The process of buying a property in 2021

With interest rates still low and the Covid-19 pandemic making people think more about their housing situation, buying a house in 2021 may well be on your agenda.

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‍If you’re still on the fence about buying a home, take a look at our recent blog on whether buying a home is a good resolution for you.

Buying a home means a lot of paperwork, procedures and different people getting involved. Understanding who does what and when before you start can make it less stressful.

In this guide, we discuss the overall process of buying a property, from your initial homework right through to collecting the keys from the estate agent on the big day.

Do your homework

Before you head off to Rightmove or Zoopla and start calling estate agents to book viewings, you need to have a handle on your numbers.  How much would a bank lend to you?  How much would a mortgage cost each month?  Could you afford the mortgage?

Understand how much you can borrow

Knowing how much you can borrow will enable you to refine your search when you’re browsing properties for sale on the internet.  There’s no point in looking at houses worth £300,000 if you can only afford one worth £200,000.

There are a couple of ways to do this:

1.     Ask a mortgage broker.  We work with Yes Mortgage Services, who would be delighted to help you

2.     Use online mortgage calculators from any of the banks.

Both methods will also give you an idea of your borrowing potential and a typical monthly cost.

Now take a look at your budget

As you now have an idea of how much the mortgage is likely to cost you each month, you should consider your monthly budget to see whether you can afford these repayments.  This exercise will give you an idea of whether it’s affordable and what’s not and may help you set appropriate expectations when you’re researching available properties.

To help you with this, you can review our guide on how to create a budget.

The property

With ‘knowing the numbers’ in the bag, you can now start to think about the criteria for your ideal property.  Having an idea of the things you’d like from your new property will allow you to assess the market, drawing up a shortlist of available properties to see.  You can use our Home Buyers Checklist to help with this.

How long does the process take?

Now that you’re almost ready to begin your property hunt, you might be wondering how long it will take to complete the process.  A typical home purchase timeline can be anywhere between 6 weeks and 8 months. The timeline may look as follows:

• 4 to 12 weeks to find your perfect property and get an offer accepted
• 2 to 4 weeks to receive a mortgage offer from your bank
• 16 weeks for the legal process
• 2 to 4 weeks to complete the purchase

Research the market

Now you’re ready to go house hunting.  Online house listings sites such as Rightmove and Zoopla will become your best friend for the next few weeks, while you research what properties are available.  Our next blog will cover how to review the market and give you our top tips to get you started.

Is the bank likely to lend to you?

By this point in the process, you’ll likely have your eye on a few contenders, so you need to start getting serious on the mortgage side of the process.

For you to be taken seriously when you put an offer in, you need an ‘agreement/decision/mortgage in principle’ – we’ll call it Agreement in Principle (AIP) from now on.  This is a mini-application where the lender checks your credit file and other information and decides how much they might lend to you. It’s not a binding offer but will form the basis of your full mortgage application.  You can get an AIP from your mortgage broker or bank.

AIPs last between 30 and 90 days depending on the lender.  This should be plenty of time for you to get your shortlist of properties drawn up and viewings booked.  Our upcoming guide on how to view properties will give you an idea of what to expect.

Putting in your offer

By now, you have viewed your shortlisted properties and found one that you want to buy.  You now begin the process of negotiating with the seller.  Putting in an offer is as simple as emailing or phoning the estate agent. The more important aspect is negotiating a good deal. Later in this series we will cover how to negotiate a house purchase, but the key point is not to spend more than you can afford.

Mortgage application and legal process

Now your offer has been accepted, it’s time to ask your mortgage broker or bank to begin the processes of applying for your mortgage and instruct your conveyancing solicitor to begin the legal process.

Conveyancing is the legal process that allows for the transfer of a property from one person to another. Your conveyancing solicitor will do all the legal paperwork, local council searches and Land Registry, draft the contract and handle the exchange of money. As this series progresses, we will share our tips on picking the right conveyancer.

