The steps to buying a house, flat or apartment are not at all difficult or complex. The process is fairly simple and straightforward and should not put you off buying.
Once you know how uncomplicated the steps to buying a house or flat are, you will be full of confidence to buy your first property.
This blog deals with the procedures when buying in England or Wales.
Disclosure: Some of the links in this post or on this site are affiliate links and if you go through them to make a purchase I will earn a commission. I only link to products or companies I consider to be of quality.
The steps to buying a house or flat are:
- Work out what you can afford
- Decide where to buy
- Raise your deposit or down payment
- Get pre-approved for a mortgage
- Find the property and agree the price
- Arrange a valuation of the property
- Instruct a solicitor or conveyancer
- Consider your mortgage offer
- Read and approve the Report on Title
- Make insurance arrangements
- Sign the contract and the mortgage documentation
- Pay your deposit to your conveyancer
- Authorise exchange of contracts
- Sign the purchase deed
- Pay all sums due to complete
- Make removal arrangements
- Check that completion has taken place
- Collect the keys and move in
- Check that your conveyancer has registered your ownership
1 Work out what you can afford
The first of the steps to buying a house or flat is to work out the price range of property you will be able to afford. In order to do the sums accurately, contact a mortgage broker or lender to find out the amount of mortgage you can get.
The mortgage you can achieve will typically depend on your earnings. Loans are normally no more than 3 or 4 times the borrower’s annual salary.
Usually a lender will want you to provide at least a 5% deposit if you are buying the property as your home. In that case you would need a mortgage of 95% of the purchase price.
Remember that you will need additional money for valuation and legal fees. You may also need to pay a mortgage broker. You will need to pay stamp duty if that applies to you.
2 Decide where to buy
Once you know the price range you can afford, and the deposit you have or can secure, you will be able to decide the locations where you can afford to buy.
If you cannot buy in your preferred location, it is worthwhile to consider less expensive areas further afield. That could mean re-locating to another town or part of the country.
Where property prices are rising, the longer you delay your purchase the more difficult it will become for you to buy.
“Rentvesting” is possible option if you want to buy but don’t earn enough to buy in your local area. Rentvesting is where you continue to rent but buy an investment (BTL) property in an affordable part of the country.
You can keep the property as an investment or sell it when it goes up in value and can help you to buy in your preferred area.
3 Raise your deposit or down payment
Perhaps the most important of the steps to buying a house or flat is to secure the deposit or down payment. That is because many potential buyers give that as the main reason why they fail to get onto the property ladder.
There are a few lenders that offer “100% mortgages” including Lloyds and Barclays. With these mortgages, the lender will lend you 100% of the price, up to a limit, on the basis that a family member saves the equivalent of a 10% deposit with them.
Therefore, if you wanted to buy a property worth £200,000, a relative would need to save £20,000 with the lender. Of course, other terms and conditions apply.
50 Ways To Put Together A Deposit in 6 Months
4 Get pre-approved for a mortgage
By getting “mortgage pre-approval” you will give the estate agent and seller confidence that you are a serious buyer and will be able to exchange contracts if a sale is agreed with you.
Mortgage pre-approval has several other names including “agreement in principle”, “mortgage in principle”, “decision in principle” and “mortgage promise”.
The main point is that your lender formally confirms that a mortgage of a certain amount will be available to you – typically subject to valuation.
Sometimes an estate agent will ask you for “proof of funds”. A mortgage pre-approval letter can amount to proof of mortgage funds.
5 Find the property and agree the price
Once you have your deposit, mortgage and additional sums you will need for legal and other costs, you will be ready to start looking for a property.
Find out more about the differences between freehold and leasehold titles here.
A freehold title is superior to a leasehold title.
When buying a leasehold title, there are many things you need to watch out for. In particular, you should be cautious about buying a short lease – taken as any lease with less than 90 years to run.
When you agree a price with a seller, that agreement is not legally binding. The seller is therefore free to increase the price at any time before contracts are exchanged. That is known as “gazumping”.
6 Arrange a valuation of the property
Once you have agreed a price with the seller, you should inform your mortgage broker or lender.
They will then arrange for the property to be professionally valued by a valuer. Normally you will be responsible for the valuation fee.
The valuer will usually be concerned with whether the price represents adequate security for the lender.
If you want to have more detailed information about the repair or condition of the property, you should pay for a more comprehensive survey.
