Buying a Home: a Step-by-Step Guide
This article is written for Amie (a client of ours) who reminded us that people don't buy homes very often and to those who have never done it at all, it's a scary thing to do.
It's almost become a black art and we know for sure that the difference between taking the right path and the wrong path can cost you thousands.
At Conveyancing Expert, we know a thing or two about buying houses so we are going to go above and beyond our usual excellent legal advice and take you through it step by step.
Buying a home... Should I do it?
Why buy a home?
First, you need to decide if buying a house or home is even right for you. It is often felt that it is the ultimate investment. Why? Because you always have something tangible. A real asset.
Imagine if you buy gold — you know you have something to hold on to — (like Gollum clutching the One Ring). It's the same with your precious home.
Further, over a long period (sometimes a very short period depending on the market trends) the value of the house will rise. The percentage is a little uncertain but it's usually better than you would get if you put money in the bank.
Why NOT to buy a home?
It's not for everyone. Sometimes, having flexibility is more important.
Not everyone is a home-bird. For the more nomadic amongst us (the free-spirits of this world) being tied to one place is not for them.
You may find that you cannot afford to buy in an area you wish to live — so you may prefer to rent.
Simply put, you may not be able to afford to buy a home (it's a double edged sword — if you own a home you will be delighted by rising house prices — if you don't, it's not so good).
If you decide to buy a home — What to do first
- There is no harm in dreaming about what you want to achieve in life but as a cheap desk calendar once reminded me "the first thing to do to make a dream come true is to wake up".
- Start saving. Even in the days of 100% (or more) mortgages, you still need money. We will cover average costs below but there will always be legal fees, removal costs, mortgage fees (valuations) and a new bed to consider.
- Speak to a good Mortgage Adviser. This can be directly with your bank (though please remember they are only going to offer you their products) or ask around and find a good independent Mortgage Adviser.
- Once you have spoken to a Mortgage Adviser, they will look at your income; they will look at your savings and outgoings and they will tell you the maximum amount you can spend on a house.
- Save some more! Long experience has taught us that there is always a curve ball (a broken boiler, a broken door lock, a couple of rotten timbers).
What if you don't have much money yet
- Modern life means that people often have a good income but because of the cost of rent and life in general, saving for a deposit can take forever.
- How about the bank of Mum and Dad? The bank of grandparents?
- Other options and quite popular is moving back in with family whilst a deposit is saved. Sometimes this reminds you why you moved out in the first place and increases your desire to save quicker!
7 Steps to Buying a Home
Step 1: Decide where you want to live
If you already live in an area and need/want to stay there then the choice is easier.
If however you are moving — then you need to research. Log on to the local facebook sites, ask questions, check statistics (e.g. crime, schools and travel to where the work is) and this will let you know if you are on the right track. Look on Rightmove and see what houses are available in certain areas.
Step 2: Choose a specific property
- When you know where you want to live, then you can start researching the properties in that area.
- Speak to the local estate agents and be nice. The agents are the first to know about properties — which are good value, which ones need work etc.
- Don't forget The estate agents are working for the seller so their job is to get the best price for them. That said, they also want to shift the stock so if something has been on the market for a while, the seller may be inclined to take a lower offer.
- The sneaky trick So you see a house for sale at £250,000. It needs a bit of work and you can only afford £235,000…what do you do? You get a friend to go around a few days before, look around the house and then tell the agent it needs a lot of work and that they would only offer £200,000. If they accept — great. Swoop in and buy it. More likely though, they won't — but when you go back a few days later and offer £235,000, it sounds like a great offer..sshhhhsssh.. don't tell anyone this.
- Visit the property as many times as you can. Don't just amble around it visualising how it will look with a cow skin rug and an open fire — think about it properly. Think about: is it on a noisy road, is it close to the school you want, is it close to public transport, does it have parking, is the boiler old or new, are there any extensions or changes; if so let your Conveyancing Solicitor know — so forth and so on. There are plenty of checklists for looking over a house online as well but they nearly always miss one point — speak to the neighbours. By asking the neighbours what it's like to live there, you will find out about the area warts and all.
Step 3: Make an offer on the property
- Making an offer is done through the estate agent.
- Before you make an offer you've saved your money, you've been approved for a mortgage, you've checked the area is where you want to live….you've checked that the house is everything you need it to be…then you ring the agent and make an offer.
So you have seen a house at £380,000. It's been on the market for 3 months. Don't ring the agent and say "Hi I'd like to offer £370,000 for this property".
