Are you thinking about buying a house but not too sure where to start?
In this blog you’ll find our helpful 6 steps of buying a house guide, making understanding the house buying process that little bit easier for you.
Step 1. Budget
One of the most important things to ask yourself when thinking about buying a house is, ‘how much house can I afford?’. To work this out, you will want to take into account how much deposit you have at the ready, your income and your partners income (if you are buying with somebody else). If you’re a first time buyer, you will need at least 5% of the overall house price as a deposit. Lenders will typically lend you between 4 – 4 ½ times your household annual income for a mortgage, which should help you work out how much you will be able to borrow. Whether or not a mortgage lender will lend to you may depend on your credit score, so it may be worth checking up on this. Be careful when checking your credit score as many services can leave a mark on your credit file for checking it. One good credit checker you could use is Check My File, but there are many options out there. When budgeting to work out what house values are in your price range, consider your monthly mortgage payments; what will they be? To work out what you will pay each month in mortgage payments you will need to work out how much you need to borrow, and how long for. If you’re a first-time buyer, you may want to take out a longer mortgage term to make your monthly mortgage payments more affordable. Taking out a longer mortgage term seems daunting, but if it makes owning your home more affordable, it may be a wise choice for you. If after a number of years your financial situation has improved , you can always adjust your mortgage term and make it shorter through re-mortgaging options. Whenever you are thinking about buying a house, always put affordability to the forefront of your thoughts.
Step 2. Browse
Once you have worked out what houses are in your price range, you can begin your search. Look for houses that fit within your price range but don’t forget to consider things like Council Tax and other local charges. Council Tax fees often vary from area to area and can depend on house values. Before considering viewing a property, work out if the area in which that property is located is an affordable place to live. You can check council tax bands by using .the government's Council Band Checker.
One great way to make sure you don’t miss out on any relevant properties is to sign up to estate agents in your areas mailing lists. By doing this, you will receive alerts from estate agents when new properties which meet your criteria are listed on the market.
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Once you have found some properties you like, arrange a viewing.
Step 3. The offer stage
Once you have viewed a property you like and think you’re ready to put in an offer, there a few things you should do first. Firstly, check you will be approved for a mortgage (if you require one) for the value of the house you are thinking about buying. There are various ways you can do this, you can speak to a bank or building society directly, or talk to a reputable mortgage advisor.
Secondly, you may also want to arrange a second viewing of the property before you make an offer. A second viewing is advisable as you may spot things or think of questions you want to ask that you didn’t on the first time around. Second viewings are a good way to avoid getting any nasty surprises after purchasing your home.
Once you have completed the above and are still happy with the home you have found, make an offer.
Step 4. Conveyancing
Once your offer on your new home has been accepted by the seller, you will need to contact a Conveyancer. A Conveyancer will help make sure your sale goes as smoothly as possible and all the necessary checks on your new home are carried out before the sale’s completion. This process is to make sure you are fully aware of what you are buying and have conducted all the necessary checks on the property to protect your interests.
Step 5. Exchange
Once your Conveyancer is happy all the necessary searches have been carried out and is satisfied with the results from these, you will progress onto the exchange of contracts stage. Exchanging contracts is the final stage in the home buying process and outlines exactly what you are buying.
Your solicitor will exchange contracts with your seller’s solicitors and once these documents are signed, the agreement between you and the sellers becomes legally binding. It is vital that you are happy with the home you are purchasing before you get to this stage in the sales process. If you pull out of a sale after the exchange of contracts, you could incur a fine.
Step 6. Completion
Once you have exchanged contracts you will arrange a completion date with the seller. You will not have completed on your property until your funds have been transferred to the seller’s solicitors. Transfer of funds is the final step in the house buying process.
If you are buying a house in a chain, going from transfer of funds to completion can sometimes take a little while. The seller in your chain will need to secure their next property before they can release the property to you.
To find more help and guidance on buying a home, visit The Money Advice Service.