Buying a house

Last updated: May 2024 | 3 min read

Buying a home is a major financial commitment. Use our timeline to understand the steps, key stages, and fees involved. The decisions you make during this process can save or cost you thousands. 

Check out our guide for a step-by-step explanation and essential checklist for buying a house. It is especially useful if you are a first-time buyer.

Assessing if buying is right for you

What are the factors that influenced your decision to buy? This is an important question. When deciding to buy a house, several considerations come into play. Have you thought about the reasons in detail?

Are you buying to upgrade or perhaps buying for an investment? The choices you make in this journey, depend directly upon and vary because of your reasons for buying.

Have you considered whether buying or renting would be better suited to your circumstances? The commitment of homeownership, comes with maintenance to monthly repayments. It's not just about possessing keys to your own home but understanding the responsibilities attached.

Are you looking for stability, or perhaps a space to start a family? Your long-term goals matter as well.

How strong are your finances? One of the first things to think about is your financial capability. Assess your savings, monthly income, and any outstanding credit commitments.

Where do you want to buy? With house prices varying significantly across the UK, your location preference might push you towards or away from a purchase. Factors like potential relocations for work or changing family dynamics might also sway your decision.

How does the current UK housing market affect you? The better part of 2024, is being labelled as the 'buyer's market'. This means that the property climate is favouring the buyer.

The UK housing market ebbs and flows are influenced by economic, political, and social factors. Currently, various regions experience differing growth in house prices.

Depending on where you're looking, this could make buying a home more appealing or slightly out of reach.

Interest rates, set by the Bank of England, impact the cost of borrowing. When rates are low, your mortgage costs might be more manageable. However, an upswing in rates will affect your monthly repayments, especially if you choose a variable rate mortgage.

Government schemes designed to assist buyers, such as the Help to Buy (being replaced by the government) or Shared Ownership, can play a role in your decision, offering pathways to homeownership that might not have been previously accessible.

The market is dynamic. Understanding current trends is essential, anticipating future shifts and seeking expert advice can be equally beneficial.

Many a house sale falls through due to the buyer's inability to get a mortgage approved in time. Read on to equip yourself properly for financial readiness as a buyer to avoid disappointment later.

What can you afford in the UK property market?

When buying a house, your first step is assessing your budget. UK house prices vary significantly, influenced by factors such as location, property type, and market demand.

Think about potential mortgage payments, initial deposits, and any additional costs.

Online mortgage calculators offer a glimpse into monthly repayments based on different purchase prices. However, always consult financial professionals for tailored advice.

How much deposit do you need to save up for?

In the UK, it's common to provide between 5% to 20% of the property's price as a deposit. A deposit is your financial commitment to the home-buying process.

The average first-time buyer deposit hovers around 15%.

A larger deposit often results in more favourable mortgage terms, as it reduces the lender's risk.

Banks and building societies offer a variety of savings accounts to assist in amassing this sum. Start early, consider government schemes, and always be aware of your budgeting limits. Our article on how to save for a deposit when buying a house, will help you tremendously.

How do monthly mortgage payments work?

Mortgage payments, typically made monthly, consist of two main components: the principal and the interest. The principal refers to the repayment of the original loan amount, while the interest is what you pay to the mortgage lender for borrowing that sum.

In the UK, most homebuyers opt for repayment mortgages where monthly payments gradually chip away at both the interest and principal. Over time, a larger portion of your payment goes towards the principal, reducing your debt more swiftly in the latter years of the mortgage.

Choosing the right mortgage 

Hiring a mortgage broker simplifies the process

Mortgage brokers can source competitive deals tailored to your needs. While some brokers charge a fee, others earn a commission from lenders.

A broker can simplify the application process, handle paperwork, and advise on the right mortgage terms.

Before engaging, ensure the broker is registered with the Financial Conduct Authority, guaranteeing they follow UK regulatory standards.

Which type of mortgage is right for you?

The UK mortgage market offers a medley of options.

Fixed-rate mortgages lock in a specific interest rate for a set period, ensuring consistent payments.

Variable-rate mortgages see interest rates fluctuate in line with the Bank of England's base rate.

While there are pros and cons to each type, your choice will largely hinge on personal preference and your financial situation.

Whether prioritising payment stability or potentially lower rates, always compare offerings from multiple lenders.

Here's a more detailed article on the types of mortgages available in the UK.

Impact of the loan ratio on your mortgage rate

The purchase price determines how much you'll need to borrow.