You know and I know that you will end up paying £375,000 for it.
Funnily enough, if you rang and said, "Can you ask the seller what the lowest price is they would take for it?" the agent will go away and come back with an offer — it may be £365,000 but if they come back and say £375,000 then you still have a bit of wriggle room. Remember this.
Some agents ask for a holding deposit. Refuse. Instead tell them that you will instead put your solicitor in funds to start work and they will confirm this to the sellers solicitors.
Step 4: Get your finances in order
Once you have made the offer; go back to your Mortgage Adviser/Mortgage Lender and give them the details of the property (the full address of the property you have offered on and the amount you intend to buy it for) — get the formal mortgage offer in place.
You are likely going to have to pay a valuation fee and this varies from lender to lender but it can be between £200 and £500
Step 5: Instruct/Appoint a Conveyancer
Conveyancing is the legal process of moving a house from one person's name to another. A Conveyancer is someone with the legal skills who can do this.
They can be a Solicitor or a Licensed Conveyancer. Often, Licensed Conveyancers are also qualified Solicitors who just happen to specialise in Conveyancing.
Conveyancing Expert is a typical example of this and the firm is made up of Solicitors and Licensed Conveyancers.
There has been quite a debate over which is better and simply put, Licensed Conveyancers have a much lower rate of fraud and a higher rate of client satisfaction whereas Solicitors generally wear better suits.
Please note that Licensed Conveyancers actually do have a lower rate of fraud but the writer wears very nice suits so there is no evidence of this claim about Solicitors being better dressed.
The regulatory rules imposed on a Law Firm by the SRA or the CLC are one and the same. They both offer an equal level of protection to the public.
That said, it will come down to personal choice and Solicitors do have the name "Solicitor" which still has some merit in the UK. At Conveyancing Expert, some of the team are still Solicitors (as well as Licensed Conveyancers). So when bragging in the pub about how great your experience has been, you can use the term Solicitor if you want and we won't take offence.
Can you do the conveyancing yourself?
Of course you can. Much in the same way that the writer of this dabbles in heart surgery every now and again. I've had a moderate success playing with a plastic model (not a Barbie doll) and think I could have a good go at it.
Yes, yes, the above is flippant — but from employing conveyancing team members for the last 10 years or so, the writer has found that you can have a good conveyancer after just 3 or 4 years — but a really good conveyancer usually becomes that good after about 15 years of non-stop review of titles and dealing with issues.
At Conveyancing Expert, the most junior person has worked on conveyancing matters for 3 years and is a qualified licensed conveyancer. All work is still supervised (although in other firms, they would have been working on files alone for 2 years). Get the message?
Step 6: Get a survey
Ok, your mortgage company will do a valuation. This is part of the mortgage.
They may however offer to upgrade you to a full survey — it's worth it.
A cheaper option is often to just get the valuation from the lender and then get your own surveyor on the job (get on Google or Facebook to find one).
Some people will tell you "it's fine, I know a builder" or such other nonsense. The truth is, a good survey nearly always pays for itself.
Do you know whether there is wood boring insects? Would you notice a small spring in the kitchen floor which indicates damp? Get it checked now — it will save you money and it's often information/findings that you can take back to the seller and potentially negotiate a lower purchase price.
Step 7: Let your conveyancer get on with it
If you have chosen a great Conveyancer, then you don't need to chase them.
This isn't because I'm trying to keep you off the phone — it's because with a great conveyancer, you won't need to waste your time ringing them.
At Conveyancing Expert we make it easy for you:
- When we receive a contract pack (the details about the property you are buying) from the sellers solicitors, we will let you know.
- When we raise enquiries about the property and the title, we will copy you and the agent in.
- When they answer them, we will let you and the agent know
At Conveyancing Expert, we know that you don't do this everyday, so we do it for you. By doing this and I mean, we actually do this — it means that you quickly come to trust us. With that trust, it makes your home move a lot less stressful.
The full process has been set out in our guide to conveyancing.
How much is a conveyancing solicitor/licensed conveyancer going to cost me?
Ok. Let's look at a £150,000 house where you have a 10% deposit.
The mortgage will give you £135,000.
You will then pay:
|£15,000 for the rest of the house (the deposit)|
|£400 valuation fees for the mortgage|
|£300 for your own survey|
|£200 removal fees|
|£499 legal fees|
|then all stamp stuff etc|
As you can see, the legal fees are actually a small part of the cost of buying a house.
In summary, you need to save some money and get looking for your new home.
Best of luck — we can't wait to hear from you.