As part of the mortgage application, the lender will want to ensure that the building is fit for purpose, so will instruct an independent valuer to assess the property.  The mortgage valuation is NOT a survey.

Arrange a survey

A survey assesses the property for any potential problems.  There are three types of survey you can chose from:

• Condition or snagging report. The cheapest and most basic survey which tends to be used on conventional homes or new builds. It doesn’t include a valuation or investigate possible future repairs
• Homebuyer report. More expensive and thorough, this examines both the inside and outside of the property.  You can usually request this is done at the same time as the mortgage valuation
• Building or structural survey. The most comprehensive option, this is more suited to older or unusual properties like converted barns.

You can usually request the survey is done at the same time as the mortgage valuation.  If the survey throws up any problems, the surveyor will usually give you an idea of how much they would cost to fix.  You might decide to renegotiate the price with the seller or pull out of the deal altogether.

Just remember it is better to pull out and lose the money you have currently spent, than to buy a house that costs thousands to get right!

Mortgage offer

Once your valuation has been completed, your mortgage lender will have assessed the property and will decide whether to lend you the money. If everything is in order, you receive your mortgage offer.  You’re almost done.  Just a few more steps before you get the keys.

Agreeing dates

Assuming your solicitor hasn’t found anything untoward, attention will turn to when you ‘complete’ the house purchase. This is moving day! You need to negotiate this with the people selling the house.  If you’re also selling your home, you need to tie this up with your buyer to make sure they all happen at the same time.

You agree two dates. The first is when you exchange contracts. At the point of exchange you are legally bound to buy the house. The second date is completion date.

Buildings insurance

You might not own the building yet, but once you exchange contracts you’re legally bound to buy the property, so now is the time to start getting buildings insurance quotes.  Part of the quote process will ask you the rebuild cost which will be stipulated in your survey.

In our future blog we will share our tips on how to protect your family when buying your home.

Deposit transfer

To enable exchange to take place, you need to send your solicitor your deposit.  Depending on the amount of your deposit you may need to ask your bank to setup a CHAPS (Clearing House Automated Payment System) payment to your solicitor.  This is usually a same day payment and will likely incur a fee.  Talk to your bank beforehand to find out how much they charge.

Exchange contracts

If your solicitor and surveyor are happy, now is the time to sign the contract and exchange with the seller.  Your solicitor will send a copy of your signed contract to the buyer’s solicitor and vice versa.

Once this happens the buyer and seller are committed to the sale. Pulling out of the deal means you’re likely to lose your deposit.

Completion

At this point your solicitor has a few more tasks to do which should be done relatively quickly.  Things you need to action or look out for include:

• Getting a completion statement. This is a statement of costs and outstanding expenses such as stamp duty land tax and the solicitor’s fee.  This usually needs to be paid on or before your completion date
• Transfer deed. Your solicitor sends you the transfer deed to sign and return. This document confirms you are willing to own the property.

Once your solicitor has drawn the money down from your mortgage company and sent it to the seller, you have completed.

Look out for a phone call from the estate agent asking you to come and get the keys.  Get your camera and a bottle of wine ready for the awesome selfie of you standing outside your new house.

What to do now

As this series continues, we will be giving you more tips on buying a house including understanding mortgages, how to review the market and how to negotiate the price.

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Mortgages:

Batsrock Limited, trading as Stag Protect, acts as an intermediary for the purposes of introducing its customers to Yes Mortgage Services Limited, part of the H L Partnership.

YES Mortgage Services Limited is an appointed representative of H L Partnership Limited which is authorised and regulated by the Financial Conduct Authority. YES Mortgages Services Limited is a company registered in England and Wales with company number 08872874. The registered office address is Yes Mortgage Services Limited, Four Winds, 22 Windmill Lane, Avon Castle, Ringwood, Hampshire, BH24 2DQ.

You will not receive advice or any recommendation from Batsrock Financial. Such services will be provided by Yes Mortgage Services Limited.