For many people, buying a home is their greatest investment. Getting on the property ladder in 2019 may seem like a headache but don’t let that put you off!
By breaking down the stages of buying a house, the process of buying your first home, or even buying another residential property can be made simpler. Our comprehensive guide to buying a property in 2019 is packed with information, tips and expert advice by our leading conveyancing Solicitors.
1. What does the market say?
We advise that you stay up to date with the latest news on the property market. Although, we know that this may not be the most exciting part of the home-buying process and all the scaremongering in the press can put you off.
Here is a list of some things to consider which will help you decide when is the right time to buy a house:
Consider buying in the Winter
Prices are less expensive at the end of the year and data from the UK House Price Index shows that house prices increase when the weather is getting hotter. This means it’s probably best to buy a house in the winter.
Look at the key economic indicators
When unemployment rates are falling, more people are in work and the higher their wages. This may seem confusing but it essentially means that house prices will tend to be higher when a lot of people have jobs. If you decide to purchase your property when the market isn’t doing well and house prices are low, you could actually be saving a lot of money if they go back up again.
Pay attention to the interest rates
The general rule is that it’s best to buy your home when interest rates are low. When the economy is experiencing low inflation, interest rates are generally low meaning you will be paying back less on your mortgage. If you secure a fixed rate mortgage, this can be even better for you.
One of the questions we’re constantly asked is ‘should I buy a house before or after Brexit?’. To answer this question, we need to look at how the referendum has impacted the housing market.
Brexit uncertainty is often blamed for the fall in house prices. However, uncertainty is keeping mortgage rates low. This is actually very appealing to many first-time buyers who are looking to save money. If the value of your property does not decline after the UK leaves the EU, buying a house before Brexit can be cost effective.
2. How to search for your property
Allocate yourself ample time to decide on what property best meets your needs. The internet has made searching for your property incredibly simple. There are many websites that include both photos and 3D virtual tours of homes to help you decide what you’re looking for. Book an appointment with the seller and prepare questions in advance. Some of the questions you can ask during your home viewing can be:
- How long has the property been on the market?
- How many times has this property been sold?
- What is the minimum price the seller will accept?
- Have any major works been conducted?
It’s probably wise to prepare a checklist to make sure that the property you’re buying suits your needs. Our blog post on listed buildings and freehold properties will give you more information on what to do when buying your home.
You can also read our other articles to help you look for your future home:
- The Buy to Let clampdown
- The Dos and Don’ts of Buying a House at an Auction
Go through your finances. The best time to buy a home is when you have a strong credit score, small or no debts and are flush with cash. Here are some scenarios that you may be in:
You have a large student debt
Student debt will not appear on your credit report. However, it’s highly likely that your mortgage lender will ask you about your student loan. This is because they want to see if you have enough disposable income to pay back your loan.
If you have paid off your student loan, then you’re in a stronger position to have your mortgage application approved which is great for you.
You are married and living with your spouse
If you decide to split the responsibility of the mortgage and get a joint mortgage, you could be saving more money. The more you save on your deposit, the better the mortgage deals that you can get.
You just inherited a large sum of money
In general, the more money you have, the more you can save towards your mortgage deposit so that you get the best deal on the market. If you have inherited a large amount of money and don’t need a mortgage, then you can save a lot of money in the long term by not paying interest on your loan.
Going through your finances will also help you decide how much time you need to save up on the deposit for your home. Generally, the deposit for your home can vary between 5% to 20% of the asking price. The more you save, the more access you have to cheaper mortgages.
However, the deposit for your home is not the only thing you need to take into consideration. You also need to look at:
- Removal costs – cost of hiring removal vans or storing your belongings in a storage
- Stamp Duty – tax on any property valued greater than £125,000
- Design – furniture and decoration
- Solicitor’s fees – conveyancing fees
- Survey costs – finds any potential issues with the home you are buying
You can also read our blog to help you analyse the costs involved in your purchase to ensure the most lucrative and comfortable transaction.
Now you can arrange a meeting with the estate agent so that you can see the house in person.
4. What to do at a home viewing
Home viewings are important because you need to make sure that the property is right for you. Here are some things to keep in mind when viewing your potential home.
- Always downplay the amount you are willing to spend
- Don’t show the estate agent how keen you are
- Do try visit the property again, at different times throughout the day
During your home viewing, you can also agree with the estate agent on any fixtures on the property.
5. Placing an offer
At this stage, you would have found the property you want to buy. Now you must place an offer. There are a number of factors that will ensure you offer is accepted:
- If the house has been on the market for a long time
- If the house has been reduced in price multiple times
- If the owner is quick to sell
- If you are the only potential buyer of the property
Remember to put your offer in writing to reduce the chances of an argument later. Whatever you decide you want to offer, estate agents are required by law to pass it on to the seller.
Next, you move on to the dreaded mortgage application.
6. Mortgage Application
There is an eerie meaning behind the word mortgage. The term combines two French words to literally mean ‘death pledge’. Despite this, there are many benefits of getting a mortgage to buy your first property.
To put it simply, a mortgage is a loan. They come in two forms: fixed rate and adjustable rate meaning the interest rate changes. Many people do not have the means of buying a home upfront with their current finance and turn to loaning money from a bank or financial institution to help with their purchase- these are known as mortgage lenders. You may have come across the term mortgage broker which essentially refers to a person or company that helps you find the best mortgage deals available.
Your mortgage lender will ask you for specific details which can include:
- Where do you work?
- How much do you make?
- Do you have any recurring debts?
Your credit score will play a large factor when applying for a mortgage. A credit score is essentially a 3-digit number that measures how good you are with managing your payments efficiently. The higher your credit score, the better it is. Although many banks differ on what a good credit score is, any credit score below 600 is unlikely to better your chances of being offered a good deal by your mortgage lender.
Some people take out bridging loans to buy their home. They are mostly used by home buyers who already own a home and want to quickly buy a new home before selling their existing.
Technology is changing how people apply for mortgages. You can find out how much you could borrow in seconds using mortgage calculators. There are also many online mortgage brokers who don’t charge any fees. Mortgages are constantly changing, stay up to date by reading our blog.
At this stage of the application, a Solicitor is not needed. You’ll only be dealing with your mortgage lender if you’re finding the mortgage for yourself. If you’re opting for using a mortgage broker to find the best mortgage deal, they will be important during this stage.
7. Find your solicitor
Conveyancing is the process of moving legal ownership from one party to another. Many people use a Solicitor as the matter can get quite complicated. A Solicitor will:
- Give legal advice
- Deal with the Land Registry
- Submit a range of searches e.g Local authority, water, environmental
- Exchange contracts
As much of conveyancing is carried out remotely, don’t feel like you need to choose a local Solicitor.
8. Paying Stamp Duty
Stamp duty is the tax you pay to the government when you’re buying a home. The seller does not pay stamp duty. The amount you pay depends on how much your property is worth.
Stamp Duty rates in England and Northern Ireland:
|Price of Property||Stamp Duty Rate|
For many first-time buyers looking to save money, they can claim first-time buyer relief.
9. Your Big Move
It takes about 6 months to buy a house, including looking for the property, finding a Solicitor and getting the keys.
Once this is all complete, all you need to concern yourself with is the removal process.
After working so hard, your new property awaits you.