
Buying a house will most likely be one of the biggest buying endeavours of your life. It’s a big step up from the regular shopping list stuff, you know…milk and sugar. In fact it gives a whole new meaning to the phrase “big shop.” So how can you go from grocery-store shopping, to house shopping? Here’s a simple guide to the house-buying process. Knowing what to expect and being prepared will help you to avoid wasting time and money along the way. So, here’s what you need to know… It’s not very “British” to talk about money, but you’ll have to throw that rule out of the window when you’re buying a house. First things first is to get your finances worked out. As a first step, why not use our mortgage calculator guide? It’s a great indicator of what you can borrow, based on your income and regular outgoings. Firstly, let's talk money
The first step on your property journey is to work out your budget. How much house can you afford? This will look different for different people, depending on their salary, deposit and regular expenses. You may be able to get financial help from the government through their affordable home ownership schemes. If you’re what’s known as a “cash buyer” then you’ll be buying your property without a mortgage. So your budget will be how much money you have available (meaning not tied-up in other properties or investments etc.) to spend on a house. You will not have to worry about monthly repayments against your loan as you will have 100% equity in your home. You won’t need to talk to a mortgage broker or lender, but you could seek advice from a financial advisor, or someone at your bank or building society.How much can I afford?
Buying as a Cash Buyer
How much house can you afford? This will look different for different people, depending on their salary, deposit and regular expenses. "
Buying with a mortgage
If you’re looking to get a mortgage, you’ll need to work out how much you can borrow. Though your lender or broker will have to look at your finances to decide what you could borrow, as a general rule of thumb you can borrow between 4-4.5 times your annual salary. Or if you want to go one step further and get a more detailed (but still estimated) look at what you can borrow, you can use a mortgage calculator. This will consider salary, interest rates and mortgage term (length) in order to give you a rough indication of what you could borrow. If you’re buying with a mortgage your purchase will be split into two parts: the loan and the deposit. The deposit is the amount of money you will be putting into the house from the start. It will dictate how much equity you have in the property. Though you can occasionally buy a home without a deposit, or with only a very small one, most buyers will put down at least a 10%, with lenders preferring a 20% deposit nowadays. The higher the deposit, the more equity you have in the house. If you have a bigger deposit (40% or higher) you will have access to the best deals, so your monthly repayments should be smaller because of better mortgage rates.
The second part of the purchase will be made up of the loan or mortgage. This will be given to you by a lender, most often a bank or building society. These lenders will give you an estimate on what you can borrow, in order for you to work out how much house you can afford. If you put down a 30% deposit, then you will need a loan which is worth the remaining purchase price. You can work out your Loan-to-Value (LTV) ratio by calculating what percentage of your home has been bought using a loan. If your deposit is 30%, then your LTV is 70%. As we said, the better your LTV, the better mortgage rates you’ll be offered.
Though you can occasionally buy a home without a deposit, or with only a very small one, most buyers will put down at least a 10%, with lenders preferring a 20% deposit nowadays."
Budgeting for extra costs
If you’re buying with a mortgage, you will be repaying the mortgage with interest each month. You will have upfront but also ongoing costs when buying and owning a house. This may add around 15% to your bill, on top of the actual cost of the house. Extra costs include things like: Removal costs. Mortgage insurance. Stamp Duty Land Tax. Bills and Council Tax.
Getting a mortgage in principle
You can’t get a mortgage before you’ve found your property, but you can (and should) get a Mortgage in Principle (MIP), also known as an Agreement in Principle (AIP) or Decision in Principle (DIP). This is an agreement between the lender and the buyer, where the lender does a “soft search” on the buyer’s credit history (which does not affect your credit score), as well as looking at their earnings, regular outgoings and current interest rates in order to come up with a rough amount that they may be able to borrow. This is done because it gives the buyer an idea of how much they can borrow, which should help to narrow down (or expand!) their property search, depending on their findings.
A Mortgage in Principle also lets sellers and estate agents know that the buyer is truly serious about buying - it’s a kind of marker of legitimacy. Getting a MIP does not guarantee you a loan or specific mortgage product, but it is a good indication of what deal you could secure.
