In the summer of last year myself and Demelza started house hunting. In the December we had put in an offer and then finally in the February we finally moved into our first home. During this time we learnt a huge amount about how to actually buy a house. I am putting some of what springs to mind here in the hope that it will save others the sharp learning curve I needed just to keep up with the whole process. Questions more than welcome.
Step 1: Get some money
It doesn’t really matter how you get a deposit, but one way or another you will need one. Mortgage lenders seem to want between 10% and 20% of the value of the property at the moment. Clearly this means you need to know how much you are going to spend, but a quick check on something like Rightmove won’t take long. Words of caution, if your money is coming to you via a Will then all is fine. Same too if you are saving it all yourself, however, if you are being lent or given it by say close family then be careful how much you get. I think the limit is 12k per year that you could have received from someone else before anti money laundering laws kick in. Basically, when filling in your mortgage they will want to know where that money came from. And if it happens to have come from someone else they will want details about that person. The best thing to do if you are being given it is to ‘save’ it is smaller chunks over a little while so you never tip over the threshold and get lots more questions than you want.
Step 2: Work out what you have to play with
Once you have a deposit you need to work out how far it will go. You could setup a meeting with a mortgage broker at this point, or you could just look up the numbers on the many mortgage calculators that exist on the lenders websites. I think I used the one on Nationwide and the one on Santander. There is nothing wrong with talking to a broker at this point either; there are no obligations, they will be more than happy to talk to you about their options. I also think they are worth going to even if you didn’t think you would be using one. They have access to a lot more deals than the set the high street offers. They also make comparison of a lot of options a damn sight simpler. They might also help give you a better understanding of how mortgage work if you are unsure.
Step 3: Go hunting
Now comes the fun part, time to actually look for a house. There isn’t much to this really… Find houses, talk to estate agents, look round houses, nod and smile when they make jokes. They don’t seem to generally make jokes though, just stand and look solemn and point out the bleeding obvious like “this is the kitchen”… really. I actually think the best way to go about visiting houses is having done your homework on them first. Thanks to the internet getting lots of detail is normally fairly easy, but there will always be something missing. For example, a lot of postings miss out floor plans. Write down the list of things you want to check when you are there, such as layout etc. If you are seeing more than a couple of places in a day then make notes the same day about each one… On one day we saw 4, 2 in the morning and another 2 early afternoon and it was surprising how quickly you forget the details important to you. By the evening of that day it took a bit of thought to drag out the pros and cons.
Most importantly, remember to ask questions and have a good poke around… this can be a little hard if the owner is the one showing you around… just try to be chatty.
Step 4: Show us the money
OK, so you have found the one. It fits all the requirements; you love it, see potential in it, whatever it may be. Assuming at this point there were no clear turns off’s like damp or huge cracks in the walls… time to put in an offer. The best tip we heard on this was never start at the asking price. This may seem obvious, but there is a good reason for it. If you were to offer the asking price straight away then the seller is going to think maybe they have undervalued their home if you are so willing to go for the asking price. They may hold out; seeing how high you will go and how badly you want it.
The key to this negation stage is two part, firstly you want them to think they need you and not that you need them. With your first house this one is easy, you have no chain so can move when you want. This is a very powerful bargaining chip. The second key is to lower their expectation.
It is also worth noting that as you get closer to a deal you can put things like appliances, fixtures and fittings on the negotiating table.
Step 5: Things start getting serious
At this point you need to start getting the paperwork to catch-up. That means two things, getting a solicitor involved and getting a mortgage. Generally estate agents and mortgage brokers are happy to make recommendations for solicitors they have worked with.
Applying for the mortgage is the slightly scary bit, but it isn’t too hard. Once you have your solicitor on side you begin the long and arduous job of keeping everything moving forward. It is surprising how much work there is to get everyone doing their jobs… At peak I was speaking to the solicitor and or estate agents at least once a day.
It is worth noting that when you have a mortgage the solicitor is acting on not only your behalf, but that of your mortgage provider. If you think about this it makes perfect sense, they are buying a greater stake in the house than you are most of the time. The solicitor will do searches to find out the details the local council hold about the property. They will confirm boundaries, do environmental checks (things like if there is an old tip nearby, or a river or even in the south west checks for Radon). The seller will provide a detailed list of what they will and will not include with the property. Check this sodding carefully, it is important. Once you exchange contracts you can’t go back on things. It is up to you to make sure everything is as it should be.
The mortgage company will normally sort out a basic survey if they feel they want one, but you can get a more thorough one done. It is very normal (hell, expected) for you to request more visits to the property during this time. Even if you have nothing to check, I would still recommend this. All this pushing back and forth of letters takes time and it may have been some time since you saw the property. Never hurts to keep in fresh in your mind. We actually got Demelza’s parents to come with us to give us a second opinion and sanity check. While it will be expensive to pull out at this point, better to be sure.
Step 6: Exchange
Once all the contracts have been sorted out, the paperwork in place and the dates for everything agreed you are almost ready to exchange. To exchange you need to have fulfilled any requirements your mortgage lender might have (house insurance is the big one), you need to give your deposit over to the solicitors and you need to be sure with what you are buying. Once you exchange you are committed. It is worth noting, if you are transferring over 10k to the solicitors, you will need to pay for a CHAPS transfer (about £25).
Step 7: No man’s land
Once you actually exchange you enter a contractual point where you are legally responsible for the house. At this point you sort of own the house. The lenders transfer your mortgage amount to your solicitor who combines it with your deposit. They transfer this over to the seller’s solicitor. They update the deeds of the house and hand them over to you. This period between exchange and completion can take between 3 days and about 2 weeks.
Step 8: Completion
Finally, day of completion arrives! You can collect the keys from the estate agents and open your front door for the first time! Now the fun part of moving all the services over…