It’s been a year and three months since I sold my first property. Since then, going back to being someone’s tenant hasn’t been too bad. Our £1,200 / month rent is pretty reasonable for the one-bed flat my girlfriend and I have in East London. East London is great and my 20-minute commute convenient. But our flat is pretty cramped and, more importantly, it’s not really ours. So, ready to buy together, this is why we are now moving and, after 7 years of living in London, I am excited to be moving outside of the capital!
It’s the second time I have now gone through the property-purchase process. Therefore, I thought I would write an end to end guide for anyone else who is about to embark on this journey.
Step 1 | Are your finances in order?
When it comes to working out whether you can afford a property, start by asking yourself the following questions…
- Have I enough saved for at least a 10% deposit?
- Do I (or my partner and I if purchasing together) earn annually 4x the mortgage needed?
- Do I need to pay stamp duty? If so, do I have enough saved to cover this?
- Do I (or my partner and I) have a good credit score?
In addition to this, you should put aside around £2,000 for things like solicitor fees, a survey and moving costs.
If you are good on all fronts except the deposit then you may wish to look into the Help to Buy equity loan scheme. This allows buyers to purchase a new home with just a 5% deposit. Hopefully, if you are a first-time buyer, you’re already aware of and planning to make use of a Lifetime ISA. Using a LISA you can benefit from a government bonus towards your first property purchase.
Doing these sums will ultimately give you a clear indication as to the maximum property value you can afford.
Step 2 | Finding the Right Property
Your property search is highly personal and circumstantial. Having crunched the numbers, you now know your maximum price when setting the filters searching on Zoopla. Kirsty and Phil have told us for over a decade that it’s all about the location, location, location. It’s worth bearing this in mind. How many clueless couples have had to have Kirsty Alsopp shouting in their faces before they realised they were being completely unrealistic when it comes to their expectations. Don’t be that couple!
Buying a “project” property in 2016 is still the best financial decision I ever made. If you can look passed dated decor and more at things like the location, layout and natural light, then you can grab a bargain in a better area by buying a project.
When viewing a property, be thorough. Ask the agent lots of questions and check for things like water pressure and storage. Does the kitchen have space for a dishwasher, washing machine, etc?
Step 3 | Making an offer
Once you have found a property you like and have decided to make an offer, don’t just dive in, you need to do your homework. Zoopla makes it easy to see things like; when the property first went on the market, and whether the owner has dropped the price at any stage. You should also be able to see the sale history of the property. If the owner only purchased the house a year ago then this might indicate something is not right. Speak to the estate agent and ask about the current owner’s circumstances to find out if they’re a motivated seller. Finally, remember that most estate agents price up properties expecting that they won’t get the asking price. In most cases, to start with, I would suggest offering in the region of £30 to 20k less than the asking price.
Step 4 | Arranging your mortgage and instructing a solicitor
Some people might argue that you should look to arrange a mortgage in principle as part of stage one. However, you don’t actually need one to be able to make an offer and have it accepted. What’s important is that, once your offer has been accepted, you move quickly. This shows the owner you are an organised and serious buyer. When choosing a mortgage, I would highly recommend speaking with a fee-free mortgage advisor because he or she can ensure you get the best deal. Furthermore, because there are so many variables when choosing a mortgage e.g. fixed vs. variable, the mortgage term, how much to put down as a deposit, etc. a mortgage advisor (aka a mortgage broker) can help explain these options to you.
You will also need to choose a conveyancing solicitor to do all the paperwork (and there’s a lot of it). When choosing both a solicitor and a mortgage advisor, I would advise asking around for recommendations. You really need diligent people who are good communicators or else the whole process will take a lot longer. I would highly recommend Abacus Money for free mortgage advice and mortgage brokering and Abels Solicitors for conveyancing, both provide great service!
Step 5 | Surveys
A requirement of your mortgage lender will be that the property you’re purchasing is worth what you’re paying for it. To confirm this, your mortgage lender will charge you for a valuation survey (costing around £200). In addition to this, you should also arrange to have a building survey carried out. The reasons for this is that the valuation survey is unlikely to uncover things like structural damage, damp, dry rot etc. Such problems may cost tens of thousands to fix.
Step 6 | Exchange Contracts
By this point, you will have signed a lot of paperwork. Your solicitor will have also conducted a range of local searches and you will have sent them your deposit in preparation for this next very important step: exchanging contracts. At this stage, both parties i.e. you as the buyer and the current property owner as the seller are contractually obliged to proceed with the sale of the property. Key to exchanging contracts is that this is when you will agree with the seller a date for completion.
Step 7 | Completion
Completion is the date the property officially becomes yours. The mortgage starts and the funds are sent to the seller’s solicitor. The seller must, of course, have vacated the property by this date and you can finally move in. Congratulations and good luck with your move!