Guide to Buying Residential Property

Buying a new house is an exciting time but also stressful. Knowing what steps to take and the process involved can help put your mind at ease along with moving the process along as smoothly as it possibly can be.

Choosing the right finance

Mortgages

If you are looking for your forever home, it is important to find the best finance option that works for you.

If applicable, you can find a mortgage via an Independent Financial Advisor (IFA), mortgage broker or direct from lenders. Once you have found a product that suits you, and the lender accepts you, they will offer you a mortgage ‘in principle’. This will tell you how much money they are prepared to offer and the interest rate you will pay.

However, a mortgage is not the only way to buy property, as a cash sale will likely speed up the process. 

Making an offer

After you have chosen the property you want to buy, your next step is to make an offer to the seller. This is generally done through the estate agent or directly to the seller if they are not using one. Buyers do not pay estate agency fees, you will only have to pay them if you are selling a property.

Arranging a solicitor

The first question you are likely to be asked by the estate agent when you put in an offer is the name and contact details of your conveyancing solicitor. Conveyancing is the legal term used for transferring ownership of property from one person to another.

During the process, a solicitor:

• Handles contracts
• Gives legal advice
• Undertakes local council searches
• Deals with the Land Registry
• Transfers the money to pay for the property
• Registers the title
• Pays any Stamp Duty due on your behalf

Solicitors charge either fixed fees, hourly rates or a percentage of the asking price. You should make sure a quote is clear about costs and whether it includes or excludes charges for: searches, bank transfers, Land Registry fees, Stamp Duty (if applicable), additional work if the process is more complex than expected, and other costs, including courier services and postage.

Some conveyancers charge more if the buyer is using a Help to Buy or Lifetime ISA, or buying a shared ownership property. The typical cost of conveyancing is between £500 and £1,500 plus VAT at 20%.

Which survey?

A surveyor will value the property and highlight any problems which could affect its value. The type of valuation you can ask a surveyor to carry out varies in cost; the following are most often used:

Valuation Survey

This survey is carried out by the lender before they approve the mortgage to ensure the property is mortgageable and worth the price you are paying. It is not an in-depth survey and will not identify all the maintenance or repairs that may be required. Typically, the cost of a valuation survey is in the region of £250 and £1,500, depending on the value of the property. Some lenders may not charge you for this type of valuation, depending on the type of mortgage you choose.

Property Survey

Since this is going to be your forever home, it is in your interest to pay for an in-depth survey. If the survey reveals an issue that requires a substantial spend to cover repairs, it can help you renegotiate the price. For example, asking the seller to reduce the asking price by the cost of the repairs.

There are several types of property surveys:

• RICS condition report: this is the least expensive and is most suited to new-build properties and other conventional homes in good condition. No advice or valuation is given with this survey. It costs in the region of £300.
• RICS homebuyer report: this is suitable for conventional properties in reasonable condition and is a much more detailed survey, which looks both inside and outside the property. It also includes a valuation and costs around £400.
• Building or structural survey: this is the most comprehensive survey and is suitable for any residential property. It is good for older properties or ones which might require refurbishment. The typical cost is around £600.

Finalising the mortgage and offer

Once the survey has been completed, depending on the results, you may want to go back and renegotiate your offer. But if the survey does not highlight any issues and all has gone according to plan, you should contact your lender, if this is the finance route you have chosen, and advise them you are ready to proceed.

There may, at this stage, be an arrangement fee to pay to set up the mortgage. Often, this can be added to your mortgage, but if you choose to do this, bear in mind that interest will be charged on it for the duration of the mortgage.

After you receive your mortgage offer, your lender must, by law, give you at least 7 days to consider whether this is the right mortgage for you. You could use this time to compare the offer with other mortgages. If you decide to go ahead, you do not have to wait the 7 days.

Exchanging contracts

Before you sign the contract, you should go through it with your solicitor to ensure the details are correct, ensure you agree with what the sellers have said they will leave in the property, and that all queries have been answered.

After the exchange, you and the seller are legally committed to the sale. Once you have exchanged contracts, you will need to ensure you have buildings insurance in place to cover the property’s structure.

Completion and final steps

Any outstanding money will be transferred to the seller’s solicitors, for which there is a telegraphic transfer fee of between £25 - £50. Your solicitor will register the transfer of ownership with the Land Registry and pay any Stamp Duty. Buyers have 14 days from the date of completion to file their Stamp Duty Land Tax Return and pay any tax due. Your solicitor will arrange to do this on your behalf.