Buying a Property
1. How much can you afford?
Buying a property is likely to be the biggest purchase you will make. The most important factor in the whole process is making sure that you choose a property you can afford.
When deciding take into consideration the stability of your current income - Although you may be able to afford your desired property based on your current income and present interest rates, look ahead to the long-term. Are your circumstances likely to change? What if mortgage interest rates soared? Could you keep up with your payments?
Aside from the cost of the property itself, a number of one off cost’s also need to be budgeted for i.e. Mortgage valuation and admin fees, mortgage broker fees, survey fees, solicitor fees, stamp duty, removal expenses, final bills from your present home and a deposit on exchange of contracts.
2. Get a mortgage agreed in principle
Before looking at properties, you should consult a mortgage advisor or lender as to what your maximum possible loan would be. The maximum loan will be calculated on your income and the size of your deposit.
Mortgage lenders typically lend up to three times your annual income, some will lend up to four times your income. If you are buying as a couple, this increases to either three times the first income plus one year of the second income, or two-and-a-half times your joint income. Your lender will contact your employer to confirm your income, or if you are self-employed you will have to supply proof of your income.
Once a mortgage has been agreed in principle with a lender, you can confidently start searching.
3. Search for a property
Once you know what you can borrow and afford, make a list of all your priorities for your new home. Achieving them all could be unrealistic, so you may need to compromise on location.
Use this website to search for properties for sale by either town name or postcode. The listings will display properties from all the agents in your area. To help you not go over budget we include a mortgage calculator on every property detail page, type in your deposit amount, interest rate and mortgage type once, and your proposed mortgage payments will be displayed for each property you view.
Keep on looking until you find a house that meets all of your priorities. If a property comes close arrange a viewing with the agent, what looks like a quiet road could be busy and noisy during rush hour, likewise most houses look great when the sun is shining, but when the weather is miserable the house could look the same. View the property at least three times on different days and at different times to get a good feel of the property overall.
4. Make an offer
Once a property is found that you would like to make an offer on, ask if there's a Homeowners Information Pack (HIP). This will give you important information about the property you're thinking of buying, including an energy performance certificate, local authority searches and evidence that the person selling the property is entitled to do so. Not all properties will have a HIP - it depends on how many bedrooms they have and when they were put on the market.
Think about the asking price and remember it is just that…an asking price and is negotiable. If the property is being sold through an estate agent, you should tell the agent what you are prepared to pay for the property. The estate agent will then put this offer to the owners. There is no limit on the number of times you can make offers on a property. If your offer is accepted, you are not committed to the purchase until exchange of contracts; likewise the owner could withdraw your offer and accept a higher bid in what’s known as being ‘gazumped’.
5. Appoint a solicitor / conveyancer
Once an offer has been accepted whoever you have chosen to do the legal work needs to be informed. Most firms of solicitors offer a conveyancing service. Although all solicitors can legally do conveyancing, it is advisable to choose a solicitor who has this experience. You can use a licensed conveyancer (in England and Wales only) to do your conveyancing. Licensed conveyancers are not solicitors but are licensed by the Council of Licensed Conveyancers.
6. Valuation / Survey
There are three types of report available to a purchaser:
The Mortgage Valuation Report
This valuation and report is organised by the lender. The primary purpose is to provide an opinion as to whether a property is suitable security for the money to be lent. The valuation will be done by a surveyor on behalf of the lender but you will have to pay for this valuation. The fee will be payable in advance, when you send a completed mortgage application form to the lender.
This valuation is not a survey, there may be problems in the property that could be costly to put right - and they won't appear in the valuation report as they may not affect the lenders decision to lend. You should consider whether or not to have an independent survey carried out in addition to the valuation.
The Homebuyer Report and Valuation
You can ask a professional surveyor to commission a Homebuyers Report and inspect the property for you. The RICS homebuyer service is a cost-effective way to minimise risk.
The homebuyer report is suitable for most twentieth century property, and focuses on essentials: defects and problems which are urgent or significant and thus have an effect on the value of the property. The homebuyer report, unlike a building survey, provides not only a survey but also a valuation as an integral part of the service.
This type of report is much more detailed than the mortgage valuation, which most people choose to commission. The surveyor will give a professional opinion about the particular features of the property which affect its present value and may affect its future re-sale.
It covers the building inside and outside, the services and the site. It focuses on the defects and other problems which the surveyor judges to be urgent or significant. Internally, the condition of service installations, such as wiring and drainage and central heating, will also be examined but not tested.
The Building / Structural Survey
The Building survey is the most detailed of the three and is recommended for properties pre 1940 or those that have been altered or extended. The report includes a detailed description of the condition of each element of the property usually with advice as to what remedial work is required if any. Often an indication of the cost is also included.
Externally, the surveyor will have a detailed examination and report on chimney pots and stacks, all roof coverings, gutters, fascias, external walls, windows, drains, damp proof course and the site itself including boundaries and trees.
Internally, the loft will be inspected, the structure of the roof, insulation, chimney stacks, condition of wiring, all internal walls, damp testing, timbers, electrics, plumbing and heating to name but a few.
The cost of this survey can be repaid many times by finding existing or potential problems and defects before completion of the purchase.
7. Exchange of contracts
The final contract between you and the seller is prepared when:
a) You have received a formal mortgage offer
b) You have received the surveyor’s report and any necessary action taken
c) The payment of the deposit has been arranged
d) Both you and your solicitor (or licensed conveyancer) are satisfied with the final outcome of all enquiries.
e) The completion date has been agreed.
Both you and the seller each have a copy of the contract which must be signed. These signed contracts are then exchanged and both parties are legally bound. If you were to pull out at this stage you would lose your deposit.
8. Organise the move
If you are a current homeowner you may require a quote from a removal and storage company for your possessions.
Arrangements should also be made for the supply of all utilities and the seller should arrange for final meter readings to be made.
9. Completion
The mortgage lender releases the money to purchase the property; the deeds are handed over to your solicitor or licensed conveyancer. The seller leaves the property and gives the keys to the agent, ready for you to move into your new home.