Buying a home is one of the most complicated, stressful things you will ever do, but it'll be worth it. In the UK, there are a lot of hoops to jump through before you get those keys, so if you're looking to buy a flat or house for the first time and you're clueless as to where to start, we're breaking it down for you. Buckle in, this is a long one!
Before You Begin Looking
The first thing you need, unless you're a lucky cash buyer, is to have your finances sorted. You'll need a deposit (usually at least 10 percent of the property price). Remember to factor in other costs: solicitors fees, moving costs, and, if you're buying a property worth over £125,000, stamp duty. Then work out how much you're able to pay towards a mortgage each month, plus the number of years you'd like to pay it back. An online mortgage calculator can help you to work out how much you can realistically afford.
Many estate agents and vendors will want proof that you can pay for a property before an offer will be accepted, and this usually comes in the form of an Agreement in Principle (AIP) from a mortgage lender. This is not a mortgage offer, simply a note from the bank or building society stating that their basic checks suggest you will be approved for a mortgage. You can do the legwork to find a mortgage yourself, or use an independent mortgage broker. Some charge fees, others offer free advice.
Mortgage lenders do very intensive checks into your financial background, and you'll need to give them huge amounts of information, including payslips and bank statements going back three months. Banks will pressure-check your ability to pay your mortgage. If you can make your statements look as clean as possible for three months before starting your house hunt, you'll be in the best position.
Now is also a good time to start looking for a conveyancer: a solicitor who can manage the purchase. Costs vary wildly, and since everything is done by email, phone, or post, they don't have to be local. Some online companies will do it for a few hundred pounds, but you will probably get better and faster service going with a small local firm. Ask friends, colleagues, or family who've purchased in the area. An estate agent you have a good relationship with may also be able to recommend someone.
The House Hunt
Now you're ready to start the search. Have a good idea of what your priorities are, and write a list. Is a garden a necessity? Do you need somewhere to park your car? How many bedrooms do you need? Is a small kitchen a dealbreaker? Does it have to be a house, or would you consider a flat or maisonette? Are you willing to buy a leasehold property?
You may well need to compromise, but it's good to know what the dream is. Register your interest with estate agents in the areas you're keen to buy, and set up alerts on Rightmove and Zoopla based on your requirements. If agents continue to push properties that are out of your price range, be firm with them. Don't put yourself in a position where you fall in love with a place you can't afford. Agents will always try to squeeze as much money as possible out of you, they make commission!
Making an Offer
You've found a place you absolutely love, you've got an AIP, and you're ready to put in an offer. Now the fun really begins. You make your offer via the estate agent. Most people go in under asking price, assuming there'll be a negotiation upwards, but listen to the feedback and have a last and final offer in the back of your mind: if you're up against other people making high offers, you may have to think quickly. It's unlikely the agent will tell you what other offers are, just that they are higher. Know your ceiling.
An offer is not a contract. Even when a vendor has accepted your offer, either of you can pull out right up to the point where you exchange contracts. However, it is generally assumed that you only make an offer if you are serious about a property. Changing your mind could affect other people's lives, especially if there's a chain of properties. It's also considered very bad form to put in multiple offers on different properties at the same time (though there may be rare occasions when you have to do this so you don't miss out in a very busy market).
If all goes to plan, after a bit of back and forth, your offer will be accepted, and it's time to move on to the next stage. If you're outbid or the vendor declines your offer for some other reason, that was obviously not your home, and the search continues!
Your offer's been accepted, and the next step is to engage your solicitor and get on the phone to your mortgage provider. Your estate agent will usually issue a "memorandum of sale" (a document showing agreed price and contact details) and stop showing the property to other potential buyers.
Most mortgage providers will require a property valuation by a third party. Most also require either a homebuyers report or a full building survey. A third-party surveyor (usually organised via your mortgage lender) will visit the property and investigate the structure for potential problems or work that needs doing. They will also measure the property (as estate agents can sometimes get this wrong) and provide their valuation to the mortgage lender. This is how a lender decides how much you can borrow and helps you to make sure your offer is fair. A homebuyers report will probably cost somewhere in the region of £350 to £1,000 depending on the value of the property. Some mortgage lenders may subsidise or waive this fee. Full surveys are useful for homes with noticeable issues, those with uncommon construction, or very old buildings, and cost more.
If the valuation comes back lower than your offer, this could cause problems with your mortgage. In most cases you will need to go back to your vendor and negotiate on price. A vendor has no requirement to drop the price based off a valuation; a house is worth what someone is willing to pay for it, despite its market value. But have the conversation (it's likely other buyers would have similar problems). If you can't talk them down, you may need to talk to your mortgage provider about adjusting your LTV (loan to valuation percentage). With a small deposit, this may not be possible, but if you have a good sum of money to put down and you really love a home and genuinely think it's worth it, you may be able to adjust the figures to make it work.
