The process of buying a house can seem very long and complicated and many will wonder where to start when buying a house. In this step-by-step first-time buyer guide we will take you through all the stages of buying a house.
Preparing to buy your first house is not just about what to do but also when to do it, so we have included a house buyer’s timeline.
Step One: Start Saving for a Mortgage Deposit
Once you have decided that buying a house is the right choice for you then you need to start saving for a deposit.
Most lenders require a minimum deposit of 5% of the value of the property you’d like to buy. For example, if you wanted to buy a flat for £200,000 then you’d need to have a deposit of at least £10,000.
The bigger deposit you have the better so the earlier you start saving the better. A bigger deposit will mean more mortgage products at better interest rates are available to you. Find out more about saving for a mortgage deposit in our Mortgage Deposit Guide.
Saving up for a decent mortgage deposit can take years so it is worth starting a saving plan as soon as you can. Once you have saved a good amount, talk to a mortgage advisor who can help you to look at how much you might be able to borrow so that you have an idea of your budget before you start house hunting.
Step Two: Start House Hunting
Once you have a clear idea of how much you can afford to borrow then you can start looking for your first house. You probably already have an area in mind but it is worth doing some research at this point.
Go and visit the areas you are interested in during both the day time and the night time. Think about the following factors:
- Transport links: where is the nearest train station, tube or bus stop? How long will it take you to travel to work?
- Amenities: Is there a local shop? Nearby pub? Are the local schools any good?
- Development: Are there plans for more houses, shops or large developments to be built in the area? Will these have a positive or negative impact on house prices?
- Crime levels: How safe is the area?
Step Three: Get a Mortgage Agreement in Principle
A Mortgage Agreement in Principle (AIP) or Decision in Principle (DIP) is confirmation from a lender that in theory they would lend you a certain amount.
It is useful to have a mortgage agreement in principle before you start viewing properties as it demonstrates to estate agents and sellers that you are well-prepared and ready to start the mortgage application process for real once you have an offer accepted.
A mortgage advisor can help you to look at all your options to help you to decide if you like a fixed-rate mortgage or a variable-rate mortgage. They can also help you if you want to organise a joint mortgage with parents, a partner or friends.
A mortgage Agreement in Principle usually lasts for between 30 and 90 days, so once you have your AIP start arranging some viewings.
But don’t worry if it takes you longer than this to find the right home for you. As long as nothing major has changed in your circumstances you should be able to secure another Agreement in Principle.
Step Four: Make an Offer on a House or Flat
Once you have your mortgage agreement in principle, start registering with estate agents and going to lots of property viewings.
When you have found the property you are interested in you can contact the relevant estate agents and put in an offer.
If you think you are in a strong position (good deposit, mortgage in agreement in principle and no chain) and think that the property is overpriced you might decide to offer less than the asking price.
If however the property is sought after and similar properties have gone for around the same amount as the asking price then it can be more sensible to offer the full amount.
In some cases other buyers might also have offered on the same property which could spark a bidding war in which each buyer increases their offer. Sometimes this scenario can result in a ‘sealed bid’ situation where each interested party has to submit their best final offer and the highest bidder wins.
You can generally make the offer over the phone to the estate agent but it’s a good idea to put it in writing too. When submitting an offer make it clear that the offer is subject to the property survey and ask that they take the property off the market.
Having an offer accepted on a property is an exciting moment in what can be a stressful process, so take some time to celebrate and enjoy the moment!
Step Five: Apply for a Mortgage
Now you have had your offer accepted, it is time to apply for your mortgage for real.
A mortgage advisor can help you to identify the right type of mortgage for your circumstances.
Find out more about first-time buyer mortgages in our guide.
There are a number of factors which can affect the chances of you being approved for a mortgage so it is worth thinking about improving your credit score, clearing debts and providing proof of income before you apply.
Step Six: Surveys and Conveyancing
Conveyancing is the legal process you need to go through to buy a house. A conveyancer or solicitor specialising in property law will take you through this process which includes:
- Carrying out searches on the property you wish to buy
- Drawing up contracts
- Dealing with the Land Registry
- Organising the payment of Stamp Duty
In theory getting a survey done on the house you wish to buy is optional but unless you are very confident that there will be no nasty structural surprises it is usually advised that you get a survey. Some mortgage lenders may insist on you having a survey done.
There are three levels of survey, each more in depth than the previous. The most basic is the condition report, then there is the HomeBuyer’s report and finally a full building survey.
