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The Mortgage Broker team are on hand to support you with your mortgage today. Whether you want to assess your affordability, or get a fast decision in principle to capitalise on a house purchase opportunity, our team of advisers can support you.

Get in touch to quickly discuss your options or of course, read on and find out everything you need. The Mortgage Broker have free tools for you to use in your own time, via our mobile app or online here with our mortgage calculators.

However, if you want to just let us know your circumstances, we can start finding you the best mortgage rate today!

To buy new property is one of the most exciting and nail-biting times in life. There are so many things to consider that it can sometimes feel overwhelming.

Taken step by step and breaking down the entire process, we’ll run through, beginning to end, all of the factors involved in buying a property.

If you’re wondering about all the whys and wherefores, and the steps in buying a property in the UK, read on to find out about:

• Estate purchases
• Conveyancing
• Property viewing
• Mortgages
• Property purchase
• Deposits
• Stamp duty
• And much more!

The Process of Buying a Property

When you’re reviewing mortgage options and the best loans to get for your prospective property, using a mortgage broker helps to simplify the process.

Working with one of our mortgage advisors, we’ll take your financial situation into account, we’ll discuss your individual needs and we’ll scour lenders from all over the country (including specialist lenders whose deals aren’t available on the high street), and come up with a list of highly competitive mortgage products for you to choose from. All you have to do is provide us with some information and we’ll do the rest.

Rather than spend countless hours looking for the right mortgage deal for your dream home, let us do the hard work for you; one less thing to worry about!

Transparency and clarity are things we prize; to that end, we’ve decided to create this handy page describing each part of the property buying process and detailing the costs of buying a property. Whether you’re a first-time buyer or on the hunt for the next rental home in your budding property empire, you’ll find some useful and demystifying information below.

Why not get started by downloading our Home Purchase Guide

 

Estate agents

Where it all begins; once you’ve seen the property you’re interested in, you’ll need to arrange for a viewing with the estate agent that is dealing with that property. Most of the time this is easy to ascertain simply by looking at the “for sale” sign on the property itself.

What are estate agents, and what do they do?

An estate agent is an integral part of the steps in buying a property. They arrange all viewings, will guide you around the home and help to manage negotiations between homeowners. When you make an offer, it will be through the estate agent who then relays your offer and the response from the seller.

They also help with the reverse; when you are selling your home you will need to contact the estate agent who will then market your home to potential buyers. They will arrange for professional photography of your house and use information from the local housing market to ensure that your home is priced competitively. They also vet buyers, ensuring you only get people who are serious in their desire to buy your property.

Difference between a local and national estate agent

During your hunt for a new home, you’ll likely come across many estate agents in the same area, all offering a range of different properties. There are high street chain estate agents that exist around the entire country and local independents that service only a small area, so what’s the difference?

• National chains may have less flexibility, having a set series of processes they must adhere to
• Independents offer a more personal, bespoke service.
• Independents often have better local knowledge
• National agents have access to a much wider pool of resources

No matter which estate agent you go for, they should all have a good working knowledge of the industry and of the local housing market. Before contacting an agent to begin the process of buying a home, conduct research online to read their reviews and see how they conduct business.

Getting a property survey

A survey is a great way to discover any problems with a property before you fully commit to a sale. You will usually have a survey carried out after an offer is accepted. Most of the time a survey tells you that everything with your property is fine, that’s what you want to hear. But also, it flags up any nasty surprises that may lie in wait, giving you the ability to make a more informed decision on whether you want to buy the property or not and avoid unexpected repair costs once you move in.

RICS reports value plain, jargon-free survey reports, giving you a straightforward and concise appraisal of the property.

The type of survey you need depends on the type of property. Considering the age and condition of the house, RICS offer three levels of building survey to suit these different needs.

Cost Provided Item	Unit	Average UK Cost
Level One Survey	Condition Report	£300
Level Two Survey	Condition & Homebuyer Report	£450
Level Three Survey	Building Survey	£550
These costs are ballpark averages for the UK.

 

Title deeds and land registry

When you have bought a new property the change of ownership is registered with the land registry. Changing the title deeds to be in your name validates your ownership and indicates you legally own the property.

Title deeds are documents that show the history of ownership for any given property. Without title deeds, you would have no firm legal ownership over your new home.

