No one knows what house prices will do over the next few years, so wondering ‘is it a good time to buy a house?’ is the wrong question to ask.
Consider, instead, if it is the right time for you to buy a house. If purchasing your own place is the right decision for you and you can afford it, perhaps it is time to look into the process of buying a house.
How to save for a mortgage or deposit
If you’re buying a house for the first time, or moving home, you have an exciting journey ahead of you, so it’s time to get organised.
Unless you are extremely wealthy, you will need to borrow the bulk of the money from a bank or building society in the form of a mortgage.
But in order to apply for a mortgage, most lenders will require you to put forward a lump sum of cash known as a deposit.
The more of your own money you can put into your property purchase, the better your mortgage options will be, as:
You should be able to borrow more
You should be able to secure a better (cheaper) interest rate
If you’re wondering ‘how much deposit do I need to buy a house?’ you will typically need at least 5% to 10% of the purchase price; a significant sum of money.
For most people, this will be a long term project, so shop around for a savings account with good interest rates, and use it to build up your deposit by making regular contributions.
If you’re a first time buyer, consider opening a Lifetime ISA account. You can pay in up to £4,000 each year and the government will top it up by 25%, provided the money is used to buy a house.
Help stretch your budget a little further by making the most of your savings.
Costs of buying a house
The next step in the process of buying a house is to know your budget.
Viewing properties without a clear idea of how much you can afford is a recipe for disappointment and wasted time.
Remember that there are also a whole range of costs and fees when buying a house, over and above the cost of the property itself to budget for, including:
Land registry fees
Mortgage arrangement fees
The precise figure depends on the cost of the property itself to an extent, but it is certainly prudent to set aside somewhere between £2,000 and £5,000 to cover these one-off expenses.
Consult a mortgage advisor or check out a selection of lenders to find out how much you can borrow. This will be determined by the size of the deposit you have and your annual salary or earnings.
If you have a property to sell , find out how much you might make from the sale, minus any outstanding mortgage balance. If the property is not yet on the market, get an idea of its value from a range of local estate agents.
Whether you are looking to move up the property ladder, downsize or just relocate we can help you find the right mortgage when you move home.
Stamp duty
Note: Due to the COVID-19 Coronavirus pandemic, the Chancellor has currently waived stamp duty for property purchases under £500,000 until 1 April 2021.
In England, Wales and Northern Ireland, you will not have to pay stamp duty for a home that costs less than £125,000. You will need to pay the following rates for each threshold:
| Purchase price | Stamp duty rate |
|---|---|
| £0 – £125,000 | 0% |
| £125,001 – £250,000 | 2% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1,500,000 | 10% |
If you are buying in Scotland, you pay Land and Buildings Transaction Tax instead. You can download a calculator from the Scotland.gov.uk website .
How to get a mortgage in principle (MIP)
Before you even look at properties, it can be an idea to find a suitable mortgage deal and put in an application.
The lender will then take you through an application process, to work out how much you can borrow. All going well, the lender will approve your application and grant you a mortgage agreement in principle (MIP or AIP).
You won’t have to borrow the money immediately, but if your application is accepted, you will have the security of knowing the money is there when you find the property you would like to buy.
In many cases, estate agents will refuse to take a property off the market, even if your offer has been accepted, if you don’t have a mortgage agreement in place.
It is worth noting, however, that you may have to pay a mortgage arrangement fee up-front which you’ll forfeit if you don’t end up taking the mortgage out.
Whether you are looking to move up the property ladder, downsize or just relocate we can help you find the right mortgage when you move home.
Buying a house checklist
It is vital to get a feel for the local market, especially if you are moving to a new area so take the time to speak to local residents and estate agents.
Questions to ask when buying a house include:
Which are the desirable neighbourhoods?
Are there good schools nearby? Commuter links?
What are you likely to get for your money?
Where is the cheapest place to buy a house and what represents a bargain?
Buying a council house in an up and coming area, or buying a house at auction can provide good opportunities to find great properties at rock bottom prices.
This should all give you a good idea of where to look based on your needs and budget. Once you have decided which areas to focus on:
Check the local papers and property websites regularly
Meet with a selection of estate agents to find out what is on the market now, and ask to be kept informed as new properties come on the market
At this stage, it is also a good idea to view a few properties in the area. Even if they are not right for you, seeing them up close will give you an even better idea of what you can expect to get for your money.
Avoid getting hung up on one property
In an ideal world it is best to identify a shortlist of properties you are interested in, rather than going after one property at a time.
This will help you avoid being seduced by one property – setting your heart on a specific house just encourages you to overlook its problems.
By contrast, making a shortlist enables you to:
Compare and contrast each property’s strengths and weaknesses, as seeing more than one helps you to understand more fully how each measure up.
Decide which features are most important to you, including the size of the garden or kitchen, number of rooms and type of property.
Save time by seeing more than one property on the same day.
Keep the estate agents guessing and interested. Having an open mind about seeing different types of properties gives estate agents hope and makes them more willing to put in the effort. Always remember however, that estate agents are looking after their clients, not you.
Arrange viewings
Before you commit to buying, at least two viewings are a must.
Before you arrange viewings, however, request Home Information Packs (HIPs), which will provide some basic information about each property before you see them. A seller must make a HIP available before the property can go on the market.
Viewing a property is your opportunity to get a feel for the place and look out for any potential problems. For instance:
Find out what fixtures and fittings the seller plans to leave behind. What is included in the sale price?
Look closely at the layout. Are the rooms big enough, or would any oddly shaped rooms present a problem?
