Buying a property is an enormous financial commitment and it can be rather daunting – even more so if you’re a first-time buyer. There are many steps to the process, and a lot of things to consider at every stage. This is why Think Plutus has curated this in-depth guide to help you learn everything you need to know about the property buying process.
How long does the house buying process usually take?
Timescales vary depending on your circumstances, as well as those of the seller, and problems can arise with conveyancing that may cause delays. Nevertheless, here is a rough guide to how long you can expect the process to take:
6 weeks – 8 months
Finding a property by researching areas then looking through estate agent listings and viewing properties.
Putting in an offer, telling the seller what you’re happy to pay and what conditions you have.
4 – 12 weeks
The offer is accepted, so you have a survey done to assess the property’s condition and have your solicitor check for legal issues.
The exchange takes place, whereby you release your deposit and can no longer back out without substantial cost.
Instantly – 4 weeks
Completion of the purchase, meaning the remaining funds are released and you get the keys and deeds to become the legal owner of the property.
Step 1: Finding the right property
Before you begin looking at houses, it’s wise to work out what you will be able to afford. You need to think about what is within your means as things stand as well as how you would cope if a change occurs, such as interest rates rising or your financial situation taking a turn. You need to feel confident that you aren’t overstretching yourself.
You need to bear in mind that the savings you have will need to cover more than just the deposit. Things like mortgage fees and Stamp Duty (in England and Northern Ireland) need to be considered, or Land Transaction Tax in Wales.
Think Plutus recommends that you check your credit report to ensure there are no nasty surprises waiting for you, and you should have a think about the type of mortgage you want. It’s never too early to start thinking about your mortgage as it can be a time-consuming process to arrange one. We can advise you on the options available to you and even give you a rough idea of what you might be offered if you can give us some key information.
Choosing between property types
The thing that can make buying a home so overwhelming is the fact that there are so many options and decisions. The first thing you need to do is identify the sort of area you want to live in. Make a list of criteria that includes things like:
- Convenient transport links
- Shops and restaurants
- Leisure facilities
- Good schools
- Low crime rates
If you already have a certain area in mind, do your due diligence to find out more about it so that you can identify your ideal locations within that area.
Now you are ready to think about the type of property you want. Do you want a house or a flat? What do you need from your home? What’s your vision for your family? The features of a property can make it ideal or completely inappropriate for your needs, so you need to consider them carefully. You also need to think about costs – your budget will play a significant role in determining the types of property that are available to you. You also need to think about maintenance and running costs.
You may need to compromise, so it’s important to determine your main priorities. Here are some things to consider with property types:
Freehold vs leasehold
If you have freehold ownership, you own the building and the land it stands on indefinitely. Most houses are freehold, and it will mean:
- You won’t be required to pay ground rent
- You are responsible for maintaining everything about the property
With leasehold ownership, you have ownership of the property for a fixed term but not the land upon which it stands. Leases usually have a long term but there can be some variation in the length. The leaseholder has a contract with the freeholder which details the legal responsibilities and rights of both. In a leasehold property, you:
- Will probably pay ground rent to the freeholder
- Will be required to pay maintenance fees, annual service charges and your share of buildings insurance
- Have to get permission to make any major changes to the property
- Could lose your lease if you fail to meet the terms of your contract
Viewing a house
Once you’ve identified potential locations and chosen a property type, let local estate agents know you are a potential buyer and they will send you regular details of suitable properties they have. Contact estate agents regularly to get ahead of your competition and learn about the newest available properties. It isn’t unusual to like more than one property, and viewings are essential to help make an informed decision.
Here are some questions you should consider with every viewing:
- How old is the property? This information can easily be obtained from The Land Registry, or your estate agent should be able to tell you.
- What Council Tax band is it in? Council Tax must be paid on any property you own or rent. You need to know how much you would have to pay to get an idea of the long-term costs of living in a certain property. Check the Council Tax band online.
- When can you move in? You might be changing location for a new job, or perhaps your current tenancy is coming to an end. In any case, you should get an idea of move-in dates early on to avoid any timing conflicts.
- How long has the property been on the market? A property that is new to the market will usually attract more attention, meaning there will be more competition. However, if a house has been on the market for a long time, you should find out why – there may be an issue you need to know about.
- Is the house north- or south-facing? A house’s temperature throughout the year can be significantly impacted by the direction it faces. Finding this out can help you know what to expect.
Step 2: The mortgage application and making an offer
Most people will need a mortgage to buy a home. Think Plutus has detailed mortgage guides from applying for a mortgage to the different types of mortgages. The process can be complicated and stressful but, with our help, you can avoid frustration and confusion to focus on the joy and hope that comes with a new home. In order to make an offer you should seek to secure an Agreement in Principle (AiP) from a lender and we can help make this happen quickly if necessary. Remember that there are many, many lenders and mortgage products on the market, so we strongly urge you to seek our assistance as a whole of market mortgage adviser to ensure you don’t miss out on your perfect deal.