The title deeds also show you the boundaries of your property, not just the structures on it. They are extremely useful in dealing with any boundary disputes that arise and allow you to see how much of the surrounding area you own.

Local authority searches

This is a vital part of the conveyancing process. If you’re buying a house with a mortgage (and we hope that you are), the lender will require a local authority search to be carried out. The local council carries out this search and is a way for the lender to be reassured of the property’s value in the context of its local area.

Usually requested by your solicitor after your offer has been accepted, this search includes information on:

These searches take two to six weeks on average and will cost between £50 and £250 depending on the local authority. The length of time is due to human factors and can’t really be helped. It will depend entirely on the staff levels of your local authority and how busy they are; you can keep abreast of any developments during this time by keeping in contact with your solicitor.

Freehold vs leasehold

Put simply, a freehold parcel of land is one that you own, a leasehold is a building that you own but the land it’s on is owned by someone else. When your lease expires, you will have to vacate the property. This can be decades or even centuries but it is something that’s best to check before you commit to buying.

Before buying a new home, make sure that you have freehold ownership. This means that you own the land and any structures standing on it. Most houses that are for sale will be freehold but it is best to check, to make sure.

Property chain explained

As the name suggests, a property chain is where a series of home buyers are connected through the transactions of the homes between them.

If you are a first-time buyer, you will have no chain so moving home will likely be easier than those with a large chain behind them.

No chain properties are those that require no other transactions to complete other than your own.

If you are part of a large property chain, any link that is broken, I.e. if another homeowner were to pull out of a sale, could cause significant delays or cause the chain to collapse altogether. That is a worst-case scenario but it is worth noting that the more people involved, the higher the likelihood that something will go wrong somewhere.

This is mostly in the form of delays, as other homeowners need to wait for surveys to be done, or if there are any complications with the homeowners report.

If you do encounter problems in the chain connected with your property, communication is the key. Keeping in contact with all relevant parties ensures there is no miscommunication and any delays can be prepared for and dealt with.

The most common types of mortgage are:

There are other types that are more useful for buy-to-let landlords and those in financial distress. There is a correct mortgage product for everyone, no matter your circumstances.

The interest rates used to calculate your repayments will be based on those your lender has set or those set by the Bank of England. Naturally, the higher the interest rate, the higher your repayments. Several things can mitigate this, such as having a large deposit and securing a fixed-term mortgage at a lower rate. This way you can ride out any volatility in the market before you have to remortgage.

Loan to Value

The Loan to Value (LTV) of a property will always be expressed as a percentage. What the LTV indicates is the amount of debt used to buy a home against the value of the property itself.

To make it as simple as possible; say your home is worth £100k and you have a £20k deposit so your mortgage is £80k. This means that you have an 80% LTV.

The lower your LTV is, the better you will look as a prospective mortgage holder to the lender. The larger your deposit, the less that will need to be lent to you and the less you will have to repay. You are, essentially, a less risky prospect than those with a lower deposit amount.

Stamp duty

After completion is when you’ll have to pay Stamp Duty. This is a land tax that will be paid through your solicitor.

Stamp duty was first introduced in the 1600s and is a one-off fee payable to the government on the transfer of property from one person to another.

You will need to pay stamp duty if you:

• Buy a freehold property
• Buy a new or existing leasehold
• Buy a property through a shared ownership scheme
• If you take on a mortgage to buy a share in a property, i.e. transferred land or property in exchange for payment

Several factors influence how much you will need to pay.

If you’re a first-time buyer and your property is worth £625,000 or below then you won’t pay any stamp duty.

If you already own a property and are buying an additional property, your stamp duty will be a larger amount.

If you’re not a UK resident, your rate of stamp duty will be different.

The amount of stamp duty you pay will be a percentage of the value of your home.

The rates are:

0% – £0	£250,000 (£625,000 for first time buyers)
5%	£250,000 – £925,000
10%	£925,000 – £1,500,000
12%	£1,500,000 +

Use our stamp duty calculator to quickly see how much stamp duty you will need to pay for your new property.

 

Home Insurance

You have no legal requirement to purchase home insurance, though lenders will usually require you to have buildings insurance to help protect their investment.

Getting home insurance covers you in the event of any unforeseen circumstance. You may think it’s a good idea to forego it since it will save you money, but in the event of a catastrophe, you’ll pay far more in the long run.

