First Time Buyers Guide to Buying a Property
The typical house buying process follows these key steps, in some cases the order may be different especially with auction property, new builds, repossessions or where you approach an advisor having already made an offer. But we will provide further guidance as part of the advice process.
Synopsis of typical house buying steps
Before you begin finding a property
You will need to save a deposit to begin with (usually 5% minimum unless it is a right to buy property, a purchase from a family member below market value or a guarantor is available with equity in another property or cash to be used as a bond) as well as enough money to cover other initial outlays for things like legal fees.
Get mortgage advice & recommendations for a mortgage
Speaking to a mortgage advisor like us initially will help you find out how much you may be able to borrow, and the likely rates. We can give you full recommendations at this point so you can be clear about your ability to get a mortgage and what the costs etc would be, and there is no obligation to use our service.
For us, this would involve completing a short 2-page form followed by a telephone call lasting about an hour. From there we can send you recommendations that detail all the specifics of the products like interest rates, fees and other terms.
Arrange an agreement in principle or decision in principle
The first step in an application is an agreement in principle (or decision in principle). It can be used to show estate agents that you are likely to be able to arrange a mortgage.
This is where the lender performs a credit check and indicates if you have passed their credit scoring. If there is a reason to have concerns about hard footprint credit checks, we will usually start with a lender that has a “soft check” to begin with. We can then also provide you with a list of the documentation you will need to apply in full.
You will often hear that it’s good to reduce your outgoings for a few months and pay off any unnecessary borrowing to make your application “look better”. Although it cannot hurt, it’s often just window dressing.
What is far more important generally is that you do not stray beyond any overdraft limits at all and do not miss any payments on credit items. Starting any new credit commitments could affect a recommendation already made by a broker.
When you get to the stage of making an offer the agent will normally ask you for proof of funds (an agreement in principle, and proof of your deposit). They will also normally ask who your solicitor is.
So, it makes sense to get a decision in principle first and to get some quotes for solicitors so you can give these to the agent and assure them you are a serious buyer. It is also a good idea to get quotes for a more thorough survey of the property from local surveyors (such as a chartered building surveyor).
But don’t pay anyone to start any work before speaking to your mortgage advisor.
Making an offer on a property
Once a property has been selected and you decide to make an offer, the formal process of the mortgage application can begin.
If the offer is binding for any reason (such as an auction property) or if it requires a significant cash deposit to reserve the property you should speak to your advisor before placing an offer.
If the property is a new build, a repossession or if the vendor needs the sale to be completed by a specific date you should also discuss it with your advisor first, but this is not usually a problem.
The agent will usually want to see your proof of funds (decision in principle and bank statements evidencing your deposit) and solicitor’s details so you will need to have these ready.
Tell the estate agent which solicitor you intend to use, but don’t pay to begin legal work yet. You can “instruct” the solicitor which usually takes a few days but don’t pay to begin work at least until the application has been submitted for the mortgage.
Once the vendor confirms agreement to the offer you will now need to proceed with your mortgage application.
Submitting the mortgage application
You now need to provide all the documentation requested by us so we can submit the mortgage application. We share all documents digitally unless you require otherwise. Take care that you supply correct documents, following the guidance we give, this is often a source of delays in applications.
For some lenders, you will need to pay a basic valuation fee. The lender's basic valuation is not for your legal benefit though, i.e. you cannot sue the lender's surveyor if they fail to spot a significant issue or give an incorrect assessment of value.
So, you might want to arrange a more thorough survey for your benefit. Sometimes you can arrange this through the lender too. When the mortgage application is submitted any relevant upfront fees will need to be paid. If we are charging an advice fee this is not normally paid until mortgage offer.
We will now complete and submit the application and handle liaising with the lender. They will arrange for their basic valuation to be carried out. This does not necessarily involve an actual surveyor visiting the property and could be electronic, so should not be relied upon as an effective assessment of the properties value or soundness of construction.
Once completed, the lender will either agree on the application and make a binding mortgage offer or request any additional documents or property reports that might be required.
Once a mortgage offer is agreed, the mortgage application is complete, and the legal process is all that is left. At this point, you would pay our advice fee where applicable.
The legal process, searches, contracts, exchange and completion
The first step in the legal process is the searches. This is where enquiries are made with bodies to establish the legal suitability of the property for purchase and what other issues need to be addressed in the legal process like rights of way.
Searches normally take several weeks, and significant time can be saved by requesting personal searches.
Personal searches can come back in a matter of days, as a private firm effectively goes into the government registers and performs the checks for you rather than awaiting the various bodies to report themselves. Not all lenders accept personal searches, but most large ones will, and your solicitor can guide you further.
It is also possible to avoid searches entirely with some lender's and buy an indemnity policy instead, but this has several risks attached and you should seek legal advice if considering search indemnity instead.
Draft contracts will then be exchanged by your solicitors and queries relating to the searches and anything raised by you or the lender's surveyor sent to the vendor for a response.
An example of a query might be requesting evidence of planning permission for a new driveway, but they can often be raised in expectation of something that was not actually required (some new driveways do not need planning permission for example) and this can often cause problems as vendors panic that they have broken a law or been unaware of some obscure legal issue from their original purchase.
Queries are often a source of delays, make sure to stay in touch with your solicitor during the queries to see what has been raised and seek guidance on what solutions might be applicable where there are issues. Often seemingly serious problems (like a lack of planning permission) may be less severe than imagined.
Once all queries have been suitably addressed, the solicitors will move towards the exchange of contracts. You will need to pay your deposit if applicable (usually 5-10% of the purchase price) at this time and it is generally non-refundable.
Exchange normally occurs about a week before the sale “completes”, but sometimes if necessary, parties can agree to exchange a long time beforehand as is often the case with new build property that is still being constructed.
Once contracts have been exchanged the sale is legally binding and you are committed to the purchase. At this stage, you may also need to insure the buildings. Your solicitor should provide guidance.
Finally, the sale completes, and the agents arrange for you to collect the keys to the property on the day of completion. And that’s it, you can step inside, open some bubbly; and contemplate unpacking, or the pub!