Buying a home and moving is a daunting prospect even for someone who has done it before. For those first time buyers it is even more confusing! Our house buying guide is designed to make the process a little more clear and help you understand the process. It will hopefully also give you some points to consider.
Step 1: The Property
The top of anyone's list of things to do when thinking of moving is to find the right home to buy. Points to consider when doing this will include:
- how long will it take to get to work?
- is it near the right school?
- what is the neighbourhood like?
- are their conveniences nearby?
- what are the transport links like?
- is it in a well established area or an up and coming one?
- how many bedrooms do you need?
- do you want outside space?
- are you looking for a home or an opportunity?
Don't forget larger properties will cost more to maintain and look after. Flats may have service charges and ground rent to pay. Make sure you investigate all these aspects and also think about your mortgage budget.
The key is to acknowledge early that you will not find the perfect property and its likely you will have to make a compromise. The compromise might be location, the size of the property, your budget, the size of the garden or maybe something else. Make a list of all the things you are looking for and find the property that gets closest to your wish list. This will help you prioritise certain things over others.
Step 2: Budget & Independent Mortgage Advice
Be clear and know exactly what you can afford as early as possible. You never know you might be able to buy a much bigger property. If you follow this simple rule, it will really help you focus on your property hunt and save you a lot of wasted time.
The best way to know what you can afford and whether something is possible is to speak to an independent mortgage broker as they will be able to independently advise you of your options and will be aware of which lenders are best to get the borrowing you need. You can send an inquiry here and we will let you know how much you can borrow:
Don't forget every lender has different rules and amounts they are willing to lend. So don't assume they all lend the same amount.
Step 3: Negotiating and making an offer
Don't make an offer until you know what you can do!
Lets assume you followed step 2; you have found the perfect property, now is the time to make your offer. As you will have followed step 2, you will be in a good position to make an offer and have this validated by your mortgage broker if an estate agent does their due diligence correctly. You will know exactly what you can do and how much you can afford to offer. You will be in a strong bargaining position as you've taken the time to get the finance in place before offering.
Don't forget you could be in competition to buy the property. The market, area or type of property you are buying could be popular and you need to make yourself stand out from the crowd and move quickly. If you like something, or think its a good deal, you can almost guarantee someone else will too. By following step 2 and getting all your ducks in a row when you offer, it will make a huge difference in how you are perceived as a potential buyer. Working with an independent adviser like Barr Financial will really help. If you would like to make an enquiry you can do that here:
Step 4: Solicitors
Think about who you will use for your legal work pre-offer. You don't want to sound like you don't know what you are doing when you are making an offer and the agent ask who you will be using. If you aren't sure, just ask. We know the good from the bad!
Work with a solicitor who works well with your mortgage broker. Unfortunately its often the case that solicitors will not be pro-active or liaise with everyone involved in the transaction. Its much better for everyone that all parties involved from the finance, to the legals and the agents are all communicating.
Step 5: Mortgage Process
Once an offer has been accepted, its critical to apply for the mortgage straight away and without delay. The process can take time, so the sooner it is started the better. Otherwise you could lose the property from a disgruntled seller and estate agent who is frustrated with how long you are taking. It happens. Don't let it happen to you.
At Barr Financial we can handle the whole process of applying for a mortgage, from submission, to sending supporting documents, chasing the lender, getting the survey instructed and ultimately helping you secure a mortgage offer.
Important note: you might have heard the term "agreement in principle" (AIP)? This is not a mortgage offer but only a credit check. No evidence of income or verification of your circumstances or even a valuation on the property would have been done. By having an AIP does not mean you have the mortgage.
If you have a mortgage question you can ask one of our experts here:
Step 6: The Survey
if you are getting a mortgage to buy a property you will need a survey. Even if you don't require a mortgage, its a sensible idea as you want to make sure you are aware of any potential issues.
There are different types of surveys and they vary in terms of how much detail they will go into:
- Basic survey / Mortgage Valuation: This is the minimum requirement a lender will need. It is limited in nature and is for the benefit of the lender to make sure the property is adequate security for the loan they are going to offer you. The basic survey might pick up obvious things, but it won't necessarily pick up everything
- Home Buyers survey; this is more in depth and goes a little further than the basic survey.
- Full structural survey; this is the most comprehensive type of survey and will look at every aspect of the property.
Important note: A survey is not designed to flatter you or the property. It is designed to be critical and identify issues with the property. So if you are buying an old house, don't be surprised there are issues. If issues worry you, maybe buy a newer property.
Step 7: Mortgage Offer
Subject to your application being successful and the survey coming back okay the lender will issue the mortgage offer. It is only at this point that you know you can get the mortgage to buy the property. Up until this point, nothing is guaranteed. And even when a lender makes a formal offer, they do have the right to withdraw the offer if something else comes to light.
On a positive note, this is the point where all the hard work has been done and you know you can buy the property. Its just down to the solicitors now.
Step 8: Exchange Contracts
This is the term used when contracts between seller and buyer are exchanged and the buyer agrees to buy and the seller agrees to sell based on the agreed contract. At this point you are committed to the purchase. Up until this point both buyer and seller can pull out without any ramification.
At this point a deposit of 10% is passed from the buyer's solicitor to the seller's solicitor.
An agreed completion date is also set at this point, which could be simultaneous but could be at a future agreed date.
You are know responsible for the building, so it is important to have any insurance set up at this point.
Step 9: Completion
Yes - get the keys!
This is the point that you 'complete' the transaction and take ownership of the property. Up until this point you do not have any rights of access and you do not own the property.
We hope you enjoy your new home :)