Making the decision to purchase a residential property is a big step. It can launch the next chapter of your life, or mean that you and your family can finally upgrade to a bigger space!
That being said, whether it’s your first time buying a property, or third, it can be a bit of a complicated process, and it’s always a good idea to have the right information at your fingertips.
Understanding each stage of the process can help potential buyers to be informed and move things along as quickly as possible.
It may seem like a long and winding path to the front door right now, but read on and soon you’ll know all the important steps involved in buying a residential property.
This article will explain:
Although it can be easy to jump into a buying decision after falling in love with a property, it’s important to evaluate whether buying a residential property is the right decision. There are a whole host of factors that will play into this.
Of course, the most important factor to consider, is whether purchasing is a financially viable and sensible option. If a potential buyer has achieved financial stability and obtained a secure job, with a low debt-to-income ratio, then taking the plunge to buy a house might be the right decision.
Additionally, if a potential buyer is tired of essentially setting fire to money each month through renting, and instead wants to build equity, buying a house is a great way to achieve this.
Equally, if a potential buyer is prone to changing location frequently, and isn’t quite ready to settle down, renting might be a more favourable option.
As outlined above, it’s essential that a potential buyer is fully aware of their financial situation and what they can afford. Although a buyer may qualify for a mortgage, that’s not the only cost involved in purchasing a house, and savings will have to cover a number of different things.
Buyers will also have to arrange payment of a mortgage arrangement fee to their lender, as well as a valuation fee to ensure the property is adequate security for the loan.
It may feel like buying a house for the first time is an impossible task. After all, house prices are now at an all time high! That being said, there is some good news. In the UK, there are a few government schemes that exist to help out first-time buyers.
The Help to Buy Equity Loan, lends first-time buyers up to 20% of the cost of a newly built home. This increases to 40% if the first-time buyer resides in London. In order for a buyer to be eligible the home must be worth up to £600,000. In addition to this, those participating in the scheme must be able to afford both the monthly fee, interest and must also not own any other property, or sublet after the house purchase.
Another scheme is the Shared Ownership scheme, which allows people to buy a percentage of a home (between 25% and 75%), while renting the rest of it. To qualify, combined income must be less than £80,000, and those participating in the scheme must have no mortgage or rent arrears and a 5-10% deposit for their share of the property.
Once finances have been reviewed and a buyer has found a location that they have fallen head over heels with, it’s time to register with an estate agent.
It’s key that a buyer chooses the right estate agent, after all, they’ll be coming along on the house purchasing journey too!
As a result, strong market knowledge, excellent communication skills and five star reviews are a good start. And, of course, it’s important to find an estate agent that you gel with because you’ll be spending a lot of time together.
It’s important to properly investigate the property and assess whether it is in fact the perfect home.
It doesn’t matter if the inside of a property is a winner, if it’s right next to a dump, or located out in the middle of nowhere with no public transport links, it may not be so perfect.
Equally, it’s also vital to check out the structural integrity of a property. While a house may appear to have everything in order, taking a closer look may reveal some cracks!
It’s also a good idea to view the property more than once. While the property may seem serene and calm during the day, returning in the evening may reveal screaming neighbours and loud, thumping music!
When making an offer, there are a number of factors to consider. One must calculate how much they can afford to spend on the property. For this step, hiring a mortgage broker is useful.
Potential buyers should also look at what is happening in the market. The Land Registry website can be used for this kind of research.
Utilising your estate agent will also be key here. Don’t be afraid to ask questions, they will give insight and understanding into the property. Good questions to ask include, why the seller has chosen to sell, what the competition is like, and what is the minimum offer that will be accepted.
Another key part of the buying process involves employing a surveyor and property solicitor. The former will take care of surveying the property for any issues, and the latter will handle the legal work.
Typically, a full house building survey will cost around £700, however it can also cost as little as £350. Usually a surveyor will be a member of the Royal Institute of Chartered Surveyors (RICS), and there are three main types of surveys available. This includes:
Once a survey has been conducted on the house, a buyer may want to propose new terms and negotiate the price of the purchase. Following this, a solicitor will take a look at the title deeds, and draw up a legal agreement, and disposition.
That being said, even if everything is agreed upon, accepting the offer is not actually legally binding until contracts have been exchanged.
With the offer accepted, and the relevant documents exchanged, the contracts can be exchanged too, making everything official.
At this stage, the buyer will be responsible for paying an exchange deposit, which is typically 10% of the property price.
Once all monies have been exchanged then things will finally be set in stone!
While it can be a stressful time navigating your way to the perfect home, having a good understanding of the process can make everything a lot simpler.
So, if you felt intimidated by the buying process before reading this article, you should now be equipped with the knowledge you need to proceed with ease.
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