Buying a home can sometimes seem like a tall task but if we break the stages down it starts to look a whole lot feasible.
Step 1: Work out your mortgage affordability
You can't start the home buying process if you don't even qualify for a mortgage. You should first work out your mortgage affordability after which you should then look to boost your mortgage affordability if you are not up to scratch. This will involve saving a mortgage deposit and building your credit score.
You can find your mortgage affordability by using mortgage affordability calculators.
You should also check your credit score to see what it is and if there are any serious negative marks on your credit report such as a county court judgement
Tip: don't forget to prequalify for home buying government schemes which reduce the mortgage deposit you are required to pay or increases your mortgage savings.
Step 2: Find an affordable region:
So now you know how much you can afford and how much you want to save towards your desired purchase price. Now it's time to find a region within your budget. You can do this easily via the zoopla website. You need to look at your wage and find a region where the house prices will match the total amount you can borrow . Once you figure out how much you can borrow then you should look at regions that match your house price target.
Don't just consider how much mortgage you can afford. You should also consider the other costs involved with buying a home as these will significantly affect the property prices you can afford.
You should consider your stamp duty costs especially as these might be the major stumbling cost you have to pay. Use a stamp duty calculator to see how much stamp duty you may be due for your chosen house price.
Step 3: Check your credit score
Mortgages aren't just about the money. You must also have a good credit score so lenders can see if they want to lend to you based on your past credit behaviour. You can use a credit score simulator or calculator to see how much a change in credit score could affect the mortgage APR you are offered. It is important that you check your credit score before you go to a digital mortgage broker as a bad credit score or negative marks on your credit score will not allow you to get a mortgage.
You will need to build your credit score over time to an acceptable level before a mortgage broker will be able to submit your application to a mortgage lender.
Step 4: Get a mortgage in principle:
So you have gotten your mortgage deposit in place, qualified for a home buying scheme and you are ready to go. You should now seek a digital mortgage broker and begin searching for the right mortgage. A mortgage in principle will give you an idea of how much a mortgage lender will look to lend you.
A mortgage in principle is not a firm offer. It can be changed at any time by the mortgage lender when you come to apply. This is especially true if your situation has changed since you got the mortgage lenders agreement in principle. This could be due to things such as your credit score changing, losing your job or your expenses significantly rising.
Mortgages arent cheap, they will also have varying costs associated with processing them. You should ask your digital mortgage broker for a full list of costs.
Step 5: Make your house offer
So now you are ready to make your house offer. You have your mortgage in principle which gives you much more credibility and you have found a few houses you will like to visit. You will usually make an offer through an estate agent and your solicitor will then be responsible for handling the paperwork.
Step 6: find a solicitor
Your solicitor will do all the searches on a property to ensure it is legally fit and there are no legal issues with it. They will also manage the sale of the property by liasoning with the mortgage lender and the seller. They will deal with the money transfers , the transfer of title and anything that requires legal advice. It is best to find a solicitor early on in the process so they can advise you accordingly throughout the process. Solicitors can cost up to £1500 and the searches he or she may carry out may cost up to £350.
Step 7: A property survey
Once you have made your house offer you may want to carry out a property survey on the property if your offer has been accepted. You can do this as a condition of your offer and if you find anything significant when you have done your property survey then you can bargain for a better price or walk away from the home purchase.
People who have bought hoes with surveys have usually face bills of over £5,000 on average. You can find a good property surveyor on the royal institute of chartered surveyors website.
There are different levels of surveys, they include:
RICS condition report
RICS homebuyers report
Building or structural survey
Each survey is priced differently and offers a varying degree of service. You should consider the different factors involved when choosing a property survey
Step 8: finalise your mortgage offer:
If your property survey did not bring up any red marks and you are happy with the price you can finalise it but beware that if the mortgage lender carries out their own valuation and doesnt think the property price matches the valuation they came up with( so the home is valued lower than what it is being sold for) then the mortgage lender might reduce how much they are willing to lend you and leave you with a shortfall.
At this stage a lot of things can go wrong which is why it is essential that you move very quickly to avoid any surprises such as the seller taking the property off the market or being gazumped .
Step 10: Finalise your mortgage
Now you are ready to get a mortgage offer. Work with your digital mortgage broker to get all your documents in place and submit your application the the best lender you have chosen. If all goes smooth the mortgage lender will send you a binding mortgage offer which you can accept within their given timeline. You will also have to pay a mortgage arrangement fee at this point which might be as little as £250 or as much as £3000 depending on the size of the mortgage.
Your mortgage lender will inform you of all fes prior to you making an application. Most, if not all of the fees associated with your mortgage can be added to the mortgage but you will end up paying huge interest on these fees as you are borrowing them over the whole mortgage term. You can avoid this by overpaying all the costs within the first few months of your mortgage if your mortgage does not have any mortgage overpayment penalties.
At this stage you can still abandon the deal but you will risk losing out some money and might be liable to the house seller for any deposit which you have put in escrow.
Step 10: The mortgage lender carries out their own valuation:
Once you have submitted your final offer and you are happy to purchase the home the mortgage lender will carry out their own property valuation. This is not an extensive search but rather a search on how much the property is worth and nothing more. In some cases it is an electronics home valuation. Regardless it will still cost you between £100 to £250 but up to £1500 if the property is a high value property,
Step 11: Exchange of contracts
At this point your solicitor and the seller's solicitor will go about drafting the contracts which will be signed and exchanged. Some sellers will ask for a deposit to be paid to ensure you go through with the deal or as a penalty if you don't. The solicitors will then deal with transferring the funds from the mortgage lender and any other paperwork outstanding at this point. You can now begin to shop for buildings insurance as a condition of your mortgage. Your mortgage lender might require to see this before completion. Your solicitor will also deal with payment of stamp duty as there is a 30 day timeline from completion for stamp duty to be paid.
You can now begin moving your stuff to your new house once you have the keys but if you use a removal company ensure they have appropriate insurance to cover your belongings or purchase the insurance yourself if your current home insurance doesnt cover it.
Step 12: Completion
The mortgage lender will set up a mortgage account for you which they will kindly charge you for and send you all the key financial information regarding your mortgage.
Your solicitor will then register the home sale with the Land Registry for properties in England and Wales. In Northern Ireland it needs to be registered with Land and Property Services and in Scotland with Registers of Scotland . There is ofcourse a cost for this put it changes every so often and is dependant on where you are registering the property.