How to Buy a home

Buying a house is one of the biggest purchases you will ever make. On top of the financial commitment, there are also all the emotional aspects of becoming a homeowner – finally knowing where you belong, creating a space for your family to live in and grow together, etc.

Before getting too far ahead of yourself, you need to evaluate your current position. If you have no money saved, you can’t buy a home, so do some serious inventory on your current financial situation. If you are renting, ask yourself what it will take to buy a home. How long will it take to save up your down payment? What is the average price of homes in this area?

We’ve compiled this comprehensive and detailed step-by-step guide to home purchasing, which we hope will help you be a little more prepared and armed with what to anticipate and where / who to push if necessary. We’ve taken some of this information from the gov.uk buying a house guide, which is completely up to date and unbiased.

Who will be involved? Can I count on anyone for assistance?

Lender (the bank) – able to provide you with a loan so you may buy the property

Insurance Company – able to provide the property insurance and contents coverage you need to buy a home, as well as any other associated forms of cover (buildings insurance is required)

Conveyancer – an individual who acts on your behalf to complete the legal documents required to acquire a home (the paperwork).

Surveyor – capable of evaluating the property’s physical condition and providing an independent appraisal.

A mortgage broker or advisor can advise you on the most appropriate mortgage for you.

A professional or trade specialist who is skilled in maintenance or construction can help with any repairs or improvements discovered during the survey.

An Energy assessor can help you with the Energy Performance Certificate (EPC) questions.

An estate agent is someone who will assist you through the buying process and work with other parties to help the transaction go through. But keep in mind that their main function is to assist the seller in selling their property.

What’s my budget?

You may typically borrow up to three times the amount of your annual income, and there are several online calculators available to help you determine what you can afford. You generally need a deposit of 5% or more of the asking price of the home you want to buy.

There are also these governments schemes to help buyers;

• Help to Buy: Equity Loan
• Help to Buy: ISA
• Lifetime ISA
• Shared ownership

Furthermore, while buying a property, you must budget for some or all of the following additional expenses;

• Stamp duty (if you’re a first-time buyer and satisfy certain conditions, you may be exempt from stamp duty)
• Up-to-date surveys/reports
• conveyancer fees
• search fees
• Insurance for buildings
• Removal cost
• home repairs or improvements
• mortgage costs and life insurance
• service charges and ground rent in leasehold properties

Obtaining a Mortgage Agreement in Principle

Most agents will want to see a Mortgage agreement/decision in principle when accepting an offer on a property. This is a written statement from a lender that estimates what they will lend you, but you can only have one in principle agreement; be careful because lenders will do credit checks. There may be too many agreements in principle that could harm your credit.

What documents do I need to prove my identity?

You’ll have to supply A TON of information about yourself, your earnings, and so on, so double-check you’ve got it all ready to go and easy to send.

• Identification documents – A valid passport, driver’s license, EU member state identity card, or other valid identification document is required.
• Proof of address – Copy of a current driver’s licence, bank or credit card statement, phone bill (less than 3 months old), and/or electric bill (not more than 3 months old) is required. A mobile phone bill is not considered valid proof of address.
• Proof of Financial Source– Your employer has the paperwork you’ll need to apply for self-employed status. You’ll also require your payslips from the previous three months; P60 form from your employer; a tax return and other papers if you’re self-employed.

Finding your new house

You probably already know the location you want to purchase, but it will aid your decision if you really delve into what you want and what you are willing to give up. Check out the local area, businesses, restaurants, and schools while also noting how long any journeys are, how busy the peak hours are, parking availability, and crime statistics.

This is a convenient checklist to have on hand when looking at a home, so print it out and take it with you! It’s also a good idea to visit homes repeatedly throughout the day if you’re interested in buying one – for example, traffic may create problems. 

What questions should you ask about a home you’re considering?

Is there anything else I should know about the property before making an offer? Your estate agent must supply you with material information regarding the home as a legal requirement.

How long has the house been on the market? If it’s been on the market for more than three months, ask why they believe it won’t sell. Is there anything else that has scared people away, or is it too expensive?

