They say an Englishman’s home is his castle because, in the UK, we have a true love affair with homeownership. So if you’re thinking of stepping onto the property ladder for the first time, or continuing your journey up, or down it, we hope this guide helps.
1. Decide if buying a home is right for you
- Although 86% of people in the UK want to own their own home, it’s not always right for everybody all the time. The advantages include:
- You’ll have the freedom to change as you like and not be beholden to a landlord and what they want to do.
- It can save you money, as interest rates on mortgages are very cheap, whereas rents are high.
- It can make you money. Property prices generally increase (although they can also obviously fall) and your monthly payments will be reducing mortgage debt.
- However, there are some disadvantages:
- It’s a big financial commitment, and mortgage payments need to be honoured. Prices could fall, and if you cannot afford to wait out such a drop, you could have negative equity (where your property is worth less than the debt secured against it).
- You’ll have to do all your own repairs.
2. Decide if you should sell first
If you are already a homeowner, decide whether you want to sell your house or flat before you buy it. It can be dangerous in a rising market, but there are upsides. In particular, you will be able to pounce quickly when you do find the home of your dreams, and you won’t be trapped or held to the risks of a chain.
3. Decide on your budget
How much do you want to spend? This might be dependent on how much of a deposit you can get together. See our Mortgage Calculator to see what you could afford. And don’t forget the variety of one-off and ongoing hidden costs of buying a home (stamp duty, legal fees, agents costs, removals, etc). These can put an extra 15% on the cost of your home – more if you are doing serious building or redecoration work.
4. Get your finances in place
The best person to advise what you can afford is a mortgage broker. They will also be able to advise on different types of mortgage so you can understand what suits your requirements and preferences, and which deals would be best for you based on the level of your deposit.
5. Decide where you want to live
If you want to move to a new home close to where you already live, there is little to decide, but if you want to move to a different part of town, or across the country, then deciding the area is more difficult and time-consuming. This is a very important decision – get it wrong and you will either be unhappy with where you live or face the costs of moving again. You must do your research thoroughly, and so if moving to a completely new area, “try before you buy” and consider a rental option.
6. Choose a specific property
Once you know the area you want to live, you should start researching the properties in that area thoroughly so you really get to know the local market well. Visit estate agents and register your details, and start to view as many properties as possible, and make sure they are no hidden surprises. See our blog “The top questions to ask at a viewing”. You may also be considering whether to buy a new build or an older or period property and if you are thinking of buying a new build, then you’ll also like our blog “Top tips for buying a new build property”.
7. Make an offer – and get it accepted
Work out the price that you feel is the most that you are prepared to pay for the property, and importantly can afford, and then make your offer to the agent. We have a culture of negotiating on offers for property purchases, so prepare yourself for a bit of haggling!
8. Hire a solicitor or conveyancer
Once you have had an offer agreed, you will need to get a solicitor or conveyancer to handle the legal work to transfer ownership of the property to you. Ask for local recommendations, both from friends, family, and your estate agent (they will have lots of experience of knowing who are the good, the bad and the ugly!). See our blogs on “How much will my conveyancing cost?” and “Questions to ask to choose the right solicitor for you” to help you make the right choice. Your solicitor will investigate all matters legal on the property and ensure that you are fully protected with your purchase.
9. Decide if you want a survey
Your mortgage lender will require a valuation by a surveyor, to ensure that the property is good enough to lend against. This is not a proper survey, and will only look very superficially at the property, if at all. You can usually either get the valuation upgraded to a full survey, or you can commission a separate survey. This should tell you everything you need to know about the property and alert you to any potential problems you will face once you move in. Unless you are very experienced with property, it is usually worth getting a survey done.
10. Arrange a deposit
Before you can exchange contracts (see step 13), you need to arrange a deposit of 10% of the sale price of the property and give it to your solicitor or conveyancer. You should either have the 10% deposit from the deposit you have arranged for the whole property or might be able to raise it from the sale of your existing home. You may need to negotiate a lower deposit if you are buying a more expensive property than the one that you are selling, and your solicitor can advise on this point.
11. Exchange contracts
When you exchange contracts with the seller you become legally committed to buying the property – and they are legally committed to selling to you. If you pull out after this, without due reason, your 10% deposit can be forfeit. It is therefore important to be totally comfortable with your purchase before you exchange contracts. In order to exchange contracts, you need to agree on a completion date with the seller, lodge your 10% deposit with your solicitor and arrange buildings insurance.
12. Final arrangements and negotiations
Once you have exchanged, there is a lot to do: arrange removers, sort out a change of address and speak to utility suppliers, to name but a few. See our checklist to guide you through the various steps. Your solicitor/conveyancer will be liaising with the mortgage company to ensure the money will be ready for completion, and you need to make sure that your deposit is also ready, and lodged with your solicitor before completion.
13. Complete the sale
Completion is when you pay for the property and take ownership of it, and takes place on a certain day, as specified in the contract. On the day of completion, the money is transferred and the deeds of the property are transferred, between each side’s conveyancer.
14. Take possession of your new home
The seller has to leave the property by the time of completion, and you should then be able to collect the keys , normally from the estate agent. You are now free to move in, or if you are doing any building work beforehand, the workmen can now start.
15. Pay stamp duty and settle up with the solicitor and conveyancer
After completion, your solicitor or conveyancer will send you an account, covering all their costs and disbursements, as well as the purchase price of the house and stamp duty. Your solicitor or conveyancer will normally pay the stamp duty for you, and ensure that the change of ownership is registered with the land registry.