Buying A House: A Step-By-Step Guide

Step 1: Are you financially ready to buy a house?

Buying a house is not for everyone because it's an expensive and long-term commitment. There are some important things you need to keep in mind. 

First, you need to make sure you have a stable and reliable income. In addition, you must have a good credit score to show how healthy your finances are. 

IMPORTANT NOTE: Remember that external circumstances such as market conditions will influence house prices. Sometimes, it's better to wait for the right time to get a better deal. 

Step 2: How much can you afford?

The amount of money you will be able to borrow is according to your income.

If you have a higher income, you may be able to borrow more money. As a very general rule of thumb, you may be able to borrow up to four times your annual income before taxes. 

This changes from lender to lender, and depends on your personal circumstances. For example, if you make £25,000 per year, you may be able to borrow around £100,000, for example. 

IMPORTANT NOTE: You could be able to borrow more if you apply for a joint mortgage with another person or more people, then all the incomes are taken into account. 

Step 3: Save, save, save 

Buying a house includes more than the mortgage deposit. You need to keep in mind other costs, such as application/arrangement fee, valuation fee, broker fee if you are using a mortgage broker, estate agent fee, surveyor fee if you are going to do a property survey, and conveyance costs. You also need to keep in mind that if you are not buying a new property, you are very likely to have to do some renovations, which should be included in your budget.  In summary, when you buy a house, the final price you will be buying is always higher than the one in “the price tag”. 

Step 4: Apply for a mortgage in principle 

Before getting a proper mortgage, you need to get a mortgage in principle. This piece of paper (or digital document) will show that a lender is willing to lend you money and how much they are likely to lend. This is not a guarantee and the actual terms may change.

Then when you start house hunting and contacting estate agents, you can tell them you have a mortgage in principle and they are more likely to take you seriously as a buyer.

At this stage, you may want to consider to talk to a mortgage broker. This professional may help you with your application and increase your chances of getting a mortgage. They will also tell you what the best mortgage type for you and your case is. Please note that whilst mortgage brokers do tend to have access to exclusive mortgage deals, they may not have access to every deal. You can still do your own research alongside.

IMPORTANT NOTE: Latest Deals has a full guide about how to get a mortgage. Check it here. You can also find 25 ways to improve your chances of getting a mortgage here. 

Step 5: Start house hunting

First, it's important to decide if you want to buy a house or flat, then you need to decide if you want a new built or second-hand property. There are pros and cons to both. The final decision is down to a personal choice. You also need to decide which area you want to live in.

If you know the area you want to live in because you have lived there before, perfect, but if you don't, it's better to visit the area on different days of the week and at different times of the day to make sure you are getting the whole picture of what it's like to live there. The more you research about the area, the easier it will be to make a decision. 

You also need to consider the properties' conditions and the repairs needed, access to public transport, access to schools, and other services that you might need, such as supermarkets, retail shops, banks, post offices, GPs and hospitals. 

Other points to think about when you are house hunting

Number of bedrooms

Numbers of bathrooms

Energy performance

Amount of living space including storage

Access to internet

Car parking/garage

Garden or external area

Scope for extending

Drawbacks (which can make it harder to resell)

IMPORTANT NOTE: Make sure you visit more than one property before making a decision. There is no rush, and the house hunting process should be as long as necessary to get you what you want. You might not find the perfect house of your dreams, but if you are dedicated to your search, you might find one right for you and your needs.  

Step 6: Register with estate agents in the area of your choice 

Once you have decided which area you want to live in, you need to register with estate agents in the area. Estate agents will help you find the right property for you. It’s free to register, and you can leave information about you and the type of property you are interested in. 

Some of the questions to ask your estate agent when you are visiting a property

How long has the property been on the market?

Is the property part of a property chain? (the longer the chain, the longer and more expensive the process of buying is.)

How long have the owners lived there?

Is the property leasehold or freehold? To learn more about this read the First Time Buyer Mortgage Guide.

IMPORTANT NOTE: To find estate agents, you can use Rightmove and Zoopla. While doing your house search online, you will see different estate agents, and you will need to reach out to them to schedule the viewing. Sometimes, estate agents send listings that aren't online first to their registered customers, so this is a good way to find properties that have been recently added to the market. 

If you have a mortgage in principle, tell them, as it will encourage them to take you more seriously as a buyer. Some estate agents do not book viewing appointments unless you have it, have a property to sell, or are buying in cash.

Step 7: Make an offer 

When you find a property you are interested in buying, you will need to make an offer. It's important to make a reasonable offer, considering the market conditions and how much the owner is asking for. If you offer something much lower than the asking price, your offer might be rejected. Here you need to use your power of negotiation.

IMPORTANT NOTE: Often people offer around 5% to 10% below the asking price. There may be several rounds of negotiation. Even if your offer is accepted, nothing is guaranteed. The homeowner may still pull out, and so can you.

TOM’s TIP FOR NEGOTIATING THE RIGHT PRICE: Look at other properties nearby online and how much they sold for, or are on sale for. Look at the floor plans and calculate their internal floor size. For example, 1,000 square feet (sq ft). Work out the cost per square foot. For example, if a house is £200,000 and is 1,000 square feet, it is £200 per square foot. Compare that to your house. For example, if your house is also 1,000 square feet but costs £300,000, you are paying £300 per square foot. Do this for a few houses nearby and calculate the average. You can then see whether your house is above market value, or below, and negotiate accordingly.

Step 8: Apply for a mortgage 

Now it's the time to officially apply for a mortgage. Once your offer is accepted, you need to apply for a mortgage. First, you need to understand what the best type of mortgage is for you. If you work with a mortgage broker, this step will be much easier, and you will have extra support.

IMPORTANT NOTE: Latest Deals has a full guide about how to get a mortgage. Check it here. You can also find 25 ways to improve your chances of getting a mortgage here. 

Step 9: Property Survey 

The property survey is optional. It gives you a whole picture of all the property's issues, and you will know how much it will cost to get them fixed. This can even help you to negotiate a better price. 

There are different types of property surveys. Some are more or less expensive, and it's up to you to choose which one you want to get and can afford. It's recommended that you go along with the person surveying the property, to check everything is being noted. 

After you have the final report in your hands, you can also get quotes about potential work you might need to get done to fix the problems. This will give you a clear idea of what to expect after moving in. 

Property surveys can be expensive, but this is an investment to avoid future headaches and even more problems. 

IMPORTANT NOTE: it's important to not confuse the property valuation with property survey; they are two different things. Your mortgage lender does the first one. The second is optional and done by you. 

Step 10: Get home insurance 

Before the exchange of contracts, you will probably need to make sure you have home insurance. This is usually a mortgage lender requirement. Home insurance will protect your property against different issues. 

Step 11: Contract exchanges 

Your conveyancer and the seller's conveyancer will be responsible for the contract exchanges. You will need to work with them to get it done. Sometimes, conveyancers are slow and you may need to chase them to get it done. After the contract exchanges, the property purchase is legally binding. After that, your mortgage provider sends the money to your conveyancer, who puts it in a special escrow account. Then, when that is confirmed, you move on to completion day.

IMPORTANT NOTE: To ensure everything is correct with the contract exchanges, learn more about the conveyancing services here. 

Step 12: Completion day 

Finally, after the contract exchange, it's time to celebrate and get ready to move to your new property! On the completion day, the payment will be transferred to the seller by your conveyancer and you will be able to collect the keys from the estate agent. 

Step 13: After the completion day: Stamp duty and Land registry

After the completion day, the conveyancer will send you their bill, including stamp duty and land registry costs. After that, all is done, and the process of buying a house is complete.

Learn more about stamp duty here.