House hunting
Once you’ve had a look through your finances and worked out your budget, as well as securing a Mortgage in Principle, the fun can really start. It’s time to begin searching for properties that meet your requirements and fall within your budget. You can use online property portals, estate agents, or attend open house viewings. Make a list of properties you are interested in and start to arrange viewings. When browsing properties you should think about lots of different criteria, here are some thinking points: Affordability – does the property fit to your decided budget? There’s not really much point looking at houses that are well above what you can afford, with some exceptions, like if it’s been on the market for a long time and the seller may be looking to significantly lower the price. Generally though, stick to viewing properties that are within your budget, to avoid time wasting and getting distracted by unaffordable properties. Location – think about your needs when it comes to location. You may have area requirements, like being close to your parents for childcare, proximity to schools or proximity to work. Beyond “needs”, you’re also allowed to have “wants” (who knew!) - which could include being close to shops, Transport links – check your route to work, and that of anyone that will be living there. Are your kids staying at their same current school? If so - check the route! If they’re starting new schools, it’s good to investigate those routes too. Number of bedrooms – consider how many bedrooms you need now and how many you may need in the future. It’s easy to think “this works for now, let’s go for it”, but buying a property is a big deal. Think a few steps ahead, future “you” will thank you for it! Energy performance – look into the property’s energy performance, and what could be done to improve it (like fitting new windows, for example). You can find this information on the property’s Energy Performance Certificate (EPC).
Living space requirements – though your child may only be able to roll over now, give it a few months and that little bottom-shuffle will be a crawl, then a toddle and you’ll be kicking yourself for going for the flat with 4,000 steps and no sitting room. What do you need now? What will you need in a few months or years? Be realistic. Is there any way anyone in your household will be working from home soon? If so, they’ll need a work space. Are you thinking of becoming a major body builder? You’ll need a gym. Are you thinking of getting a greyhound? You’ll need a garden. Though you may have to sacrifice on some points, you want to try to meet your reasonable needs.
Also, if you or anyone living with you have access requirements, you’ll want to check the property is compliant with these needs. If this is going to be home to a wheelchair user, for example, you’ll want to bring a tape measure to check that the doorways are compatible with the width of that chair and that countertops are the right height. If these things aren’t in place - how easy would it be to make amendments? Extending – if you’ve got a growing family, you may want to think about the potential for extending. Internet speed and signal – how fast is the wifi? You can ask the estate agent for this information. You can also do research about whether it’s possible to get faster wifi installed. Though it seems silly in this day and age, there are also some areas which have poor phone signal - is that going to be a problem for your social or work needs? Condition – some people prefer buying a “doer-upper” as you tend to get a better price, and you can put your stamp on the place. But think about this is realistic for you before buying a house which you wouldn’t be able to move straight into. Do you have the time, money and energy to refurbish a place? Or, if you’re looking to move straight in without doing much, is the house in a good enough condition for this? Car parking – if there isn’t off-road parking, will you need to get a permit? If so - how much will it cost you?
Arranging viewings
Contact the sellers or estate agents to arrange viewings for the properties you are interested in. Visit the properties personally to assess their condition, location, and suitability. Shortlist properties: Based on your research, create a shortlist of properties that meet your requirements and preferences. Consider factors like location, size, price range, amenities, and any specific features you desire.
Reach out to the estate agents or owners of the shortlisted properties. You can do this by phone, email, or through the contact information provided on the listing. Introduce yourself, express your interest in viewing the property, and inquire about the availability of dates and times for viewings. Once you've made contact, work with the estate agent or owner to schedule appointments for house viewings. Try to be flexible with your availability to increase your chances of securing a convenient time slot. Before attending the viewings, create a checklist of questions and items to consider during the visit. This could include inquiries about the property's condition, age of appliances (like the boiler), nearby amenities, or any specific concerns you may have. On the day of the viewing, don’t be afraid to ask questions, make notes and take photos (with their permission). It’s also normal practice to bring along a friend or family member, particularly someone who has experience in home-ownership and may think of questions that hadn’t occurred to you. Don’t be too up front about your budget - it’s not compulsory to let the seller or their estate agent know your budget (or the maximum amount you’re willing to spend). This could give them negotiating power, especially if they know your heart is set on the property and you’re financially able to offer higher. Keep your cards close to your chest to improve your negotiating power.
It’s also normal practice to bring along a friend or family member to the viewing, particularly someone who has experience in home-ownership and may think of questions that hadn’t occurred to you. "
Thinking about offering?
If you find a property you want to buy, it’s time to make an offer to the seller, most often via their estate agent. Making an offer: The offer can be verbal (on the phone) but should be in writing as well - a followup email will do. The estate agent legally has to pass every offer onto the seller. Outline your position: if you’re a cash buyer, make that clear. If you’re willing to go above the asking price straight away, you may want to say that now (though we do advise holding off flying in with a much higher offer, as you may end up spending more than necessary). Negotiation: The seller may accept your initial offer, reject it, or come back with a counteroffer. Negotiations may involve back-and-forth communication until both parties reach an agreement on the price and any additional terms, such as fixtures and fittings or the timeline for completion. If you do enter into negotiations, it will be done via the seller’s estate agent. This can be challenging for buyers, as they don’t have the professional experience of the seller’s party. This is why some people consider employing a buying agent, as their expertise could save you money in the long run.
