How to buy a property for the first time
When you buy a property you need a deposit and possibly a mortgage, unless you have a lot of cash sitting in the bank. Research is key. There is no point in looking for a property unless you know whether you can afford it first.
Depending on how many buyers and sellers are in your chain, it is possible to complete the whole process within six weeks. You must however expect the unexpected. Buyers and sellers throughout the chain are not tied into any sale or purchase until each person in the chain exchanges contracts.
The key to getting this right is to remain calm, think logically, keep going and try not to get too stressed. Make sure you keep an open dialogue with the seller of the property you want to purchase so that they feel assured that all is going to plan from your end.
Documentation you will need:
You will need the following if you are intending to secure a mortgage:
- Your credit score. A free credit score from Experian will give you an indication of what lenders see about you. If you do this from the outset, you will be able to assess whether you would potentially be accepted for a mortgage. If you have an excellent credit score, you are good to go! If you have a low credit score, click here for ways to improve it.
- Copy of photographic ID (driving licence or passport).
- Current P60 (if employed).
- Last two years SA302 tax calculation (if self employed) from Inland Revenue.
- Last three months pay slips.
- Last three months bank statements.
- Monthly expenditure form.
You will need the following if you do not need to secure a mortgage:
Copy of photographic ID (driving licence or passport).
Keep a list of the following handy:
- How much deposit you have.
- Your earnings.
- A copy of your credit score/credit report (if you do not have a good credit score, click here.)
- A figure for the costs associated with legal fees from a Conveyancing Solicitor.
- A figure for stamp duty to be paid.
Follow our guide:
1. Work out how much do you want to spend on a new property.
Head to Rightmove to get an idea of how much you want to spend on a new property. You will get an indication of the current market house prices and what type of properties are available in your desired location. Take a note of a house price in a street you would be interested in.
2. Work out the Stamp Duty Fee, Conveyancing Fee and Insurances you may need for the property you want to purchase.
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. Click here for more information.
When you buy a property you will need a conveyancing Solicitor to handle the purchase for you. Fees can be in excess of £500 so ensure that you have enough funds for this service.
If you are securing a mortgage for your new property, your lender may need you to enter into some form of protection insurance. Check with your lender for information and add an approximate cost of this fee to a monthly expenditure form.
3. Check whether you can afford the monthly utility bills, council tax payments.
You can always ask a friend or a parent for advice with this on how much they spend on a monthly basis to give you an idea of the costs. Here are two very good links to help you on your way:
Add these costs to a monthly expenditure form.
4. Work out whether you will need to secure a mortgage for your new property.
If you do not need a mortgage and have the funds to buy a property, you should go to point 4 below.
If you do need to secure a mortgage, find a mortgage advisor/broker(preferably one that doesn’t charge you and searches “whole of market”) to see what you can borrow/afford etc. Give them a yearly figure of your earnings, monthly expenditure form, any debts you have etc and an idea of what kind of property you want to purchase and the cost. They will go through the process with you to advise what you can afford for your mortgage. Contact other lenders to see what offers they have until you feel you have found the right lender/cost of your mortgage. Check whether there could be an arrangement fee for the mortgage? How much is it and can you afford it? Check whether you want to pay this upfront or just have the lender add it to the mortgage.
If you need to secure a mortgage and you are doing this without an advisor, speak to your bank. Give them a figure of your yearly earnings, monthly expenditure form, any debts you have etc. and an idea of what kind of property you want to purchase and the cost. They will go through the process with you to advise what you can afford (but remember, you don’t have to go with your current lender) for your new mortgage. Contact other lenders to see what offers they have until you feel you have found the right lender/cost of your new mortgage. Click here for the Financial Conduct Authority’s advice on this. Check whether there is an arrangement fee for the mortgage. How much is it and can you afford it? Check whether you want to pay this upfront or have the lender add it to the mortgage.
5. Find a property you can afford.
Head to Rightmove to find a property. Most estate agents place properties on this website. Once you find a property you like, ask the estate agent and/or seller questions about the property to ensure it is right for you (click here for more information). You can check when the property was last sold by heading to Zoopla. If it had been previously bought and sold within the last few years, it may have been internally renovated, improved or part of the property extended during that time. If you choose to buy it, the seller should have all the receipts/ paperwork/ Party Wall Agreements/ Schedule of Condition Agreements, Building Control Regularisation Certificates and Fensa Certificates for any major or minor works that have been carried out in the property.
If you are buying a Flat/Apartment, you need to find out if it is a leasehold or freehold property. If it is a leasehold property, you need to know how long is left on the Lease. Will you need to extend it and can you afford the cost? For guidance on Lease Agreements and how to extend one, click here. If it is a leasehold property, you also need to find out how much is the ground rent, monthly service charge or whether it has a sinking fund that you need to pay into. The building may require building works that you will need to pay towards so ensure you find out about this information from the seller/freeholder first. Once you have your figures, you should go back to your Mortgage Lender to check whether you can still afford the purchase (if you are securing a mortgage for the property).
