Understanding The Homebuying Process: A Step-by-Step Guide

Before you begin your property search, it is important to determine how much you can afford. Key considerations include:

• Deposit: Most buyers require a deposit of 5-20% of the property’s value. A larger deposit typically results in a better mortgage rate.

• Mortgage Affordability: If you are not purchasing with cash, you will need a mortgage. Consult a mortgage broker or lender to assess how much you can borrow based on your income, outgoings, and credit history.

• Additional Costs: In addition to the deposit, you need to budget for other expenses such as stamp duty, legal fees, surveys, and moving costs.

A Mortgage in Principle (MIP), also known as an Agreement in Principle (AIP), is a document from a lender confirming how much you can borrow. While not a formal mortgage offer, it demonstrates your financial credibility to estate agents and sellers, making you a more attractive buyer. Obtaining a MIP is a smart first step before you begin your house search.

Once your finances are in order and you have an MIP, you can begin the process of finding your new home:

• Define Your Priorities: Consider factors such as location, property size, type, transport links, and neighbourhood. It is helpful to make a list of 'must-haves' and 'nice to haves' to help you refine the search.  
• Property Viewings: Use property websites like Rightmove, Zoopla and Purplebricks along with local estate agents to find properties within your budget and arrange viewings, either in person or virtually.
• Make an Offer: Once you find a suitable property, you will make an offer through the estate agent. Negotiations may be required before the seller accepts your offer.

After your offer is accepted, you will instruct a solicitor or conveyancer to handle the legal aspects of the purchase and to manage the transfer of ownership.    They will:

• Conduct property searches (local authority searches, land registry searches, environmental searches etc.) to check for potential issues of the property.

• Review contracts and raise necessary enquiries with the seller’s solicitor.

• Handle the exchange of contracts and the transfer of funds.

• Formal Mortgage Offer: Inform your lender or mortgage broker of the accepted offer to initiate the formal mortgage approval process.
• Property Surveys: Arrange for a survey to identify potential structural or maintenance issues. Common survey types include:
  • Homebuyers Report: A standard survey highlighting significant defects, such as structural problems.
  • Building Survey: A comprehensive assessment that is ideal for older or unique properties with complex issues.
  • Valuation Survey: Typically required by mortgage lenders to confirm the property’s value. 

Once all assessments and checks are completed and both parties agree on the terms, the transaction becomes legally binding with an exchange of contracts and an agreed date for completion. Key steps include:

• Paying the Deposit: usually 10% of the purchase price.  If either party withdraws after the exchange of contracts, they may face financial penalties. 
• Ensuring Funds are Ready: Your solicitor draws down your mortgage funds (if applicable) and requests the remaining balance of your financial contributions to ensure everything is ready for the agreed completion date.
• Booking Removals in Advance: Before exchanging contracts, it is advisable to arrange or ensure you can obtain removals for the moving day. 

On completion day, the property officially becomes yours. The final steps include:

• Your solicitor transfers the remaining funds to the seller’s solicitor.
• You receive the keys to your new home.
• You will need to arrange to transfer the utility accounts to your name.
• Your solicitor submits the Stamp Duty Land Tax return to HMRC within 14 days from the agreed completion date.
• Your solicitor registers the property in your name at the Land Registry after receiving the completion documents from the seller’s solicitor.