Finding a solicitor
You will need a good solicitor to buy a property. They carry out essential tasks during the buying process, such as:
- Obtaining the deeds that prove the seller has legal ownership of the property
- Research the legal boundaries of the property in question
- Prepare an inventory which details the fixtures and fittings that come with the purchase, as well as any defects with the property that the seller is aware of
- Advise you on the seller’s solicitor’s draft contract for sale
- Research local planning information to inform you of upcoming developments that may impact the property’s value
- Obtain environmental reports to identify any nearby chemical storage or industrial commerce
- Reach an agreement for completion which suits both parties
- Manage the completion of the process, including the exchange of contracts
Most lenders won’t have an issue with your choice of solicitor but it can be helpful to check with solicitors to learn if they are recognised by the following societies:
- The Law Society
- Licenced Conveyancers Association
Lenders usually require a legal firm to have a minimum of 2 partners – one to act on your behalf and one to act for the lender. Think Plutus can recommend some reputable and trusted conveyancers we have experience with.
Making your initial offer
Once you’ve chosen your property and have an Agreement in Principle, you can make an offer on the property through an estate agent. Most sellers have a certain amount of flexibility on the price, so buyers usually make an initial offer below the asking price. In some cases, the initial offer will be up to 10% below asking price – sometimes even more! The ball is then in the seller’s court as they decide whether to accept the price or negotiate a higher one. Be aware that sometimes the seller will have sufficient bargaining power to insist on the full asking price.
If everything goes smoothly, the seller will accept your offer. When they do, the estate agent confirms it in writing with a Memorandum of Sale. This is not legally binding, so either party can still pull out right up to the point of exchanging contracts.
This is when another buyer outbids you while you’re in the process of making the purchase and the seller accepts this higher offer. It can push you out of the purchase and might happen anytime before the contracts are exchanged. Things that sometimes lead sellers to accept another offer include dragging your feet about having a survey done, taking too long to sell your old property, or your solicitor being slow to process things.
This is less likely than gazumping, but it does happen sometimes. It’s where the buyer moves through the process of purchasing and then, at a late stage, decides they no longer want to pay the agreed price and insists on reducing it. This is considered unethical and usually only happens in a falling market. It can cause chains to break down and give the buyer a reputation with estate agents that can mean their future offers are less likely to be accepted.
In Scotland, sellers usually set a deadline for all bids on the property to be made. When that deadline arrives, they make the decision from the bids in place and provide a written confirmation of the acceptance. If a better offer comes in and the seller wants to go with it, solicitors may refuse to comply as this could leave them vulnerable to charges of professional misconduct. Thus, both gazumping and gazundering are extremely rare north of the border.
It is strongly advised that you commission a survey on the property after having your initial offer accepted – it will flag any hidden problems that could cost you money down the line. If your survey does flag any issues, it can help you to negotiate a lower price. For example, if a problem is revealed that would cost £5,000 to repair, you could request that the seller lowers the price by that amount.
There are a few types of house survey you can order:
- RICS condition report – this is a basic survey that costs the least money. It uses a ‘traffic light’ system and is best suited to new-builds and conventional homes that are in good condition. It doesn’t include a valuation or any recommendations, and will cost around £250.
- RICS homebuyer report – this is a good option for conventional properties that are in reasonable condition. It goes into a lot more detail, comprehensively covering the interior and exterior of the property. A valuation is included, and it costs around £400+.
- Building or structural survey – this is the most detailed survey and is suitable for any type of residential property. It’s a particularly good option for older houses or those that are in need of repairs. Expect to pay £600+ for this survey.
In addition to your own survey, your lender will need to have a valuation survey carried out to assure them that the property is genuinely worth the price you’re offering to pay. It isn’t an extensive survey and isn’t aimed at identifying repairs or maintenance requirements. Depending on the value of the property, these surveys cost between £150 and £1,500. Some lenders will charge you for this, while others may have a different arrangement – it depends on the mortgage product you choose.
Step 4: Finalise the offer and secure the mortgage
Once you have your completed survey you may want to return to the seller to renegotiate the price of the home. If the survey uncovered issues which will be costly to fix, that information could be justification for having the price lowered by the amount those repairs will cost. Similarly, if the lender’s survey revealed that the property value is lower than the price you have offered, they will not be willing to lend the full amount, so you may need to ask for it to be lowered.
This stage in the process is often the one where the most stressful problems arise. If your mortgage application is rejected it could jeopardize the entire purchase and, at the very least, will cause unwanted delays. There is also the possibility that the seller will have a change of heart and withdraw the property from the market. There is also the risk of gazumping. All these variables can make the period of waiting for confirmation of things a nervous one.
Communication is key
When problems do occur, you should keep the channels of communication open. Make sure the seller is up to date by giving them information through your solicitor and estate agent. When things go badly wrong, they can often be reconciled by maintaining this communication, so don’t neglect the importance of staying connected to the seller.
The mortgage offer
If everything has gone as hoped, you should get your formal mortgage offer. This is a cause for celebration! When you are ready, contact your lender (or your mortgage adviser) and tell them you want to proceed. After being given a legally binding mortgage offer, you should be offered at least 7 days to make a decision – this time can be used to compare with other mortgages if necessary.
