20 July 2020

HOW TO BUY A PROPERTY: A SIMPLE 12 STEP GUIDE (9 minute read)

Buying a house is a complex process, but with the right preparation there is no reason why it can’t go smoothly.  With this simple 12 step process guide I clearly set out what you need to do from start to finish.

1. Organise Your Finances

Buying a house is probably the biggest financial commitment you will take on in your lifetime, so looking at your finances and the costs of buying a property shouldn’t be taken lightly.

  • Understand the costs - a good understanding of the cost of buying a home is essential. It’s not just the property that will incur a cost, you will also need to pay mortgage fees, stamp duty (but not at the present time), surveys, estate agent fees and more. Being aware of this right at the beginning will allow you to budget sensibly and prevent any nasty surprises further down the line.

  • Save for a deposit – How much to save? If you are buying a resale property you would normally be expected to be holding a 10% deposit, but Mortgage Brokers tell me lenders are currently asking for a 15% deposit. Best to work out the average price of a property you can afford based on your mortgage capability. For a £150,000 house you will need a deposit of £22,500. However, things are not set in stone. Shop around as some lenders may request a lower percentage deposit.

  • Check your credit score – there are several online services that will check your credit score for you, including one from Experian, however, you will have to pay certain parts of this service. Your credit score will affect what mortgage products are available to you, so it is important to understand the score you have. If you find that your score is below what you are expecting, the Money Advice Service has produced a guide on improving your credit score.

  • First time buyer support –If you are looking to buy a new build and taking advantage of the government ‘Help to Buy Scheme’, the scheme helps you buy new-build homes up to £300,000. You must pay a 5% deposit with a shared equity loan of up to 20% of the purchase price. You will need to take out a repayment mortgage to cover the remaining amount.

  • Use a mortgage calculator – once you understand all of the costs for buying a property and have set aside a figure for your budget, you can use a mortgage calculator to get an idea of your property budget.

  • Consult a Mortgage Broker – Mortgage consultants are happy to provide initial advice if you are a potential client.

2. Get your paperwork together

When you buy a house, you will be asked to provide documents to prove your identity, address and where your money has come from. This is a legal requirement that estate agents, solicitors, conveyancers, and mortgage lenders have to perform to prevent money laundering. You will need either original documents or you will need to have them certified by a solicitor.

Some examples of the documents you will be asked for:

  • Proof of identity – passport, driving licence.
  • Proof of address – driving licence, bank or credit card statement, utility bill.
  • Proof of source of funds – last three months’ payslips. P60 form, tax return.

These are the basic documents you are likely to need, but in some cases, you may be asked for more. If you are self-employed you might not enjoy the paperwork requirements.

3. Do your research

Understanding the nuts and bolts of buying a house and preparing for each step of the process is the best way to ensure your house purchase goes smoothly.

You will also need to decide exactly what you are looking for in both your property and where you would like to live. You should think about lots of different criteria to help narrow down to precisely what are looking for, this will help your own property search and your estate agent’s too. An example of what you should be thinking about includes:

  • Buying a new build – can be appealing as they will be clean, energy efficient and come with a warranty.

  • Buying a property at auction – can be a quicker process, however, it comes with a set of considerations and not recommended for first time buyers.

  • Freehold or leasehold? – whatever property you end up buying will either be freehold or leasehold. A good understanding of what this means is essential so that you know if the property is right for you.

  • Property size and type – Do you want to live in a flat or a house? How many bedrooms do you need now and in the future? Would you like a garden, garage, or conservatory? Spend plenty of time thinking specifically about the property you would like to live in.

  • Location, location, location – location is the biggest influence on the price of property and you will need to know your budget and the type of property you need to realistically decide the location you would like to live in. If you are moving to a new area, think about the services, institutions and amenities that are important to you when deciding a location.

Some options to consider include:

  • Schools
  • Shops and restaurants
  • Parks and green space
  • Healthcare, nearest hospital and GP surgery
  • Transport links
  • Distance from workplace
  • Utilities. e.g. superfast broadband
  • Crime Rate

4. Apply for a mortgage

In most cases you will need a mortgage to cover the overall cost of buying a property.
There are many different types of mortgages,

Once you have researched the mortgages available to you and you have spoken to mortgage lenders, you can apply for a ‘Mortgage in Principle’. Essentially, this is a commitment from your mortgage lender that they will lend to you once you have found a property.

The main benefit of having a mortgage in principle in place is to indicate to estate agents and vendors that you are a serious buyer with your finances prepared, giving you an advantage over rival buyers.

5. Find an estate agent

Once you have your finances sorted, paperwork prepared and you have a good idea of where you would like to live, it’s time to find an estate agent.

When you are buying a property, you are free to register with as many estate agents as you like, however, not all estate agents are the same and some will be more effective than others.

Most estate agents in North Nottinghamshire will have approximately 50 properties on their books at any one time.   So they will be limited to what they can offer.

It is not like on the TV shows where potential buyers are presented with a range of  5-10 properties to choose from. In most other countries buyers appoint their own estate agent to represent them.  We still have a system in our country where estate agents only represent the seller’s side.

Many potential buyers will do like 96% of buyers and use the internet and visit one of the many property sales portals like:

  • Rightmove
  • Zoopla
  • On-the-Market
  • Homesearch
  • Prime Location

6. Viewings

The best way to get a feel for a property is to ask the estate agent to arrange a viewing. This is an opportunity for you to take a closer look, go inside and picture yourself living there.

Normally, the estate agent will be with you, giving you an opportunity to ask any questions. But I suggest you don’t go to view properties out of curiosity. You should to have some reason why you may like a property before you want to view it, otherwise you are wasting everyone’s time.

When you find a property you really like, you can arrange a second viewing to be more thorough, checking over the condition of the property and its fittings.

7. Making an offer

Buying a house is one of the biggest financial commitments you are likely to make in your lifetime, so there’s no doubt that making an offer on your dream home is both exciting and nerve-wracking.

Before you make an offer, make sure you have done thorough research on the property and the local area. If you are not offering the full asking price your offer might be rejected and you enter the world of negotiating. Which is a whole new experience. Get help.

8. Find a solicitor or conveyancer

Your solicitor will be vital for ensuring your property purchase stays on track and on time and is completed according to the law of England and Wales.

If you want to keep it local get quotes from one of the many solicitors in Retford, and Worksop who deal in property conveyancing. Remember that a licensed property conveyancer can also do the same job.

9. Get a property survey

Although it is not a legal requirement, it is likely your mortgage lender will require you to carry out a property survey. Regardless of this, it is advisable to get a thorough survey conducted on your property to help determine if there are any repairs needed to the property.

10. Prepare for moving day

Moving home is hard work, giving yourself plenty of time to organise for the big day will help alleviate the stress and make it just that little bit more manageable. Remember to book a removal company and negotiate a flexible date just in case something happens to upset the plan.

11. Home insurance

Make sure that you have buildings insurance in place on your new home from the day you exchange contracts. Most mortgage providers will also make this a condition of lending.
Try and negotiate a policy that includes both building and contents insurance.

12. Exchange and completion

Exchange of contracts is when the buyer and seller’s contracts are swapped between their solicitors. Once this happens your agreement to buy the property is legally binding – it’s rare that transactions fall through from this point.

Your solicitor will now arrange for you to pay the seller and have your name added to the property deeds.

Completion normally takes place two weeks after exchange, however, this is flexible, and you can arrange a convenient date with the seller.

Thanks for reading

I am always happy to help sellers, buyers, landlords and tenants

geraldbowers@thegoodea.co.uk

www.thegoodestateagent.co.uk

01777 237310 or message 07981 744003

 


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