The house purchase process is exciting, demanding and potentially frustrating. There’s a lot to consider, not just financially, but emotionally too. Looking for a ‘dream home’ can easily become stressful if you start making mistakes early in the process. We’re knowledgeable about the house purchase process, so here’s our handy guide on what to expect.
Step 1 – Find a property you can afford
The first step with any big financial decision? Decide what your budget is and where you want to live. Take into account your upfront costs. You’ll need funds for a deposit, solicitor fees and conveyancing fees. Then also consider ‘running costs’ that are involved, like the mortgage repayments and utility bills. Don’t forget that these aren’t fixed costs. Mortgage repayments and utility bills are subject to change, particularly as interest rates are surely due to rise soon. Don’t overstretch your budget. Before making an offer, you should be able to afford to the asking price if it comes to that.
Step 2 – Apply for a Mortgage and Decision in Principle
Obtaining a mortgage can be a pretty time-consuming process, but it will depend who you choose to partner with. Your choices include either a bank or building society, an estate agents advisor, or a specialist mortgage broker such as Grange Mortgages.
You will need to complete a detailed application and provide background information so that you can obtain an Agreement in Principle (AIP). An AIP shows any estate agent that you have been through a qualification process and that you have the ability to borrow a certain amount of money, based on your financial circumstances. An AIP will detail how much you can borrow and a few details about the terms of that borrowing.
Use our handy guide to help you decide what kind of mortgage will suit you best.
Step 3 – Make an offer
Now you’ve decided on your budget, your lender has agreed what you can borrow and you’ve found a property you love, it’s time to make an offer. If you decide to make an offer, what you offer is entirely dependent on the circumstances of the purchase. It might be that you’re able to offer significantly below the asking price if the house has been on the market for a while. However, if the property is in a desirable area, perhaps only the asking price will suffice. Keep in mind your budget and don’t let the excitement of buying a house financially cripple you.
Step 4 – Solicitor and surveyor arrangements
Once the offer is provisionally accepted, you’ll want to arrange for a solicitor and a surveyor to take care of legal requirements. A solicitor will handle the legal work and will make contact with the seller’s solicitors to make things as smooth as possible. The solicitor will also answer questions and provide you with plans and deeds for the property. They will contact the local council to check if any local or planning issues will change the property’s value. A surveyor will check the property for problems that might affect the structure or value of the property (for example, the property having damp would be a costly fix).
Step 5 – Searches and Surveys
It may be necessary for specific surveys and searches to be undertaken before you agree to outright purchase the property. These can cover lots of issues, from subsidence and flood risk, to structural faults and in-depth issues. Usually it’s a good idea to take out an RICS Homebuyer Report – usually costing c.£400-500. A Homebuyer Report will provide a detailed survey of the inside and outside of the property. It will outlines any faults or repairs required.
Step 6 – Finalise your mortgage and offer
At this stage, it might be worth considering whether to re-negotiate your offer with the seller. Firstly, the surveys you’ve undertaken may have unearthed some problems with the property that have expensive fixes. You can use this information to barter a lower purchase price that will cover the cost of the repairs. Secondly, the lender’s valuation may be lower than that of the seller’s asking price, so consider whether that is a factor.
This can be a tense part of the house-buying process. It’s time when full mortgage applications can be rejected, higher offers from other buyers may be accepted, or the buyer could withdraw the property from the market.
When finalising the mortgage, you’ll receive a ‘binding offer’ from your lender which gives you up to seven days to rescind your application. Most buyers will use this time to reflect and make sure all other legal aspects of the purchase are in place.
Step 7 – Exchange of contracts
If all has gone well so far, your solicitor will send you a contract to sign for that all-important completion of sale. At this stage, you should go through the contract with your solicitor to make sure everything is correct. If fixtures and fittings are included in the sale, it should be confirmed by the seller’s solicitor.
Make sure you get a completion statement after contracts have been exchanged.
Step 8 – Completion
This is one of the most exciting parts of the process – you’re almost there! Unfortunately, this is the point where solicitor’s and purchase fees will need to be paid, including Stamp Duty Land Tax and remaining deposit amounts. Once completed, your solicitor will register the property with the Land Registry, and send you the Title Deed via your mortgage lender.
That’s it – you’re now a homeowner!
Mortgages are tricky to get right, and a huge financial commitment, so you should talk to someone in the know before you begin your application. Grange Mortgages, with a fantastic team of support staff and knowledgeable, experienced consultants, are happy to help you every step of the way. Get in touch today to find out how.