Is this a property chain in which many people are buying and selling their homes simultaneously? How big is the chain of individuals? Will the seller need to link their purchase into the chain?

How long have the homeowners been there? If it’s been a short time, you might want to find out why—perhaps there’s a problem with loud neighbours.

You may look up previous sales data on the internet by going to ‘sold property price’ information. Is the home in a location that has seen many owners, with each passing owner changing the property’s condition and/or adding new enhancements? If so, why do you suppose it’s happened again?

When are the sellers planning to depart?

Have all the required permissions been acquired for any work previously completed on the property?

Is it possible to contact the sellers directly? They’ll have a far better understanding of the property’s problems than someone who has only seen photographs.

Is the property a leasehold or a freehold?

Is the seller willing to sign a reservation agreement to demonstrate that they are serious about selling you their property and are prepared to pay you compensation if the sale falls through? 

Making an offer is simple enough

Don’t hesitate to make an offer; this is a significant development, so only make one you are completely comfortable with and don’t be afraid to haggle. If you’re going through an estate agent (most likely), give them your desired offer along with any conditions attached. Also, find out what’s included in the house (white goods, etc.), what other selling prices in the area are like, and establish a ceiling in your imagination. 

Accepted Offer!

This is when the legal work begins, and you’ll need a legal representative (Solicitor / Conveyancer, as well as a Lender’s formal bid). You’ll also need to have surveys conducted on the property, either a homebuyers report or a more in-depth structural survey; many legalities are involved. Don’tforget to give your Solicitor all of the details they need to complete the deal. 

Mortgage application

Your lender will now move on to prepare an official offer based on your Agreement in Principle. They’ll need all of the paperwork we’ve outlined previously, as well as any additional information you can provide. If certain lenders refuse to accept certain conditions, a mortgage broker may help by informing them which lenders are more flexible. The lender will then complete a mortgage application and check your credit history. The salary verification process is conducted. Once all of this is approved, they can prepare their formal bid. 

Instruction a solicitor/conveyancer

Contact around for recommendations from friends and family for fantastic legal representatives in your region for your purchase. They’ll act on your behalf for things like as soon as you’ve been advised,

• Local authority search
• Environmental search
• Drainage search

The contracts will be prepared by your solicitor and the seller’s solicitor. Your lawyer will ask questions of the seller, who will then have to fill out documentation describing property information and describing what is included. 

Mortgage official offer, signing contracts

Once you’ve received the official offer, the surveys are all fine, and your solicitor has verified your finances, they will send you the contracts to examine and sign. There’s a lot to understand, but don’t be afraid to ask if you’re unsure about anything; once you’re satisfied that everything is in order, the contracts are sent to the sellers’ solicitor, and solicitors on both sides handle the purchase, they’ll usually pick a closing date. Things move swiftly thereafter (hopefully); 

1. You pay a deposit to your solicitor.
2. Both parties are now bound by contracts.
3. The seller is paid in full and you acquire title to the property with the HM Land Registry.

Completion generally takes place on a Friday, and if you are linked to another chain of events, it might bring delays. 

Preparation for Moving Day

This can be challenging in a chain, but good communication and clarity can really help.

As a guideline, between exchange and completion, consider the following tasks:

• Let your removal company know when you’ll be moving.
• Contact your local water and broadband providers to cancel or relocate any existing accounts.
• At the exchange, you will have taken out property insurance for your new home. To protect your valuables, you should consider purchasing contents insurance.
• The Royal Mail offers a post-forwarding service to help you keep your identity secure.
• Inquire about another inspection in order to measure rooms for furnishings, etc.
• Ask the seller where the fuse box, energy meters, and stopcock (water supply valve) are located.
• Purchase any appliances and furnishings you’ll want (consider when they’ll arrive – on moving day or the day after).
• Make sure you have everything you need, then start packing and discarding any items you don’t want. See our article about decluttering before a house move.

Source: https://www.gov.uk/government/publications/how-to-buy-a-home/how-to-buy