Ask about insulation, as well as the state and age of things like central heating, plumbing and electrics.
Look for big cracks in the exterior walls, which could suggest a serious structural problem, damp patches and stains on interior walls and ceilings.
Check out any wooden window frames for rot and look for small holes in woodwork – this could indicate woodworm is a problem.
Take a second look
The first viewing should be about ruling out any properties that are not right.
When you find properties that you are interested in after a first viewing, arrange a second viewing. It is amazing how different a property can seem at second glance, when you’ve had a chance to reflect and are no longer blinded by the initial excitement.
Try to arrange the viewing at a different time of day
Take a friend or relative (a builder ideally) for a second opinion
If needed, arrange a third or even fourth viewing
Make an offer
If you are convinced that you have found the right property, it is time to start the negotiation process. The first step is to make an offer:
In most cases, you should offer less than the asking price. Any house purchase is likely to involve some negotiation, and most sellers will not expect to make the full asking price.
Consider how long the property has been for sale, its condition and any obvious repairs that will be required, and take these factors into account when deciding what to offer.
Ring the estate agent and make your offer. If necessary, detail any specific issues, such as repairs, that have determined the level of your offer.
In most cases (unless your offer is ridiculously low), the estate agent will call you back with a response from the seller.
If the offer is rejected, you need to decide whether you want to increase it, or simply leave it “on the table”.
If the offer is accepted, immediately insist that the property is taken off the market so that no one else can view it
How does a mortgage work?
Once your offer is accepted it is time to get everything in motion for the sale.
You’re probably wondering how much is a mortgage payment going to be, so get in touch with your mortgage provider again.
How long does a mortgage application take?
If you took the time to organise a mortgage in principle, your mortgage application should be a straightforward process. If not, you can search for first time buyer mortgages using our comparison tables . Compare similar deals, check how much arrangement fees will be and look at the APRC mortgage rate, which shows you exactly how much the mortgage will cost over the entire term.
Porting a mortgage
If you are moving home and wish to take your current home loan with you, you could ask your lender about porting your mortgage. You could certainly consider porting your mortgage to a cheaper house.
Be aware, however, that this may not be as easy as it sounds. So if your new place is more expensive your lender may not agree to lend you more money. You may also struggle if your circumstances, or your lender’s criteria have changed. You may also have to pay an early repayment charge.
Can you get a mortgage with bad credit or a bankruptcy mortgage?
You can still get a mortgage with bad credit but are likely to have a restricted number of more expensive deals to choose from.
Regarding taking out a mortgage after being declared bankrupt, you will need to wait until your bankruptcy has been discharged. Even then you could find lenders take many years before considering you a trustworthy lending prospect. You may need to be patient and work on maintaining an excellent credit history for a set period before applying.
Appoint a solicitor
It is vital that you use a qualified conveyancer to look after the legal side of your house purchase.
Some estate agents will offer to appoint one for you, but resist and appoint your own. Ask friends and family for recommendations as a good solicitor can be the difference between a smooth and a stressful purchase.
Your solicitor will review the HIP and any other information on the property (such as survey reports and local authority search results) and ensure that everything is in order, or deal with any issues that come up.
He or she will also get involved in contract negotiation, exchange of contracts and ensure completion of the sale by transferring the title deeds and funds.
What is a mortgage deed?
Your solicitor will send you a mortgage deed which is a formal document that provides confirmation that you’re happy to proceed with the terms of your mortgage offer. To sign the mortgage deed a witness is required who is over 18 and ideally is not a family member.
Carry out a full survey
It is important to remember that viewing a house yourself does not remove the need for a proper survey carried out by an expert – a Chartered Surveyor.
Again ask for recommendations before appointing a surveyor, and check that they are registered with the Royal Institution of Chartered Surveyors (RICS).
Decide on whether you need a full structural survey or a valuation report. It is always advisable to have a full structural survey carried out, as this will identify any underlying problems with the property via a detailed survey and report. It is likely that your lender will carry out a valuation survey as a condition of your mortgage anyway.
Once you have your survey report, read it carefully. Its findings can help to highlight unforeseen issues and costs.
If the report identified serious issues or a range of issues that would be expensive to put right, consider revising your offer for the property accordingly.
What is gazumping?
Gazumping is where a seller accepts your offer, only to reject it should a higher offer come in, meaning you lose your house.
What is gazundering?
Gazundering is where a buyer lowers the offer they have made to the seller just before the exchange of contracts, often making them feel forced to accept.
While gazumping and gazundering are not as common as they used to be, they do still happen and can result in a lot of stress, as well as financial pain if you have already spent money on surveys.
Try to be as organised and efficient as you can be to keep things moving in the sale. The more quickly you can move from making an offer to exchanging contracts, the less likely it is that your deal will fall through.
What is a bridge loan?
If you are awaiting funds (possibly from another house sale) in order to pay for your property, you may have to consider a bridge loan to tide you over.
Exchange contracts
When you exchange contracts, your agreement to buy a property becomes legally binding.
Your solicitor will manage the drawing up of a “contract of sale” in negotiation with the seller’s solicitor once any issues and enquiries have been dealt with.
You will agree a date for completion of the sale with the seller and will usually be required to hand over a pre-agreed deposit.
Completion
This is the day that the seller must finally vacate the property, your funds are transferred to the seller (your solicitor will handle this) and you get your hands on the keys and the title deeds for the property.
With this all done, you will officially be the new owner of the property (or the leasehold). Congratulations!
If you’re a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.