Your loan-to-value (LTV) ratio, the percentage of the purchase price you're borrowing, impacts the interest rate you'll receive. For instance, a £20,000 deposit on a £200,000 property equates to a 90% LTV.

Generally, a lower LTV fetches more favourable interest rates as the mortgage provider takes on less risk. Aim for a balance between a manageable deposit and an attractive interest rate.

First-time buyer? What you need to know

If you're purchasing your first house, the UK government offers schemes to assist. Initiatives like the Help to Buy equity loan or shared ownership can make stepping onto the property ladder more accessible.

When considering a mortgage, first-time buyers might find lenders more scrutinous, requiring a comprehensive affordability assessment.

Lenders will examine your income, outgoings, debts, and credit score to ensure you can manage repayments. Improve your credit score before applying.

Preparation is key: keep records of utility bills, bank statements, and any other relevant financial documentation. Stay patient and keep an open line of communication with your mortgage adviser throughout.

First-time buyers get exemptions in stamp duty as well.

Extra costs to anticipate when buying a house

When buying, it's not just the purchase price to consider. Several additional expenses may crop up.

Buildings insurance

If you're securing a mortgage, most lenders require you to have buildings insurance. This cover protects the structure of your property against risks like fire, theft, and storm damage.

It's not just about satisfying your lender, though; it's about ensuring peace of mind. If unforeseen events damage your property, you'll want a safety net in place.

It's not obligatory if you're a cash buyer, but it's still a prudent step to secure your investment.

Disbursements and other fees

Beyond the deposit and the mortgage, there's a slew of other costs that can surprise first-time buyers.

Solicitors fees, for instance, are necessary for handling legal work, while the land registry requires a fee to register your new property.

And don't forget about stamp duty! This government tax applies to most property purchases, and its rate varies based on the property's price.

Before starting the journey, make sure that you've budgeted for these often-overlooked costs.

Survey costs

In 2024, a full structural survey will cost you between £500- £1500, depending on the size of the property

Surveys provide valuable insights into the condition of a property before you commit to buying. They range from a basic mortgage valuation – often required by lenders – to comprehensive surveys like full structural reports, which go deeper into potential issues.

While survey costs might feel like an added burden, think of them as an investment.

By uncovering potential problems early on, you might save on costly repairs in the future.

Deciding where to live

The area you choose can have a profound impact on your lifestyle, property value, and overall satisfaction with your purchase.

Factors that influence location choice

When you start house hunting, it's often the allure of local amenities that beckons. Proximity to good

schools, local shops, and green spaces can enhance daily life.

Consider the commute to work, access to public transport, and the overall vibe of the neighbourhood. Whether you fancy the hum of a city or the tranquillity of the countryside, your ideal location will be a balance of practicality and personal preference.

(This article will give you tips on deciding where to live in the UK.)

Local council and authorities

Every local council has its set of rules, services, and charges. Before settling in a new area, it's worth getting to know the local authorities.

Check out council tax bands, which can vary widely, and look into future development plans. This due diligence not only equips you with insights about potential changes in the area but also allows you to budget more accurately for annual expenses.

Hunting for the right house

House hunting techniques and tools

House hunting often starts online, where property search platforms display a wide array of options. Engaging with such platforms lets you set specific criteria, from the number of bedrooms to the presence of a garden.

Remember to set your search radius, allowing for possible daily commutes or proximity to amenities. Once you've narrowed down the options, consider visiting the property in person.

This checklist of questions to ask when you go for a viewing will serve as a great starting point in your house search.

Using local estate agents

Estate agents, often a go-to for many, offer personalised advice based on your preferences. They bring local market knowledge and can present houses not yet listed online. While they can streamline the search, be aware of their commission fees.

Some might push properties that serve their interests more than yours. Therefore, maintain open communication and always do your own research alongside their recommendations.

Leasehold property vs freehold

Two primary types of property ownership exist in the UK: leasehold and freehold. With freehold, you own the house and the land it's on. No annual ground rent is applicable, giving peace of mind to many homeowners.

Leasehold properties mean you lease the home for several years, decades, or even centuries. While initially cheaper, leaseholders might face escalating ground rents.

Always check the remaining years on the property leasehold and be wary of leases with fewer than 80 years left.

Making an offer successfully

How to gauge the right asking price?

When considering an offer, start by analysing recent sale prices of similar properties in the area. The Land Registry data can be a handy tool for this.

Reflect on the property's condition, the current market climate, and any unique features it might possess. While the asking price provides a starting point, remember that negotiation is part of the process.

We have a more detailed article on how to know if a house is overpriced.

