Step by Step Guides Buying

Looking to get on the property ladder? Broaden your portfolio? This guide covers all the aspects involved in a property purchase, helping you whether you’re a first-time buyer or have some experience in the property market.

Sections:

1. Where to begin
2. Property Hunt
3. Viewing
4. Conveyancing
5. Offer and Application
6. Survey
7. Mortgage Agreed
8. Searches
9. Exchange
10. Insurance
11. Complete
12. Moving

1. Where to begin

So you've decided to buy a new home. Congratulations! However, there are important things that you have to do before even starting to look for a place, such as:

1. Figuring out your budget
2. Getting a mortgage agreement in principle

1. Your Budget
You can start by figuring out how much you're able to afford for a new house. Ideally, this means you will plan a budget:

Incoming:

• If you're selling a house, the amount you will get from this transaction.
• How much money can you borrow from a mortgage lender?
• Any savings or investments that you could use to back your purchase.

Outgoing:

• The cost of the property itself.
• Additionally, you have to consider a number of one-off costs, such as:
  
  

  Arrangement Fee: lenders charge to set up the mortgage, even though some waive this fee.

  Arrangement Fee: lenders charge to set up the mortgage, even though some waive this fee.

  Lender's Valuation (Basic): Required by every lender so that they know that the property is worth the price being paid for it. The buyer has to cover this cost.

  Survey: apart from the lender's valuation, you should carry out your own survey to check for any defects within the property. This survey can be of two types: 1. The Homebuyer's Report (£250-500) 2. Buildings Survey (up to £1000 plus VAT)

  Legal / Conveyancing fees: You need the services of a solicitor in order to deal with the legal issues involved in buy a house. More on this later in this guide.

  Stamp duty: A government tax charged for properties on three bands:

  1. £120K to £250K - 1% of the purchase price
  2. £250K to £500K - 3%
  3. Over £500K - 4%

  Land Registry fee: Charged by the government to transfer the register of the property to a new owner. This can range from £40 to £800, depending on the price of the property.

  Local Authority search fees: Your solicitor / conveyancer performs searches for urban planning issues. These fees can come to around £60 or more in London boroughs.

  Estate agent's commission: If you're selling a property to buy another one, there's a percentage (usually around 1.5% or 2%) for the estate agent who sells your property.

  House-hunting expenses: Such as eating out, travel, telephone calls.

  Removal fees: Shop around for a favourable quote, or do it yourself by hiring a van. Add about £25 for insurance.

  MIG (Mortgage indemnity guarantee) fees: charged by the lender as an insurance premium when your loan is more than a certain percentage (from 75% for some lenders) of the price of the property. Costs vary between lenders.

  Other costs:

  • Buildings insurance
  • Contents insurance premiums
  • Additional removal insurance
  • Disconnection of services (water, gas, electricity, telephone)
  • Reconnection of services
  • Installation of new equipment
  • Carpet laying
  • Kennelling of animals
  • Mail redirection
  • Change of address notices
  • You should also allow for a well-sized contingency fund to use in case of emergency.

2. The Agreement in Principle
Even though this is not a requirement, it is advisable that you get an agreement in principle for a mortgage from a potential lender. This helps sellers recognise that you are putting in a serious offer and also that you want the transaction to be as quick as possible. On the other hand, you will gain an accurate mortgage estimate to consider while budgeting.

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