Buying a house can be a daunting task. Here, we take you through all the steps to becoming a homeowner.
Save for a deposit
If you want to buy a house, you will have to put together a deposit of at least 5% of the value of the property.
So where is that cash going to come from? Do you have savings already? Or will you need to turn to mum and dad to help out? If you don't have enough cash already, then you'll need to go through your monthly outgoings to see where you can save a few quid.
Read How to set a budget and stick to it for more.
You will also want to help your savings pile grow by putting them in a savings account that will give you a half decent return.
And that's tricky at the moment, as savings rates aren't exactly going to set the heart racing.
You get a better rate if you lock your cash away, but even that may not be a good move - there's no point sticking your cash in a five-year fixed rate bond if you are going to need to use that money as a deposit in the next year or two.
Check your credit score at this stage. You need to have a good credit rating before you should even think of buying a house, as you won't get a mortgage without one. If you’re not sure, check it through one of the UK's top credit agencies with loveMONEY.
If you have a low credit score or not much of a credit history at all, there are plenty of things you can do to polish it up, from trying a credit builder credit card to ensuring you are on the electoral roll. Read more at How to build an excellent credit history.
What can you afford to pay?
Now, what can afford to pay for a property? Check out a few lender websites to get an idea of how much they are likely to lend you.
Remember, just because they will give you a £200,000 mortgage, that doesn't mean that you can actually afford it! So do some sums on typical mortgage rates at the moment to see what your likely repayment would be. Can you afford it today? And can you afford it in the future, if interest rates rise?
You'll need to get an Agreement in Principle from a lender. This is exactly what it sounds like - the lender is saying that they are willing to lend you a certain amount.
You can compare the best mortgage deals around today in the loveMONEY mortgage centre, which will also give you an idea of just how much they will cost you every month and over the full term of the mortgage.
There are a host of other fees that you will need to consider in your calculations of course, including valuation fees, surveys and a Homebuyer's Report.
And of course, don't forget Stamp Duty. It's payable up front on any property worth more than £125,000, with rates rising the more expensive your property is.
Check out this Stamp Duty calculator for a clearer idea of what you'll have to pay.
Stamp Duty can add thousands to the cost of a purchase. Can you afford that?
Find a property
This is the interesting bit and there are plenty of ways to go about it. Looking online at sites like Rightmove and Zoopla is the obvious first step, but be sure to register with your local agents too as you may get to see a cracking home before it ends up online.
Check out parks, pubs, neighbours. Does anything look rundown? Ask the locals what the area is like and things that you should be aware of.
See what else is being built in the area. Check the local authority’s website or pop by the neighbourhood and look for works or signs. While you’re there, scout out information on the school catchment areas if you have kids.
Look for flood risks near the property as this will majorly bump up your home insurance premiums. Check it’s not in a place that susceptible to the weather.
Take photos when you’re viewing. View at three different times of day so that you can find out what the morning rush is like in the neighbourhood as well as the quieter daytime.
It’ll also help you catch neighbours who play their music full blast when they get home from work.
Once you have decided on the property, it's time to make an offer. Don't be afraid to offer less than the asking price - the majority of homes sold in the UK go at a discount.
If you can move quickly, or aren't part of a chain, then you are an attractive buyer, so use that to your advantage! If the vendor says no, you can always go back with a better offer.
Conveyancing and surveys
Don’t use the estate agents’ recommendation for a conveyancer as it’ll be more expensive and they’ll probably bag a bit of commission out of it.
Go for a specialist conveyancing firm, and don't worry about sticking with a local one. You can use whoever you want, and going for a solicitor from out of town may end up a fair bit cheaper!
They’ll draw up a draft contract or terms of engagement with you, setting out charges and deposits required. Your conveyancer will also take care of enquiries as well as legal and environmental searches for you.
Get a survey on the property. You’ve got four options here: a basic valuation (£250), a RICS Condition Report (£250), a Homebuyer Report (£500) and a full structural survey (£700). As you might have guessed, the more expensive the check, the more thorough it is.
Before you choose one decide what kind of state the house you want to buy is in, how much work it’s had done and how old it is. Read more at What type of home survey do you need?
Many homebuyers don’t notice what needs to be repaired and often need to fork out thousands more than they thought they would once they’ve moved in. Damp, rot and structural defects are all common problems.
Surveys can uncover sneaky tricks like painting over damp and moving photos and furniture to cover up damage.
Don’t succumb to pressure from your agent even if you feel pressed to make a decision quickly. It’s not worth buying a home that is riddled with problems that your budget can’t stretch to.
Enlist a Gas Safe engineer to do a safety check: it’s better than getting carbon monoxide poisoning once you move in!
Avoid being gazumped
Once your offer has been accepted, ask for the house to be taken off the market to reduce the chance of gazumping. This is where another buyer 'steals' your sale at the last minute with a higher bid.
Call your solicitor regularly to see how things are getting on, fill out forms quickly and chase, chase, chase!
Read more at How to avoid being gazumped.
The process of putting in an offer to exchanging contracts could take anywhere from two to six weeks, but you should get it done as soon as possible. It’ll secure the deal on both sides so you can carry on getting the final stages sorted.
You can pull out of the arrangement at any point before this if you change your mind though.
Just remember that you have no legal rights to recover funds if the seller pulls out of the deal. That said, you could ask your solicitor about indemnity insurance for wasted costs.
Contracts are usually exchanged between seven and 28 days before completion. You can exchange contracts on the day of completion too, though this is a bit risky.
Sell your old property
If you’re selling your old property, try to exchange contracts on your house sale and your house purchase as close together as possible.
The frustrating thing about a housing chain is that every cog needs to be working in order for your purchase and/or sale to work.
Selling first and buying second will give you an idea of how much money you have to spend, although you may be forced to rent if you don’t find a house to buy in good time.
But if house prices rise, you may not get as much out of your money if it takes you a long time to buy.
Buying first has its advantages, if you can afford it, particularly the fact that you won’t have to rent during the moving period. It is costly though.
Find a good removal company
Find a company which is a member of the British Association of Removers (BAR). They’ll have minimum legal standards, licenced vehicles and deposit protection.
There’ll be no route of redress of complaint if you go with someone who isn't on the register.
Move mid-week if you can. There will be premium prices at the weekend.
Allow enough time to pack up too as it can take a lot longer than you think. It's also the perfect opportunity to have a bit of a clear out.
After all, more stuff means more space and more weight taken up in the moving van.
Get yourself organised early and you could sell your old unwanted items on eBay and make a few quid, which you can put towards decorating your new home.
Completion marks the stage where you can move into your new home. Congratulations!
The time from the exchange of contracts to completion could be almost immediate, or it could take up to six weeks so that the rest of the property chain can be settled at around the same time.
Now, on to a few post-completion essentials.
Don’t get home insurance with your mortgage provider as you’ll most likely be able to get much better deal elsewhere.
There are a number of things you can do to bring that pesky premium down which you can find at Cut your home insurance costs.
You should also switch energy supplier because you’ll probably be worse off with the previous owners’ provider. Have a look for a deal which matches your needs and usage. Start your search today with the loveMONEY energy centre.
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