Buying a house

20/12/2017

The Home Buying Process

Get a Mortgage

If you are a first time buyer, the chances are you'll need a mortgage to buy a home. If you do, you'll need to make sure your credit score is in order and crunch the numbers to see what sort of mortgage you can afford.

Then we recommend that you speak to an independent mortgage broker. The mortgage broker will guide you through potential mortgage opportunities, run a credit check and assess your affordability. Our mortgage brokers provide options from the whole of the market and have exclusive deals that are not available by going direct to lenders.

Once you have chosen a mortgage provider your application is sent in and you'll hopefully get accepted for a mortgage in principle (read all 3 steps to getting a mortgage)

Find a property

Once you have a mortgage in principle you can go to market and start  the next part of the home buying process which is finding your new home. Don't worry if you have already been looking for properties to buy, this is quite usual, however the best advice is always to make sure you can afford to buy a property before going to look for one.

*Fixed Fee – No Sale No Fee – On all Major Lender Panels

Fixed Fee, No Sale No Fee and Unbeatable Value Solicitors.

 
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Conveyancing Process

The conveyancing process, although complicated, does follow a path that you can keep track of using our Buying a Home guide. The info-graphic above shows what the buyer, seller, solicitors, estate agents and bank should be doing and what happens next.

After reading this the process should feel demystified so that you feel more in control of knowing would should be happening and when. It is based on a standard freehold sale and purchase so if you are buying a leasehold flat the process will take longer as there are Freeholders and Managing Agents to consider.

IMPORTANT: Every house purchase is different – this buying a house guide sets out a standard conveyancing process and sometimes this can be completed faster or slower.

The speed of the home buying process depends on a number of factors and a key factor is how many people are involved. If you are buying a freehold property then you’ll be working with your solicitor, seller’s solicitor, seller, estate agent and local council. If you are buying a leasehold property then you can add the freeholder, freeholder’s solicitor and managing agents. There are a lot of people in this loop and if one person goes on holiday, only sends by post or has a delay then everyone else is affected.

On top of all this, if you are in a chain of sales and purchases, the whole chain could be affected by one slow party in the chain. Organising all these people and getting everyone to work harmoniously is the job of your conveyancing solicitors so make sure you choose wisely.

What are the key stages in buying a house?

What follows is primarily intended to explain the conveyancing process to a first time home buyer however if you are a home mover and you have not bought a property for a long time, it should refresh your knowledge.

Instruct-solicitor-surveyor-and-searches-order-mortgage-valuation

1 Instruct solicitor, surveyor and searches, order mortgage valuation

To start your home move process off, you have a number of things to schedule at around the same time. You instruct your solicitor and book your survey - we can advise you on whether you need a Building Survey or a HomeBuyer Report. You must also order your mortgage valuation if you are not a cash buyer. You can find out more about property searches here. If you are a cash buyer we recommend you read this article - Buying a house without a mortgage


Receive-contract-paperwork-and-submit-ID-proof-of-funds

2 Receive contract paperwork and submit ID, proof of funds

Your next job is to submit your ID forms as rapidly as possible so your solicitor can start the conveyancing process. They can then liaise with the otherside solicitor so that the contract paperwork can be sent through. You also need to provide your solicitor with proof of funds so that they can carry out their due diligence. We have published a number of useful articles in our 'News' section on gifting and gifted deposits to help you understand what your solicitor expects from you when you receive deposit funds via a gift. If you are receiving funds from overseas, we particularly recommend that you read Gifted deposit receiving money from overseas


Valuation-survey-and-searches-returned-solicitor-makes-enquiries

3 Valuation, survey and searches returned; solicitor makes enquiries

You must ensure that you pass on the result of your valuation, the survey report and the searches returned to your solicitor so they can raise enquiries. This is a critical part of the process and where it really pays to have an experienced solicitor. They may raise an enquiry with the otherside solicitor on the basis of some issue found in the environmental search returned, for example, or they may notice a problem with the title of the property itself or some restrictive covenant.
This article is highly recommended and gives a great overview of these matters: What does a solicitor do for the buyer?

Exchange-of-Contracts

4 Exchange of Contracts

Exchange of contracts can occur when the buyer's solicitor has finished their investigations and the buyer wants to go ahead. Various procedures must occur in order to exchange, such as the buyer having to lodge the required deposit funds with their solicitor and having to provide proof of building insurance. To find out more about exchange of contracts, read Exchanging Contracts

The critical point about exchange of contracts is that if a buyer pulls out after exchange, they stand to lose ALL their deposit funds (10% of the purchase price) and be sued for the seller's costs. This is examined in this article: Can I pull out after exchange of contracts?