Consider other factors: In addition to the price, there may be other factors to consider during the negotiation process, such as the inclusion of certain appliances, repairs, or a desired completion date. These details can be included in the negotiation and should be clearly communicated to the seller. If the offer is accepted: Congratulations! This is a big step. But remember, either party can legally pull out between now and the exchange of contracts. You may have to pay a small deposit of around £500-£1,000 but you will get this back if the seller pulls out.
Hiring a solicitor or conveyancer
Once your offer is accepted, you'll need to hire a solicitor or conveyancer to handle the legal aspects of the purchase. You can use either a solicitor or a conveyancer, as they will be doing the same job. A solicitor is particularly useful if your purchase is less straightforward, but they may be slightly more expensive. Either way, your conveyancing expert will be ensuring the legal transfer of ownership between parties. Although you cannot employ their services until after your offer has been accepted, there’s no harm in doing research beforehand to find a conveyancer (and make sure they’re available!). That way you’ll be ready to kick things off when your offer is accepted - less hanging around. Wondering where to find a conveyancer or solicitor? There are a few options, including asking your estate agent, asking your broker or lender, getting recommendations from friends and family, or doing a simple Google search to find a well-reviewed company who operates in your area.
Arrange searches
Conveyancers will conduct searches in order to check any potential legal issues with the property, such as liens (charges that remain unpaid), planning permission obstacles or subsidence issues. Any legal problems or challenges that may obstruct the smooth legal transfer of the property, your conveyancer should uncover in the searches. You may also want to get a survey done on the property to identify any structural or other issues that may affect your living conditions, or the house’s resale prospects. There are different types of surveys available, such as a basic valuation survey, a homebuyer's report, or a full structural survey. It’s now time to finalise your mortgage, if you’re buying with a loan. You will probably have your Mortgage in Principle lined up. You can go with this lender if you think they work for you, or you can search the market for other lenders. A broker or adviser will be able to help you at this stage, as they scour the market for the best possible mortgage products for your specific situation. Here at Strike, we have helped over 7,000 people find their perfect mortgage match. Your lender will do full checks, including a credit check (which may affect your credit score), in order to finalise your mortgage. They will also conduct a survey of the house, to check they are lending you the correct amount of money against the chosen property. For example, if the house has major structural issues they will be less willing to give you a mortgage (especially a large loan) as the house is at risk of declining in value if it sustains damage. Basically, they want to make sure the loan is safe, and a survey should help to confirm this. Your solicitor will review and then exchange contracts with the seller's solicitor, in a process often referred to as “exchanging”. Before exchanging contracts you will want to check that any agreed necessary action has been taken to the property, like any issues that arose during the survey that you asked to be rectified before the purchase. When the contract is agreed upon, both parties must sign and exchange contracts and then you'll typically pay a deposit of around 5-10% of the purchase price. This means the purchase is legally binding, and you probably won’t be able to get out of the purchase without losing your deposit. Before the exchange, you will need to agree a completion date with the seller, which is on average about four weeks after the exchange of contracts.Finalise Your Mortgage
Exchanging
Completing
After the contract exchange, your solicitors or conveyancers will handle the legal aspects of the transaction. This includes: Liaising with the mortgage lender to check that the funds will be ready when the completion date comes around. Informing the land registry that are transferring the ownership of the property from one party to another. On the agreed completion date, the balance of the purchase price is transferred to the seller's solicitor. Your solicitor will handle the legal paperwork, like transferring the deeds to your name. Then, once the funds are received by the seller, the property is officially yours! After you have completed on the property, your solicitor or conveyancer will send you an invoice, which will outline a) their services and what they’re charging you and b) disbursements, which are payments they have made on your behalf and that you must now repay. You need to pay within 14 days of the purchase. Often your solicitor will pay this on your behalf, and it can be added into your mortgage, but remember if you’re paying it back as part of your loan then you will be accruing interest on it.
Moving house
Once you have completed, you’re legally allowed to move in, or have your builders start their work if that’s the plan. Remember to make sure you’ve got all the permits you need to allow your builders or movers to park their vehicles. Movers: you should have budgeted for the type of removal costs you need, whether that’s buying a pint for your friend Jenny who has a big van, or paying a removal company to do all the bells and whistles, like setting up your house for you. Insurance: whether home insurance (both building insurance and contents insurance) is compulsory depends on your circumstances and property. Even if it’s not compulsory though, it may be worth exploring. Should anything happen, you’ll be grateful for the cover. Despite the monthly payments, it will be good use of money should you have to make a claim. Updating your address: you will have to register as the owner of the property for things like utility bills and the local council. You may want to set up a direct debit for Council Tax, to avoid missing the monthly payments.
So whilst buying a house certainly isn’t the easiest thing you’ll ever do, it doesn’t need to be the most stressful thing in the world. If you’re prepared and have the right people helping you, then you’ll have the best chance of it being smooth sailing.
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