Whether buying your first home, moving or investing in a holiday home, the process can be particularly stressful.
With so many elements involved, you are reliant on all of the pieces of the jigsaw to coming together at the right time. Failure to understand or control these elements can mean that you could miss out on your dream home.
I have put together a step-by-step guide to help you navigate through the process from initial enquiry through to getting the keys to your new home, including expected timeframes for each step and some useful hints and tips.
Every property transaction is different so it is important that your professional advisers help you understand what is involved and why.
Step 1. Finding your ideal home and making an offer
This is the most important part of the process. The first piece of advice I give to every client I meet is; do not rush this step. This process takes as long as it takes and the sole aim must be finding your dream home. It may not be perfect, but must meet the majority of your requirements at the outset.
Think 3-5 years ahead. If you are a couple planning on starting a family, think of the location, living space, bedrooms. If you need to travel, think of the commuter links etc. The list goes on…….
Properties are mainly marketed by estate agents, both on the high street and now more commonly online. It is important that you work with your professional adviser before deciding what value offer to make. You would then contact the estate agent and make your offer. The estate agent will discuss your offer with the seller and decide whether to accept or decline your offer.
The estate agent may ask for a Decision in Principle prior to accepting your bid or allowing you to view the property. The decision in principle is a document that will confirm your ability to borrow the money (in conjunction with your deposit) to allow you to buy the property. It is important to remember that the estate agent is acting for the seller, and not you, the buyer.
The house buying process in England, Wales and Northern Ireland does differ to the process in Scotland. In Scotland you must instruct a solicitor who will help you prepare a bid for the property. As you can become legally committed to buying the property when your bid is accepted, you will need to ensure that you have a Decision in Principle and are ready to proceed with a mortgage application.
Step 2. The mortgage application process
Congratulations, your offer has now been accepted! Now you can formally apply for your mortgage. Mortgage meetings, information gathering and submission should take around 24/48 hours depending on how organised you are!
Most straightforward applications are agreed within 3/5 working days of submission to the lender, although this can take longer depending on the complexity of your financial position. This process involves the lender carrying out detailed checks of your finances and credit profile. On acceptance, and the lender will conduct its own mortgage valuation (see point 4).
Step 3. Conveyancing – the legal stuff!
You will need to appoint a specialised property solicitor or licensed conveyancer to complete all of the legal aspects of the property purchase.
If this is a fairly straightforward transaction, then the conveyancing process can take between 4-6 weeks. Your solicitor or licensed conveyancer will conduct searches with the local council and other authorities to check whether there are any concerns that might affect the property’s value.
This can take longer as your solicitor/conveyancer is reliant on receiving replies to the searches and enquiries in a timely manner.
The process can also be delayed if you are involved in a “chain”. This is the term commonly used when there are a number of buyers/sellers involved. You buy a house, your seller buys another, their seller buys a house and so on. In this instance, the completion of your house may have to coincide with everyone else in the chain which may not be ideal and can lead to delays.
Step 4. Property Survey – 2 to 3 weeks
The valuation alluded to earlier (Step 2) is different to a property survey. Most lenders offer a free valuation at this point however a bank valuation is for the benefit of……the bank. This is to determine the value and property and that it would class as suitable security for the bank.
I would recommend that you have your own survey caried out to highlight any potential problems. I would seek professional guidance prior to agreeing to a survey as for example it is unlikely that you will need one for a new build property.
The surveyor can arrange access to the property through the estate agent. On completion of the visit, your surveyor will normally produce a report within 5 – 10 working days.
There are several types of surveys offering different levels of property inspection:
- RICS Condition Report – the most basic type of survey
- RICS Home Buyer Report – a more detailed inspection of the inside and outside of the property
- RICS Building Survey – the most comprehensive type of survey
In Scotland, the onus is on the seller to provide a Home Report. This report contains an energy performance certificate (EPC), a survey and a property questionnaire. Once this has been overviewed by your solicitor, you can decide whether to make a bid.
If your bid is accepted, the contract will be drawn up. Your solicitor/conveyancer will then exchange letters, known as ‘conclusion of missives’ with the seller’s solicitor, the Scottish equivalent to Exchange of Contracts. Once this process is completed, the deal is legally binding. This is where the law/process differs. In England, Wales and Northern Ireland, this isn’t the case until contracts are exchanged.
Step 5. Exchange of Contracts and Completion
On acceptance of your mortgage, the lender will issue you with a formal offer of loan. Once you have your mortgage offer and your solicitor/conveyancer is satisfied with the results of searches, their enquiries of the seller and the legal title to the property, you will be ready to exchange contracts.
Your solicitor will produce a “report on title” which will include a summary of your mortgage offer and the searches detailed about with any concerns they may have. If all parties are happy, you can then instruct your solicitor/conveyancer to exchange contracts with the seller’s conveyancer, and at this point, you will be required to lodge a pre-agreed deposit (usually 10 per cent) with your solicitor.
At this point the agreement is now legally binding, and you will be required to insure the property.
As part of exchanging contracts, a completion date will be agreed. This will be a date and time that is agreeable with all parties and is usually within 2 – 4 weeks. In some cases, you can exchange and complete on the same day.
Today is the day you get the keys!
Your independent mortgage adviser can be invaluable throughout this process. An independent mortgage adviser can fully assess your requirements/needs, complete all of the necessary research and provide a recommendation, with full justification taking into account every available lender in the market.
This article was written by Ben Horsfield, Head of Mortgage Services, Suttons Independent Financial Advisers Ltd