Buying a first home can be a daunting experience, there are so many different things to be aware of and the steps you need to take. Even if you already own a home, it can seem like a complex process. This step-by-step guide can help you keep on track and understand the progress you’re making.
1. Mortgage pre-approval
When you decide you want to buy, it can be tempting to jump right in and start looking for a home. However, you’d be missing out an important step; getting a mortgage in principle.
This doesn’t guarantee that your actual mortgage application would be accepted or that’ll you be offered the same terms outlined. But it does give you an idea of what you can afford, the level of deposit needed and whether you’ll be able to keep up with repayments. Estate agents and sellers may also want to verify that you’re likely to receive a mortgage for the offer you’re putting in later down the line.
Mortgages in principle are usually valid for 90 days. While the lender will typically perform a soft credit search, this won’t leave a mark on your credit report.
2. Search the property market
With a mortgage in principle, it’s time to start looking for your dream home. Some find what they’re looking for right away, for others it can take more time.
You might already have a clear idea of what you want from a property or be open to possibilities. Either way, have a list of essentials and keep an eye out for red flags during each viewing. Even if you’re struggling to find what you’re looking for, don’t panic. House hunting can be stressful, but don’t make a knee-jerk reaction, purchasing a home is a long-term commitment and you want to feel happy with the decision you make.
3. Purchase agreement
Once you’ve found a home that’s right for you, an offer will need to be made. It can be worrisome deciding how much to offer, particularly if you’ve fallen in love with the property, as it’s probably the single biggest purchase you’ve ever made. Expect to negotiate with the seller a bit here, after all, they’ll want to make as much as possible. However, don’t be tempted to go above your budget, even if other buyers are outbidding you.
Remember, even if an offer has been accepted, there’s no contractual obligation and there isn’t until contracts are exchanged.
4. Mortgage application
If you’ve made an offer that’s been accepted, a mortgage application is the next step. Lenders will want to check both you and the property you intend to buy, weighing up how likely you are to pay, as well as ensuring your potential home has been valued correctly.
Your mortgage application doesn’t have to be with the lender you secured your mortgage in principle with. It’s important to pick the right lender here, depending on your priorities. For example, is the ability to overpay important to you? Do you want a fixed interest period? There’s a lot to consider and many lenders to search through. This is where a mortgage broker can help. They’ll guide you towards the lenders, including those that don’t have a presence on the high street, that are likely to accept your application and offer you the best deal. If you’d like our support when buying a home, please contact us.
Once an offer has been accepted, the legal process of passing property from one person to another starts, known as conveyancing. The conveyancing firm you choose will handle the paperwork, exchange of money, draft the contract and conduct some searches too. This work comes at an additional cost and you can expect to pay in the region of £1,500 for conveyancing services.
6. Solicitor searches
Having picked a conveyancing specialist to work with, one of the important steps they’ll carry out for you is searches. This will include a local authority search, which will highlight if there are any building control issues or enforcement actions, for instance. Other searches that may be carried out depending on location could be drainage searches and an environmental search.
Some searches are optional, though they may be advisable and could be a requirement by your mortgage lender.
7. Property survey
While your lender will value the property, you shouldn’t rely on this alone. A comprehensive property search can flag up potential issues, from structural concerns to where building regulations haven’t been met.
You can choose to do a property search at an earlier point; however, you definitely want to do it before you exchange contract. For example, if you have particular concerns after viewing a property, you may decide to have a property search conducted to either put your mind at rest or help you decide to pass up the opportunity.
Should the property survey come back with concerns, you may be able to negotiate with the seller to either correct them or accept a lower offer with future costs in mind.
8. Negotiate a completion date
Hopefully, things should be progressing well up to this point; though the process can be frustratingly slow at times. Once you’ve been offered a mortgage, things can start to move forward, be sure to carefully check through your mortgage offer before signing. With the above steps in place, you can set a completion date; this is when the key will be handed over.
As you’re almost ready to exchange contracts, this is also a good time to get your deposit money to the solicitor and sign your contract.
9. Exchange contracts
If you’ve reached this point, it’s time to exchange contracts, at which point the sale is not legally binding; you can start celebrating buying your new home.
With the contracts in hand, the final few bits of paperwork need ticking off. This will include receiving a completion statement from your solicitor, a few more searches being carried out and organising the transfer deed. Your solicitor will also handle the transfer of funds.
10. Move into your new home
Whether it’s been weeks or months since you started the home buying process, this is an exciting point to reach. It’s time to move in and start enjoying your new home.