6. Does the property require alterations or building works.
If you are purchasing a property where you want to make alterations/building works, now would be a good time to contact a builder to get an idea of much this would cost. You will also need to take into consideration the cost of a potential Party Wall Notice/Award that you may need to enter in to with a neighbour for any works on or near a party wall (if the property is a terraced, semi-detached or an apartment/flat). If a Party Wall Award has to be agreed with your neighbour, this could cost in excess of £1,000 for surveyors fees for a full award. Find out what all of these costs would be. If you are securing a mortgage and you want to add these costs as additional borrowing to your mortgage, you should give these costs to a financial advisor/mortgage advisor/broker or current lender to see if you can afford it.
A flat or apartment may require building repairs/works that you will need to pay towards so ensure that you find out about this information from the seller/freeholder first. Once you have your figures, you should go back to your Mortgage Lender to check whether you can still afford the purchase (if you are securing a mortgage for the property).
7. Check that you can still afford everything.
If you are securing a mortgage:
Update your monthly expenditure form and have a copy of the conveyancing fee, stamp duty fee etc and go back to your mortgage advisor/broker or current lender (if you are securing a mortgage) and give them this information. They will help you and your advisor assess whether you are in a good financial position to continue with this journey.
If you are not securing a mortgage:
Update your monthly expenditure form and have a copy of the conveyancing fee, stamp duty fee etc and assess your situation yourself. Take your time with this and think it through carefully. If you find that you are not quite yet in a good financial position to continue with this journey, you should take stock of your situation and come back to it when you are.
8. Make an offer on your new property.
If all the figures work out, make an offer on the new property with the seller and/or estate agent. Never go in at the asking price, always try to make a lower offer. Once your offer has been accepted you need to find out who is in your chain.
9. Keep the chain together.
At this point gather all the email addresses of each Buyer/Seller/Conveyancing Solicitor and Estate Agent in the chain by asking the owner(s) of each property in the chain to give them to you.
Ask your Conveyancing Solicitor what they are working on/what they are waiting for in the chain.
Generate one email with everyone copied in advising who you are, what property you are buying in the chain and what you have been advised by your solicitors.
This should encourage each buyer/seller in the chain to respond so that everyone knows what is happening. Do this twice a week to ensure that the chain moves quickly.
This is THE best way of making sure everyone in the chain knows who or what is holding things up.
It is quite an unusual way of making sure the chain pulls together to make everything go through on time but it does work, I speak from direct experience. The Solicitors may not directly respond in the chain, but the buyers and seller will and the Solicitor will see those responses. The Solicitors may advise you to stop emailing them, but you must keep doing it in order to keep the chain moving quickly.
There will be no more “it is with the seller’s solicitors” or “we are just waiting on something from this buyer” etc. Everyone in the chain will now know exactly where the problem lies and any hold ups. This will make the transition go much more smoothly.
10. What happens next.
If you are securing a mortgage:
Your lender will want to view the property to ensure the amount borrowed reflects the actual condition of the property. This is known as a Valuation/Mortgage Valuation. If the lender advises that they will not lend as the sale price does not reflect the condition and value of the property you can either pull out of the purchase or ask the seller of the property you wan to purchase to reduce the price accordingly.
If you are not securing a new mortgage:
Go to point 11 below.
11. Obtain a Building Survey of the property to want to purchase.
Most people will now engage the services of a building surveyor (preferably registered with the RICS) who will view the property to provide you with a Building Survey/Home Buyers report. You should speak to the seller first before you put this in place. The report will confirm the value of the property and will pick up things like problems with electrics or whether the property will need a new roof etc. Once you have had a survey carried out, you can ask the seller to reduce the price if any issues arise. This is an invaluable asset when buying any property and worth spending money on. If issues are raised in this report and the property requires further investigation, you will then need to engage the services of a Structural Engineer if you want to proceed with the purchase.
If you need a Structural Engineer to assess the property, you should first speak to the seller to let them know the situation. The seller is not obligated to pay for this service but you could ask them to pay half. This report will help them to access whatever alterations they need to carry out on their property in order to sell it. If the seller refuses to meet half the cost of the report, you have the option to either pull out of the purchase or pay for it yourself. You are not obligated to give the seller a copy of the report unless they have paid towards it.
A Structural Engineer will then provide you with a Building Inspection Report/Full Survey/Structural Survey. Again you will be able to use the report to negotiate the price of the property you are purchasing if it does indeed require more work. Check whether you can afford any major works before you keep going. If an issue does arise and you cannot proceed, make sure you let the chain know.
If a survey picks up that the property you are purchasing has a history of subsidence or the property has subsidence, you will need to look into the costs associated with subsidence insurance. Check whether you can afford it before you keep going. If an issue does arise and you cannot proceed, make sure you let the chain know.
If all is well and/or all building survey issues have been resolved, go to point 12 below.