Completion

5 Completion

Congratulations! This is the point where you move in. Or it should be...Unfortunately, completions can be delayed, normally due to parties not producing the correct paperwork or transferring the required monies. You can find out more about completion and what the pitfalls are here: What happens on Completion Day?


Post-Completion

6 Post-completion

Some essential activities must occur before the conveyancing process is finally finished, such as your solicitor liaising with HMRC regarding stamp duty and also with the Land Registry to notify them of the transfer of ownership. You can read about this final stage in the process here - What happens after Completion?


Can you get a faster conveyancing process?

There are many reasons why your house purchase might slow down however most of these can be avoided. If you are looking for a fast conveyancing process these are some of the things you can do:

Getting your mortgage offer – Once you have your mortgage in principle you still need to get the mortgage offer. To do this your mortgage lender needs to do a valuation of your property and confirm they are happy with the asking price and that there are no major issues both structurally and legally. Read our article - The Mortgage Process

Order your searchesProperty searches are paid for by the buyer and give the solicitor information about the property and the surrounding area. The trigger for ordering searches is either when your mortgage offer is received or when your solicitor gets the contract papers from the seller. For a faster conveyancing purchase order your searches right at the point of instruction. Some buyers prefer not to do this because they are worried about the property falling through.

Email over post – Where possible scan and email documents to your solicitor. This’ll rules out the potential for lost time waiting for post to arrive or get lost. Sadly there are still some documents that cannot be scanned and the solicitor must have the original and these include: signed TR1 transfer document, signed licence to assign, ID if you fail the online ID check. Read our article on ID checks

Easter and Christmas – These are 2 months where a lot of people want to buy a house because of the extra time they get to move in and unpack. These are also times where people take holiday and this can slow the house buying process. January, February, and November are quieter months for completion meaning everyone has more time to complete your home move. If you are buying around the Xmas period, you may gain from exchanging contracts before Xmas itself, something examined here

Costs of Buying a Home

Although amassing a deposit is the major initial cost involved in securing a mortgage and buying a house, other upfront costs are considerable, and are examined as follows:

Bullet-1 Mortgage set-up fees
Bullet-2 Mortgage arrangement fees
Bullet-1 Valuation fee
Bullet-1 Mortgage account fee
Bullet-1 Higher lending charge
Bullet-1 Searches
Bullet-1 Legal costs
Bullet-1 Stamp Duty
Bullet-1 Land Registration
Bullet-1 RICS property survey
Bullet-1 Moving costs
Bullet-1 Building insurance

Mortgage set-up fees

Lenders frequently impose a mortgage booking fee or similar, ostensibly to reserve funds for a fixed or capped rate product. This may vary in cost, but in most situations will be at least £99, which may not be refundable.

Looking for a mortgage? Get one suited to your needs from our independent mortgage brokers. Free consultation: click Free Mortgage Broker Consultation or call 0333 344 3234

Mortgage arrangement fee

The vast majority of mortgages involve an upfront, or arrangement fee, this as distinct from the set-up fee. Depending on the lender and interest rate charged, this will be invariably be at least £900 and may be more than £2,000. This can be added to the mortgage principal, but will then incur interest throughout the life of the mortgage.

Looking for a mortgage? Get one suited to your needs from our independent mortgage brokers. Free consultation: click Free Mortgage Broker Consultation or call 0333 344 3234

Valuation fee

Lenders charge this fee to check whether a property is worth the mortgage sum. This can be between £150-£1,500, depending on the value of the property. As part of some deals, lenders may themselves pay this. Remember, a valuation fee is not a Property Survey as it does not check for defects.

Click to read more about Mortgage Valuations

Mortgage account fee

A lender charges this one-off fee to cover set-up, maintenance and closing down costs. Separate to the arrangement fee, this will typically cost at least £100.

Higher lending charge

When a borrower is lent most of the value of the property, the lender may charge a fee to take out insurance against a borrower defaulting on the loan and the lender having to sell the property at a loss. The lender may still attempt to recover any shortfall from the borrower.
This is particularly relevant when a borrower presents a comparatively small deposit. The cost is normally around 1.5% of the sum borrowed. For an average UK house sale at press time, this would cost around £5,250 (1.5% of £350,000).