Surveys are designed to pick up on any major problems with the property before you buy it. The level of survey you choose to get can depend on the size, location and age of the property you intend to buy.
Once you have the survey back, if there are any major repairs to be undertaken you can use the survey to renegotiate the asking price of the house to cover the cost.
Step Seven: Removals and Home Insurance
While you are waiting for the surveys to come back and for the conveyancing to complete, you can start thinking about actually moving home.
If you have a lot of furniture then you can start researching good local removal firms but if you haven’t got many belongings yet you might prefer to hire a large van and do it yourself.
It is important at this point to organise home insurance for your new home. Most mortgage lenders will not allow you to exchange contracts until you have home insurance in place.
This is because they want you to protect your asset. Once you exchange contracts you are legally committed to buying the property. If in between the time you exchange and complete on your house sale, the property you are buying burns down, then you will still be obliged to buy it.
Home insurance protects you and your property if the worst happens and your new house is damaged or destroyed.
The exchange of contracts is when the buyer and seller swap signed contracts and the deposit is paid.
Once contracts are exchanged then you are legally obliged to buy it, so from this point the sale is very unlikely to fall through.
To exchange contracts you will need to have the following ready:
- A mortgage offer in writing
- Buildings insurance ready from the day of exchange
- An agreed date for completion
Complete and Move In
Completion is the day that the house becomes yours and you get the keys. It normally happens a week or two after exchange of contracts but the exact date can be negotiated between you and the seller.
Your conveyancer or solicitor will make sure the money for the house is transferred to the seller and once this has happened you can pick up the keys and move in!
Timeline for First-time Buyers
There are many factors that can impact how long it will take for you to buy your first home but this timeline is intended to give you a rough guide. The time given is the amount of time that part of the process usually takes.
5 years: Saving for a deposit. It can take a long time to save up for a 10% deposit on a property so it is worth thinking about this far in advance of when you want to actually start buying.
24 hours to a couple of days: Securing a mortgage agreement in principle.
Six weeks to six months: Searching for a property and having an offer accepted.
Two to four weeks: Applying for and getting approved for a mortgage.
Four to twelve weeks: Getting surveys and conveyancing
Three to four weeks: Once surveys have come back and the mortgage offer is given then exchange of contracts can take place. Home insurance must be in place by this point.
Two weeks: Completion usually takes place around two weeks after exchange of contracts.
Usually the process of buying a home can take between six and twelve weeks but it can take much longer as there are so many variables involved, so be prepared to be patient!
Questions to Consider
Buying a home for the first time can seem very complicated so we have gathered together the answers to some of the most frequently asked questions about the process of buying your first home:
Can you exchange and complete on the same day?
Yes you can exchange and complete on a house in the same day.
However, due to the complexity of trying to get everything organised so that exchange and completion can happen on the same day, most people choose to space them out slightly.
A same day exchange and completion is more likely to occur in a simple situation such as a cash-buyer with no chain.
Delays with contracts being signed or searches being completed could mean that a same day exchange and completion could fail which could mean removals have to be rearranged.
Also if you are applying for a mortgage, many lenders will not allow exchange and completion on the same day and might stipulate that you need at least five days between exchange and completion.
In general it is less stressful and there is more likelihood of success if you have some space between exchange and completion. The average time is around two weeks.
How long does a mortgage offer last?
A mortgage offer is usually valid from between three and six months of the application taking place.
What can hold up the exchange of contracts?
There are a number of factors that can impact how long it takes to exchange contracts, including:
- The sellers being slow to respond
- Enquiries going unanswered
- Searches taking a long time
- Overworked solicitors working on lots of different exchanges at once
- Complex transactions
Your solicitor should be working in your best interests so don’t be afraid to exert a bit of pressure on them to speed the process along if you think they are dragging their feet.
What searches are done when buying a house?
There are three main types of searches that will need to be carried out when buying a house:
- Local authority searches: This will show up any planning issues affecting your property
- Environmental searches: This will highlight issues such as risk of flooding, subsidence or contaminated land
- Water and drainage searches: This will establish who owns and supplies the water, drains and sewers
Depending on where your property is located it might require additional searches but your conveyancer should be able to advise you what is required.
How long do searches take?
Searches can take anything from a few days to several months. Delays can be caused by understaffed local authorities who may not be able to process the searches very quickly.
Here at VA Mortgages we are keen to help guide you through the process of buying your first home so contact one of our advisors today for a no obligation chat.