Engaging with estate agents for a smooth process

Once you're ready to make an offer, it typically goes through the estate agent representing the seller. They act as the mediator in discussions. Be transparent about your position, such as if you're a chain-free buyer or if your mortgage is in principle.

Demonstrating seriousness and readiness can enhance your negotiation position. Equally, estate agents can offer insights into the seller's situation, potentially aiding in formulating a successful offer.

Mortgage application for securing your home loan

A mortgage application plays a key role in the house-buying process. It's the formal step to obtain the funds you need for your new home.

The mortgage application process

Initiating a mortgage application begins with contacting your chosen lender or a mortgage adviser. You'll provide them with specific financial details which they'll assess to determine how much they're willing to lend. During this phase, lenders typically examine credit scores, income levels, and existing debt, among other factors.

For an extra layer of support and assistance, many buyers involve a mortgage broker. They can help identify the best mortgage products based on your specific needs and assist in assembling all necessary documentation.

What do mortgage lenders look for?

When evaluating mortgage applications, lenders focus on three primary areas:

  1. Affordability: lenders need to ascertain your ability to meet monthly mortgage payments. They'll scrutinise your income, outgoings, and any outstanding debts.

  2. Creditworthiness: your credit history offers lenders insights into your borrowing behaviours. Those with a positive history are generally seen as less risky.

  3. Property value: lenders will commission a basic property survey to ensure the house you're buying offers sufficient security for the loan. If the property is found to be worth less than the asking price, they may offer a reduced mortgage amount.

Choosing between a solicitor and a conveyancer

When it comes to the legalities of buying a house, you will need a solicitor or a conveyancer.

Why do you need a solicitor or conveyancer?

Solicitors and conveyancers oversee the transfer of property ownership. Their role involves:

  1. Conducting property searches to identify potential issues.

  2. Liaising with the seller's legal representative to ensure all paperwork is in order.

  3. Advising you on the contract, ensuring you're aware of all obligations and rights.

  4. Facilitating the transfer of funds during the purchase.

It's worth noting that while both professionals can manage the conveyancing process, solicitors have broader legal training and can offer advice on additional matters that might arise.

Stages of legal work in property buying

  1. Initial stages: after engaging a solicitor or conveyancer, they will kickstart the process by obtaining the draft contract and other relevant documents from the seller's representative. They will also conduct necessary property searches.

  2. Review and advise: your legal representative will review the results of the property searches and the draft contract. They'll inform you of any issues or concerns that might affect your decision to proceed.

  3. Exchange contracts: once you're satisfied with the search results and the terms of the contract, both parties will exchange contracts. This step solidifies the agreement, making it legally binding. From this point, backing out usually incurs penalties.

  4. Completion: this is the day the property officially becomes yours. Funds are transferred, and you'll receive the keys to your new home. Your solicitor or conveyancer will also ensure that the property is registered in your name at the Land Registry.

Remember, while these professionals handle many legal intricacies, keeping yourself informed and engaged during the process ensures a smoother journey towards homeownership.

House surveys to evaluating the property's condition

When buying a house, a comprehensive survey provides clarity on the property's condition. Think of it as a health check for the home you're considering.

Why is a detailed survey essential?

A property surveyor assesses the condition of the house, highlighting potential problems. Their findings offer insights that can influence your decision to buy or renegotiate the purchase price. It helps avoid any unwelcome surprises post-purchase.

Structural survey vs home survey

Different homes require varied survey depths.

  • Structural survey: often referred to as a full structural survey, it's the most in-depth option. Especially useful for older homes or those suspected of having issues, it examines every accessible part of the property. While pricier, its thoroughness can be invaluable.

  • Home survey: more basic than the structural counterpart, this survey is suited for newer properties in good condition. It pinpoints urgent flaws and provides an overall assessment.

Choose the survey type that aligns with the property's age, type, and your own peace of mind.

Progressing from the offer to the exchange

After having your offer accepted on a house, the subsequent stages lay the foundation for finalising the deal.

How to effectively manage your purchase?

Progressing from an accepted offer involves a synergy of legal work, financial processes, and timely communication. Engaging with professionals, from solicitors to mortgage lenders, ensures that all goes according to plan. Remember, always stay proactive, ensuring every stakeholder has what they need.

Exchanging contracts to become legally committed

The day you exchange contracts marks a significant milestone. From this point, both buyer and seller are bound by law to proceed with the sale. Failure to do so can result in penalties.

Upon exchanging, a deposit is typically transferred from the buyer to the seller. This acts as a form of commitment to the completion date, when you'll officially own the property.