12. Find out whether there are any Boundary Issues/Party Wall Agreements/Schedule of Condition’s and Regularisation Certificates, Fensa Window Replacement certificates, EPC Certificates associated with the property you want to buy.
At this point, you should ALWAYS check whether there are any boundary issues with the property you want to purchase. Speak to your Conveyancing Solicitor, ask them to double check the measurements of the boundaries between you and your neighbours either side of you. This can be used if there are any future boundary issues with your neighbour. You should request whether there have been any past or current boundary disputes and ask for the relevant documentation. You should always ensure that you are aware of your actual boundary lines and measurements so that if neighbour disputes arise in the future, you have your boundaries confirmed in writing by your Conveyancing Solicitor.
Party Wall Agreements/Schedule of Condition:
You should ask your Conveyancing Solicitor to confirm that the seller has documentation in relation to any Party Wall Agreements/Schedule of Condition Agreements. These are important documents and copies of them should be with the Land Registry. They confirm that both neighbours are in agreement with any works that have been carried out on or near the party wall(s) of the property.
If the property you are going to purchase has had any major or minor works carried out, the seller should have Building Control Regularisation Certificates. If these are not in place, you should speak to your Conveyancing Solicitor to confirm how you will be able to move ahead without these in place and what effects they can have on the property. If building works carried out by the seller do not have a regularisation certificate from Building Control, you should request that your Conveyancing Solicitor places an Indemnity Agreement between you and the seller. An indemnity agreement ensures that you (the buyer) would be indemnified from any costs associated with poor works carried out in the property by the seller. This agreement would mean that the seller would be legally obligated to deal with the issue after he/she has moved.
If any windows, Velux, Dorma or patio/bi-fold doors have been installed in the property you want to purchase, the seller should have Fensa Certificates of the installation. If a Fensa Certificate is not in place, the seller should have arranged for the installation to have been inspected by Building Control and a completion certificate obtained. The seller can contact the Local Authority to apply for retrospective Building Regulation approval or pay for an insurance policy to cover the buyer. The other option is that you (the buyer) can request that the seller(s) Conveyancing Solicitor places an Indemnity Agreement between you and the seller. An indemnity agreement ensures that you (the buyer) would be indemnified from any costs associated with poor works carried out in the property by the seller. This agreement would mean that the seller would be legally obligated to deal with the issue after he/she has moved.
An Energy Performance Certificate (EPC) is required for all properties when constructed, sold or let. The Energy Performance Certificate provides information on the energy performance of the property and what you can do to improve it.
If all the relevant paperwork is in place, your boundaries are set out in writing, you are ready now ready to exchange contracts.
If at any time before you exchange contracts you feel that this is not right for you, your financial situation changes, there are too many issues with the property you are going to buy or have decided not to sell, you can always pull out of the chain. This can be a heart breaking time for other people in the chain, but you must do what is right for you. It is not uncommon to find yourself or someone in the chain in this position, but the most frustrating thing to do is to not inform the people in your chain straight away. So please make sure you let the chain know as soon as you make that decision.
13. Exchange of Contracts
You should now be in a position to set a date to exchange contracts and set a completion date. It is possible to exchange and complete on the same day. If you would like to do this, you should contact your Conveyancing Solicitor and email the chain. You can set the date that works for you.
You are now officially committed to the purchase after the Exchange of Contracts. You may be asked to pay a holding deposit, but most sellers do not need that once contracts have been signed.
14. Arrange your Buildings and Contents Insurance and prepare for your moving day.
Completion date is set, now you should be looking into buildings and contents insurance for your new property and any other insurances you may need.
You should be advising council tax, gas, electric, water utility companies, broadband providers and telephone companies well in advance of your moving date (at least one month) and packing your home for the move. Click here for a handy list of who to contact. Obviously you will not know the detail of each provider and how much energy/usage the property uses. You could send a friendly email to the seller to see if they could offer some assistance with this.
Click on the following links to find out which company supplies the following services to the property:
If you have a lot of furniture, you could look into hiring a removal company like AnyVan to help you. For guidance on how to prepare for moving day click here.
16. Completion Date/Moving day.
Completion day has arrived! Keep in contact with your Conveyancing Solicitor throughout the day (if the completion is set for a specific time). If the sellers have not moved out of the property at the specific time, get in touch with your Conveyancing Solicitors straight away and let them know. They can push things along for you.
17. Congratulations on your move!
*Good tip, take a photograph of your gas, electric and water meters as soon as you arrive at the property.
You’ve moved in but theres no guide or handbook to help you around your new property. Help is at hand with our “everything you need to know when you move into your new home guide”. Click here for details.
18. What happens now.
Your solicitor will register the property with the Land Registry for properties in England and Wales and you will receive a copy of the title deeds to your new home.
Ensure you have all the necessary insurances in place for your property and keep a copy somewhere safe. If you have purchased a leasehold property, you should contact the freeholder and request a copy of the Building Insurance Policy for the property.
You should look into getting a will.