Searches

Fees for searches to the local council to check whether there are any planning or local issues that might affect the property’s value. The key searches obtained by Conveyancing Solicitors are:


These typically cost around £265 in total for all four.

Need Property Searches? Call us on 0333 344 3234

Legal costs

These are paid to a solicitor or Licensed Conveyancer to fulfil the legal work stipulated for buying or selling property. Both buyers and sellers require a solicitor. These typically cost between £500-£750 and additionally incur paying 20% VAT.

Need conveyancing solicitors? Call us for a fixed fee, no sale no fee quote for CQS-approved solicitors: 0333 344 3234 or click to get a free conveyancing quote

Stamp Duty

When buying a Property in England or Wales you will have to pay Stamp Duty Tax if the purchase price of the property is above £125,000. The more expensive the property, the more stamp duty to be paid. You pay the tax according to the sale price of the value of property which falls into each band.

The stamp Duty Tax Bands are as follows:

Bands                Stamp Duty Land Tax %
Up to £125,000                   0%
£125,000 - £250,000           2%
£250,001 - £925,000           5%
£925,001 - £1,500,000        10%
£1,500,001 - upwards          12%
(as of December 2014)

NB If you own one property you are liable to pay extra Stamp Duty - to find out more, click on Stamp Duty on Second Properties

Land Registration

When the ownership of a property changes, the new beneficial owner is registered at the Land Registry. The Land Registry charge a fee for updating their records and the fee increases based on the price of the property.

NB The fees below are for when details are amended electronically. For the Land Registry to do the same task by post, 2x the fees below are payable. You also pay double the fees below if you a registering a property for the first time with the Land Registry. This might be the case for example if you are buying a New Build home.

The Land Registry Bands for transferring the whole title are as follows:

Up to                Land Registration Fee
£80,000             £20
£100,000           £40
£200,000           £95
£500,000           £135
£1,000,000        £270
£1,000,001+      £455      
           
The pricing reduced in March 2014 to the above (a saving of half the original cost!).
(as at 9th April 2014)

RICS Property Survey

A property buyer should pay a RICS surveyor to check if the property suffers any structural defects. SAM Conveyancing offers two types of survey, namely a Homebuyer Report and a Building (Structural) Survey.

A Homebuyer Report involves an examination of a property, both inside and out. It includes a valuation, which, if a lender agrees is valid for its own purpose, might be used to cut costs. It will typically cost at least £400, but increases based on the property value.

A Building or Structural Survey, the most comprehensive survey, is done when buying an older or non-standard property, for example, a property which is more than 70 years old or a structure made of wood. This will cost typically at least £600, but increases based on the property value.

Click for a Free RICS Property Survey Quote or call 0333 344 3234


Moving costs

A removal firm will move, and sometimes pack, possessions to a new property. For a small 2 bedroom flat you can expect to pay £800 to move your possessions and £320 to have them packed. If you are paying more than this call us for a comparable quote.

Click for a Free Home Removals Quote or call 0333 344 3234

Buildings insurance fee

Lenders may charge customers who take out buildings insurance with a different company, normally around £25 or above.

When you buy a Leasehold property, the Freeholder will normally arrange the Building Insurance leaving you to get contents cover; however if you are buying a Freehold, you will need to have Building Insurance in place before you purchase the property. Building insurance will vary depending on a number of different factors but can range from £300 upwards.

Click for a Free Buildings Insurance Quote or call 0333 344 3234

Typical upfront costs for buying an average UK property

Not including the considerable sum required for a deposit the costs of purchasing a house are considerable. Taking the lowest typical values above and upfront mortgage costs for a property in England being bought for £250,000 the cost are as follows:

Cost of Purchase
Average Cost for a £250,000 Property
Mortgage set-up fees         
                               
£99
Mortgage arrangement fees
 
£900
Valuation fee
 
£150
Mortgage account fee
 
£100
Higher lending charge
 
N/a
Searches
 
£250
Legal costs
 
£600
Stamp Duty
 
£2,500
Land Registration
 
£135
RICS property survey
 
£480
Moving costs
 
£1,120
Building insurance
 
£300
Total
£6,634
 

Buying a house?

If you are looking for fast conveyancing solicitors who can help get you moved in as quickly as your chain will move then call us on 0333 344 3234. We specialise in helping first time home buyers.

*Fixed Fee – No Sale No Fee – On all Major Lender Panels

Related News Articles

 
What is the Mortgage Process?
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