Regularly liaising with your solicitor during this phase helps ensure a seamless and timely exchange. Keep an open line of communication with the seller or their estate agent, as trust and transparency smooth the path to becoming homeowners.

Preparing for the big move

Moving homes often triggers a mixture of excitement and stress. While the prospect of a new environment and space invigorates, the logistics surrounding the move can sometimes feel cumbersome. Here's a brief overview to aid you in this transitional phase.

Engage a removal company

Removal companies specialise in transporting household items from one property to another. When selecting the right company for you, consider these pointers:

  • Seek recommendations: word of mouth can be a reliable way to find a trustworthy company. Friends, family, or colleagues may have had good experiences you can tap into.

  • Get multiple quotes: this will give you a clearer idea of market rates and services offered.

  • Insurance matters: ensure the company has adequate insurance to cover potential damages during transit.

  • Schedule in advance: the best removal companies can be booked up, especially during peak times like weekends or holidays. Plan early to secure your preferred date.

Organising utilities and finalising bills

Before relocating, ensure a smooth transition of utilities and finalise any outstanding bills:

  • Inform suppliers early: whether it's gas, electricity, or water, inform suppliers of your moving date. This ensures you only pay for what you use.

  • Settle outstanding utility bills: Before moving in, ensure any pending bills are paid. This prevents any complications.

  • Redirect post: use Royal Mail's redirection service to have mail forwarded to your new address, ensuring you don't miss out on any essential correspondence.

The final steps in the buying process

Completion marks the moment when the property becomes legally yours. After all the steps you've taken to buy a house, this is the crescendo.

Setting the right completion date

The completion date is when the property's ownership transfers, keys are handed over, and you can move in. To make this process seamless:

  • Coordinate with the seller: both parties need to agree on a date. It's common to aim for a week or two after exchanging contracts.

  • Factor in your circumstances: if you're in a chain, the date should be suitable for everyone involved. Being flexible can help prevent delays.

  • Stay in touch with your conveyancer: they'll manage the legal work and ensure funds are transferred correctly.

Ensuring a smooth handover

The handover process should be straightforward if properly planned:

  • Confirm key collection: often, keys can be collected from the estate agent. Ensure timings and locations are clear.

  • Review inventory: if the property is being sold with certain fixtures and fittings, ensure all items listed in the inventory are present and in the agreed condition.

  • Meter readings: on completion day, take readings of all utility meters. This guarantees you're not paying for the previous owner's usage.

After the purchase

Stamp duty

Stamp duty is a tax you pay when buying property in the UK. The exact amount hinges on the property price and whether you're a first-time buyer.

The government sets thresholds, and when a property's price exceeds a threshold, you pay a percentage of the overage as stamp duty.

Often, a conveyancer manages the stamp duty payment for you, ensuring you settle within 14 days of property completion.

For example, if you buy a house for £300,000, the stamp duty rate might be 2% on the portion from £125,001 to £250,000, and 5% on the portion from £250,001 to £300,000. Consequently, the calculation becomes: 2% of £125,000 (£2,500) plus 5% of £50,000 (£2,500) equals £5,000 in total stamp duty.

It's noteworthy that rates and thresholds can change, so always consult the latest guidance or employ a stamp duty calculator available online.

Maintenance and running costs of your new home

Congratulations on buying a house! With keys in hand, you've embarked on the ownership journey. Yet, owning a home introduces you to various ongoing expenses.

Utility bills: monthly utility bill charges are of gas, electricity, and water. Your energy performance certificate (EPC) indicates how energy efficient your house is and can give a sense of potential utility costs.

Council tax: every property in the UK falls under a specific council tax band, determined by its valuation. Your local council website provides details about the tax bands and annual charges.

Insurance: protecting your own home from unforeseen events requires buildings and contents insurance. While buildings insurance safeguards the property's structural aspects, contents insurance covers belongings inside the home.

Maintenance: from fixing leaky taps to addressing larger structural issues, maintenance costs emerge regularly. Setting aside a monthly budget assists in managing these unpredictable expenses.

Mortgage repayments: securing the right mortgage during the purchasing process means you now face monthly repayments. Make sure you're aware of the exact amount and the payment date. Some homeowners, especially the self-employed, might face fluctuating incomes, so it's wise to have a contingency plan.

Additional costs: as a homeowner, you might encounter occasional costs like removal costs, conveyancer fees, and reservation fees. Some of these might relate to specific events, such as moving or remortgaging.

Remember, maintaining your home isn't merely about meeting expenses. It's about creating a haven, ensuring its longevity, and preserving (or enhancing) its value.

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