There will often be a fee, known as an arrangement fee, for setting up the mortgage. This fee can be added to the mortgage total, but bear in mind that choosing this option would mean you’ll be paying interest on that amount throughout the life of the mortgage. It typically costs anything up to £2,000.
Once you accept the offer, you should get your buildings insurance sorted out. As soon as you exchange contracts, you are legally bound to purchase the insurance, so it can’t hurt to get things prepared ahead of time.
Preparing for completion
Now is the time to negotiate a completion date with the seller. This is the date the keys are handed over, so it needs to be suitable for both you and them. Try to offer a little flexibility here – often, sellers will want it to synchronise with their mortgage payment date, so expect them to prefer a date close to the start or end of the month. If you’re also selling your current property, this will be a key consideration for you as you’ll need your own buyers to be a part of the equation.
Once the completion date is negotiated, it’s time to release your deposit to your solicitor. The easiest method is to spend the two weeks before marshalling that deposit money into a single bank account (or two if your deposit is larger than £85,000) to ensure it’s all protected under the UK savings safety scheme. Your solicitor and/or your mortgage adviser can assist with this.
Most banks cap the amount you can move out of your account in a single day at around £25,000 (some have higher limits, some lower). If you want to move more than that, you will need to contact your bank to arrange a CHAPS payment into your solicitor’s account. This stands for Clearing House Automated Payment System and can usually be made the same day. A fee of £20 to £35 is usually attached to any CHAPS payment, so be sure to factor that into your sums.
Be advised that once you release the deposit, your solicitor will get you to sign the contract. Once you have signed, you are making a commitment to buying the property. If you change your mind, this is the last opportunity to pull out of the deal. You can cancel the whole deal at any point before exchanging contracts, though you may lose out on money depending on how far into the process you are.
Step 5: Exchanging contracts
Now that you have signed the contract, the exchange is ready to take place. Your solicitor will deliver the signed contract to the seller’s solicitor, and you will receive a copy of the seller’s. From this point, you and the seller are both legally committed to the deal. Before making this commitment, check the following things:
- Your solicitor has reported their findings from all the local searches
- Everyone has seen and accepted the surveyor’s report
- You have your formal mortgage offer and fully understand everything about it
- You have agreed a completion date and it is noted in the contract
- There are no unresolved issues with the seller
There will be more paperwork for you to complete at this point. You will be given a completion statement by your solicitor which clearly breaks down the money you still owe (outstanding deposit, Stamp Duty, solicitors’ fees, etc.) These will usually be payable on or before the completion date. Your solicitor will also carry out a few final searches to ensure the seller still owns the property and that you haven’t been declared bankrupt since your mortgage offer. Finally, you will be asked to sign the transfer deed in the presence of a witness, confirming your intention to take ownership of the property. Once signed, this will be sent to your seller’s solicitor and your solicitor will move to draw down the funds from your mortgage lender.
The full payment will now be sent to the seller’s solicitor and you will receive the title deeds and proof that the seller’s mortgage has been cleared. This means that the seller’s mortgage lender no longer has any claim on the property.
Step 6: Completion!
Once all fees have been paid and the full amount has been sent to the seller, the sale will be registered with the Land Registry in England and Wales. In Northern Ireland, it will be registered with Land and Property Services and in Scotland, it will be Registers of Scotland. If the home costs more than £125,000, you will have 14 days from completion to pay your Stamp Duty Land Tax in England and Northern Ireland. In Wales, it’s Land Transaction Tax and is payable on any property that costs more than £180,000. Your solicitor will usually arrange this for you.
The title deeds from the Land Registry are usually forwarded to your mortgage lender, but you can request a copy of them as well. These are important documents, so they must be kept in a safe place.
Think Plutus recommends the following steps to make the process of moving into your new home as stress-free as possible:
- If needed, book a removal firm to help transfer your belongings into the new home on the completion day
- Collect the keys from the estate agent as soon as the payment is confirmed
- Get in touch with the companies that currently supply your gas, electricity, water and broadband ahead of time to let them know when you’re moving out. You should provide meter readings in your old home to ensure you don’t pay for any of the services once the new occupants move in
- Ask the Post Office to redirect your mail
- Notify the council at your old home that you’re moving out to avoid paying any undue Council Tax and your records can be updated on the electoral register
Moving home is known to be a stressful time. You can get help to set up your utilities, notify the local council, arrange packing and unpacking services, clean your old property and more. It’s up to you how you handle the move, but be aware of the services that are available to assist.
Congratulations, you’ve made it! You’re in your brand new home and ready to start paying off your mortgage and enjoying life in a new place. The 6 steps listed in this guide outline the full process of buying a house, but lots can happen along the way. Think Plutus is a team of skilled, experienced mortgage advisers who have dealt with every imaginable story of buying a new home. We can help you find and apply for your ideal mortgage and carry you through the buying process to make it go as smoothly as possible. Despite the anxious waiting and mountains of paperwork, buying a new home is, ultimately, a joyous time. Let us help you focus on that.
To make your house-buying process a success, Think Plutus.