Your survey will go into detail about all elements of the home and provide information on a number of elements, usually labelled red (urgent), amber (needs attention in the future), and green (fine). Red flags could involve signs of damp, woodworm, issues with things like chimneys, guttering, stairwells, etc. Based off the survey report, you may wish to ask the vendor to carry out repairs or get quotes for work you'll need to do in the future. Most houses (especially old ones) need some work, and this may be factored into the price. But a big unknown issue (like rising damp, leaks, or subsidence) will need further investigation. Do bear in mind surveyors err hugely on the side of caution, so what seems like a big issue could be quite easily fixed, but don't be afraid to get quotes.
Your Mortgage Offer Document
Once the valuation and survey are complete and you've made any required price negotiations, your mortgage provider will send a copy of your mortgage offer to you and your solicitor. You're now financially ready to buy the property. Usually the process takes a few weeks, and you're still not quite ready to pop open the Champagne, but you have reached a milestone in the house-buying process.
Your Solicitor's Report
As well as your survey, you will receive further documentation from your solicitor. This includes yet more important information on the property and its surrounding area. Read things like the flood report carefully; you'd be surprised how water travels! If you're buying a leasehold property, you'll receive information on ground rent and service charges payable to the freeholder and full accounts going back three years. Read these and check you're not setting yourself up for thousands of pounds in unexpected fees.
You'll also receive an information pack filled out by the vendor that lists what items are included in purchase. Usually the vendor takes all furniture and fittings that aren't built in, but this pack will go into detail. Feel free to negotiate on this, especially if the agent told you that things were included when you first viewed the property. You may also see gas and electricity safety certificates. While these are not always required in private homes, do remember to find out when the boiler was last serviced and check that the heating and hot water is working (the vendor will have to disclose this).
Now is often a good time to revisit the property so you can take a look at anything that's being left and investigate things like the water system, kitchen fittings, boiler, loft space, and so on in more detail. You are still under no obligation to buy this property until all paperwork is complete and both vendor and buyer are happy. Now is your last chance to ask questions and get independent tradesmen to give quotes if you're concerned about anything.
Exchange of Contracts
You're happy, the vendor is happy, you have your mortgage offer, and you're ready to seal the deal. This is when sh*t gets real. It's time to exchange contracts. After this, you are making a financial commitment to buy the property, and you cannot pull out without losing your deposit. Your solicitor will negotiate with the vendor's solicitor on an exchange date, which is usually a Friday. If the vendor is buying another property (or indeed if you are selling one), you will find yourself in a chain. All properties in the chain will need to exchange on the same day, so you may have to wait for other people to complete their paperwork, survey, and house checks before a date can be decided.
Getting to the point of exchange usually takes six to eight weeks if all goes smoothly. For many people, it's closer to three or four months. If you're in a long chain, it could be significantly longer (and if it goes over six months, you will probably need to renegotiate your mortgage as offers have a time limit). You'll need to be calm, patient, and willing to compromise, but if you have specific requirements, voice them early and stay strong.
Your solicitor will get you to sign documents and transfer monies ahead of the day to make things run smoothly. On the day of exchange, the deposit is transferred to the vendor, and signed documents will be exchanged between solicitors. You will agree to a completion date, when the vendor will vacate the property and you will receive the keys. Completion can be days, weeks, or even months after exchange, depending on the circumstances. In most cases, it's one or two weeks later, allowing people to pack and move. Once it's decided, it cannot be moved unless all parties are in agreement. If someone simply cannot stick to a completion date after exchange, they may have to pay a fee.
On completion day, a lot goes on behind the scenes, and you simply sit waiting and worrying. Your mortgage provider will release the funds to the vendor. The vendor will move out of the property if they have not done so already. By this point, you will have negotiated with your solicitor to organise things like payment of stamp duty, their fees, and so on, so you shouldn't need to transfer any money yourself on this day. Your solicitor will let you know when the house is yours, and you can then collect the keys from your agent and treat yourself to that well-deserved drink or slice of cake. You finally have your new home!
A little extra advice: It's usually best NOT to move in on completion day unless you absolutely have to. If you can afford some crossover, even a few days, take it. As well as never quite knowing what time the keys will be yours on completion day (it's often late afternoon), you may also wish to check the house/flat and possibly get it cleaned before you move in. Vendors are required to leave a home in good condition (or at least the same condition it was when it was sold), but a lot of things come to light only when furniture is moved!
What If Things Go Wrong?
There are a billion things that could go wrong during the purchasing process, and the key thing to do is remain calm. There will probably be tears at some point in the process, as it's naturally a very stressful time. Sealing with agents and solicitors for whom you're often not the first priority can be incredibly frustrating. But remember, most things can be fixed with the right amount of time, discussion, compromise, and, on occasion, money. At the end of the day, the vendor wants to sell the house/flat, and you want to buy it. But keep this in mind: until you have exchanged, that is not your home. The hardest thing to do throughout the process is to remain detached enough to let it go if you have to. Don't go shopping for furniture or start planning your paint schemes just yet. If things start to feel unstable (which happens a lot when you're in a chain), keep an eye on the market and other properties that are for sale in the area. If it doesn't work out, there is always another home waiting out there somewhere.