What are the different types of insurance and what do they cover?

Building insurance – covers the cost of repairing damage to the structure of the building. Roofs, walls, floors and any permanent fixtures.

Contents insurance – covers the cost of replacing damaged, destroyed or stolen items. Different levels are depending on the value of the contents in your home.

Life insurance – pays a lump sum to your loved ones in the event of your death within the term of the policy. You can also add critical illness cover to make sure you don’t lose your home due to any prolonged period of illness.

Income protection insurance – this provides you with a replacement income in the event that you are unable to work due to illness or injury.

It’s best to get insurance in place before completion day but you can apply for it at any time. It’s crucial to get the right insurance for yourself and your home. In conversation with us, we can help point you in the right direction and advise you on the best course of action.

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Gazumping

This can occur after you’ve put an offer in on a property. The hilariously named act of gazumping is not, in fact, hilarious at all. This is when another party puts in a higher offer on the house you are in the process of buying and that offer is accepted, losing you the home you had put the offer on.

Unfortunately, this can happen any time before you’ve exchanged contracts and puts you back on the search for a home.

Gazumping is more likely to occur if the process of buying the home is taking too long; the seller can get cold feet and start to worry about whether the sale will go through. It also happens if the seller has the opportunity to maximise the profits from the sale of their home.

Although a horrible act and one not actively encouraged, it is legal to gazump. This is because until the exchange of contracts, there is nothing legally binding between you and the seller. The major downside of this is that gazumping can happen when you are very far into the buying process.

There’s not much you can do to protect yourself from gazumping, though getting home buyer protection insurance helps if the sale falls through.

Completion day

You have reached completion day, the final step in the home-buying process!

This is the day when it all happens; ownership is transferred to you, the new owner. You collect the keys from the estate agent and move into your new home.

This is the series of events that usually occur on completion day:

• Your solicitor will check all of the mortgage conditions have been met and request the money from your lender.
• Conveyancing solicitors create completion statements of all payments received.
• Your solicitor will transfer the purchase money to the seller.
• When the seller’s solicitor has received the funds they confirm completion and release the keys from the estate agent.
• You are notified of the completion and can move in.

You can exchange and complete on the same day, though this isn’t strictly necessary. It will depend on the chain and the timeline of moving dates. You may find you have time between the seller moving out and you moving in, or that you have to do it all on the same day.

Completion dates are usually decided far in advance, so the choice is between you and the seller. Doing everything on the same day has the advantage of speeding up the conveyancing process, it can however be incredibly stressful.

There are also some additional costs to buying a second home. Stamp duty is increased on additional homes, as below:

PURCHASE PRICE OF PROPERTY	STAMP DUTY RATE	STAMP DUTY RATE FOR ADDITIONAL PROPERTIES
Up to £250,000	0%	3%
£250,001 to £925,000	5%	8%
£925,001 to £1,500,000	10%	13%
Over £1.5 Million	12%	15%

There is capital gains tax to consider also. Each person has a capital gains allowance of £12,000 per person. If the value of the property increases above your personal allowance you will have to pay up to 18% of the tax increase.

The other increased expense is in second home council tax. You may be able to get reductions if your additional property meets certain criteria. Homes not used as a sole or main residence can have their council tax increased by as much as 100% in some places. You can also avoid this if you use the other residence as a place of business.

Buying a property and renting it out

There are a few options for buying a rental property for your second home. The first is to have tenants live there long term, this is called buy-to-let and is a great way to generate income and invest money.

The second is to let out the home as a holiday let. If your home is going to be sitting empty for the majority of the year but you still want to use it as a getaway yourself, consider opening it up as a getaway for others; another great way to generate income rather than have a vacant property.

If planning to rent out your home, speaking with a mortgage advisor is a good step to take. We can talk you through the options you have through your current lender and see if there are others that will be more fit for the task to your specific needs. Some lenders don’t allow you to rent out your home, meaning you will have to remortgage onto a buy-to-let mortgage to enable you to do so.

Be aware that setting up your home as a holiday let will incur substantial costs to set up. It’s a lot of work and there are many things to consider. You could manage the property yourself or have a holiday cottage firm do it on your behalf, though this will mean taking a cut in your profits.

If you plan to let out your second home a lot then you should also consider a specific holiday let mortgage, details of which we will be able to advise you on.