Your 8 step guide to buying a house - e.surv Chartered Surveyors

CALL US FREE TODAY TO BOOK A SURVEY

0800 169 9661

Guide to house buying

It’s said that buying a new house is one of my stressful things you can do. And if you’ve never done it before, the process can seem daunting.

We’re here to help. Our eight-step home buyer’s journey is designed to guide you through the process and answer some of the questions you may have. You can also take a look at our blog where you will find more tips and advice.

If you have any questions, don’t hesitate to email us or call us free of charge on 0800 169 9661.

1. To buy or rent?

Buying a house can be an expensive exercise. When setting out your budget, don’t forget to factor in essential like an independent residential survey, solicitors’ fees, removal costs, stamp duty, and practical extras like furniture, appliances, and carpets.

If you’re currently renting but considering buying your next home, there are advantages and disadvantages to buying and renting.

Home ownership may sound like an exciting prospect but think carefully, based on your personal circumstances.

To Buy

To Rent

Advantages

You own the property.
You gain from any increase in value.

You don’t have to worry about any rise in interest rates
You have the flexibility to move quickly

Disadvantages

You often need a loan.
The risk of losing your home.
You need a large deposit.

You never own your own home.
You need a deposit.
You must obey your landlord’s rules.

2. Find a property

If you decide it’s the right time to buy a property, it’s time to start looking for the ideal home in the ideal location. As well as visiting local estate agents or online property websites such as Rightmove and Zoopla, you should also take a drive around your ideal location and check out the private advertisements in the local newspapers.

It’s important to research the local area and learn as much as you can about the property you’re thinking of buying. And don’t forget to ask the property owner all the questions you need answers to. For example:

  • How long has the seller lived there?
  • Why is the seller moving, where to, and is there a chain?
  • Has the property had many viewings/offers?
  • How long has it been on the market?
  • How long is the lease (if it has one)?
  • Are there any parking issues outside the property?
  • Who lives upstairs/downstairs/next door? What are they like?
  • What repairs have been done?
  • If there’s a real fireplace, is it safe to use?
  • How old is the boiler and when was it last inspected?
  • What’s included in the sale? White goods? Curtains? Wood burner?

3. Secure a mortgage

Do your research. There are two routes when looking for the right mortgage. You can either go direct to a high street bank or building society, or you can go through a broker or financial advisor. Once again, there are advantages and disadvantages to both options.

Financial advisors may be better placed to provide you with an independent view of the whole lending market, but it may take some time to identify which lender has the best product for you.

If you choose a mortgage with a high street bank or building society, you’ll generally be offered one of its in-house products which may limit your ability to obtain the best rates. However, the advantage of using a high street bank or building society is that your lender should be able to process your application quickly, particularly if you’re already a customer with a history of transactions.

But which mortgage should you choose?

Fixed Rate
As you pay a fixed rate of interest for a set period, you know exactly how much you’ll be paying each month during that period. When the fixed period ends, you’ll usually move to the lender’s Standard Variable Rate. There are usually penalties to pay if you pull out of the arrangement early.
Interest Only
With an Interest Only mortgage, you make monthly payments for an agreed period, but this will only cover the interest on your loan. You’ll normally also have to pay into another savings plan or investment that will hopefully enable you to pay off the loan at the end of the term.
Standard Variable Plan
With a Standard Variable Plan, your mortgage repayments go up and down in value with the lender’s standard interest rate. This often changes following the Bank of England base rates.
Tracker
Tracker rates are linked to the Bank of England rate, or some other ‘base rate’. This means they’ll always go up and down in line with changes to that base rate.
Discount Rate
With a Discount Rate, you pay a lower interest rate at the start of the mortgage, before you move to another rate (usually the lender’s Standard Variable Rate) after a set period.

And there are some other things to be aware of:

Arrangement Fees
Beware of administrative fees charged by the lender for arranging your mortgage.
Early Redemption Charges
Your lender may charge you for finishing a fixed rate mortgage before the full term agreed.
"Payment Shock"
This is the risk that your mortgage’s scheduled future periodic payments may increase substantially.

This can occur for a number of reasons e.g. the expiration of an initial or temporary start interest rate (sometimes known as a ‘teaser rate’), the end of a fixed interest rate period, the end of an interest-only payment period, an increase in an adjustable-rate mortgage’s fully indexed interest rate, or the re-casting of a payment option adjustable-rate mortgage.

4. Arrange a valuation and a survey

So, you’ve found a property you’d like to buy, but you can’t proceed until you’ve had a valuation. It’s important to remember that a valuation is not the same thing as a survey. But why do you need either?

Before agreeing to lend you the money to buy your property, your mortgage lender will want to ensure:

  1. that you can afford to make the repayments – what is your income compared with the value of the loan you’re requesting?
  2. that you will pay – what is your record of repaying loans?
  3. that the property is worth more than the loan.

For these reasons, mortgage lenders require a property valuation (Mortgage Valuation).

Buying a house is likely to be one of the biggest investments you’ll ever make so before you commit, you must make sure:

  • that you can afford the repayments on the loan – what’s your income compared with the loan amount?
  • that you can pay – what is your experience of repaying loans?
  • that the property is worth the asking price, and that you are aware of any repairs that need to be made

For these reasons, home buyers need surveys.

Your fourth step on the home buyer’s journey is therefore to instruct a valuation and survey of the property you’re thinking of buying.

Remember, just as a lender won’t lend without a valuation, a buyer shouldn’t agree a price without a survey.

If you haven’t already, look at our product comparison guide to find out which survey report is right for you and your circumstances.

To book a survey, or for free advice on which survey to choose, please give us a call on 0800 169 9661.

5. Agree a price

Once you’ve agreed a price with the seller, and the terms of your mortgage loan with your lender, it’s over to your solicitor who will act on your behalf to:

  • Check with the Land Registry that the property exists
  • Check with the Charges Registry to identify if there is any existing charge over the property e.g. from an existing mortgage lender or finance lender. There may be more than one charge on the property
  • Ensure legal title for the lender i.e. the lender is paid back first
  • Receive the loan from the new lender
  • Pay the previous lender (if one exists)
  • Pay the balance to the vendor or builder.

6. Find a solicitor

So, you’ve agreed on an offer and now you need a solicitor or conveyancer to transfer the legal ownership of the property from the seller to you.

Choose wisely, and remember, solicitors must be members of the Law Society, conveyancers must be members of the Council for Licensed Conveyancers. Many larger solicitors’ practices employ in-house conveyancers to do their conveyancing for them, so do your research.

7. Exchange contracts

Only when your solicitor is satisfied that everything is in place (such as legal checks and mortgage funds) does the ‘Exchange of Contracts’ take place. This is a legally binding process, committing both parties to the deal.

8. Complete!

‘Completion’ takes place when your solicitor is in a position to pay the previous lender (if applicable) and the seller. It’s at this point that you become the legal owner of your property and finally receive the keys. Congratulations. Enjoy your new property.