RICS surveyors offers 3 levels of survey:
- Condition Report (level 1 – mainly a valuation report)
- Homebuyer Report (level 2 – a more detailed report identifying obvious problems such as wet/dry rot and subsidence )
- Building Survey (level 3 – desirable in the case or properties in a poor state of repair and/or where more detailed information or advice is required
7 Instruct a conveyancer or solicitor
At the same time as contacting your mortgage broker or lender, you should instruct a conveyancer to act for you. A conveyancer, normally a solicitor, will carry out the legal steps needed to transfer the property to you.
When you instruct a conveyancer, ask them to provide you with a full quote of your likely costs and expenses.
That will enable you to know the exact amount you need to complete your purchase. You can get that amount together and avoid the embarrassing position of not being able to pay your conveyancer the full amount they ask for.
8 Consider your mortgage offer
Scrutinise your mortgae offer with great care once you receive it. Are you able to comply with the terms and conditions and any “special condittions”?
Ask yourself if it is the best type of mortgage for you.
If it is an interest only mortgage, which means the loan will remain outstanding at the end of the mortgage term, do you want to put alternative arrangements in place for the loan to be paid off at the term?
Are you aware of all charges and potential penalties? Will you be able to meet the monthly mortgage payments – especially if interest rates were to rise?
9 Read and approve the Report on Title
The main job of your conveyancer is to ensure that you get a “good legal title” with the property you are buying.
our conveyancer does that by investigating the title offered to you and carrying out pre-contract searches and enquiries. Searches are made with the local authority and other agencies. Enquiries are made to the seller via their conveyancer.
Your conveyancer will raise standard or general searches and enquiries.
You should think very carefully about the property you are buying – assessing whether there are any non-standard or specific questions or enquiries you wish to make.
When your conveyancer has completed their investigations, searches and enquiries, they will set out their findings and opinions in a Report on Title. That will then be sent to you for your consideration and approval prior to exchange of contracts.
You should peruse the Report on Title with great care before approving it and authorising your conveyancer to proceed to exchange of contracts.
10 Make insurance arrangements
The usual legal position is that insurance risk for the building will pass from the seller to the buyer when the sale contract becomes binding on “exchange of contracts”.
Accordingly, as a buyer, you should check that building insurance is in place on the day contracts are exchanged.
If you are buying a leasehold title, the freeholder or managing agent will normally deal with building insurance.
You should check with your conveyancer that all insurance matters are in order before you agree to contracts being exchanged.
At the same time as you consider the building insurance arrangements, consider and action your contents insurance requirements.
11 Sign the contract and the mortgage documentation
Once you are fully satisfied with the Report on Title, you will be ready to sign the contract. You will also be ready to sign the mortgage documentation – assuming you are getting a mortgage.
You should not sign these documents unless you are fully satisfied with the property you are buying and the title you will be getting.
12 Pay your deposit to your conveyancer
Your conveyancer will ask you to pay your deposit a few days before the date on which contracts will be exchanged.
All conveyancers have legal duties in relation to money laundering or the proceeds of crime. Therefore, be aware that your conveyancer will ask you questions to be satisfied as to the lawful source of your funds .
On a similar note, your conveyancer will also ask you to prove your identity by provision of your passport, driving licence, bank statements or other documents.
13 Authorise exchange of contracts
Your conveyancer will not usually exchange contracts without your authority or permission to go ahead. Your authority will typically be requested in the Report on Title.
Of course, you should not authorise your conveyancer to exchange contracts unless you are entirely sure that you wish to proceed.
Normally exchange of contracts takes place in a telephone conversation between your conveyancer and the seller’s conveyancer.
Your conveyancer will normally have to pay a 10% deposit on exchange of contracts. However, the two sides can agree a smaller percentage.
Exchange of contracts results in a legally binding agreement, compelling you to complete on the date set out in the contract.
If you are later unable or unwilling to complete the contract, you can be sued for breach of contract.
14 Sign the purchase deed
The purchase deed is the document which transfers the legal title of the property to you. It is usually a Transfer or Conveyance. With new leases, it is a Lease or Underlease.
Usually you will be asked to sign the purchase deed before exchange of contracts, in readiness for completion. However, you can also be asked to sign it after exchange of contracts.
15 Pay all sums due to complete
Usually before exchange of contracts, your conveyancer will send you a “Completion Statement”. This is a financial statement setting out the total amount of money needed from you to complete your purchase. It should include any stamp duty payable by you.
You should ensure that the full amount due is paid over by the date requested.
Your conveyancer may not be able to complete if you do not put them in funds as requested. That would put you in breach of contract and you could be obliged to pay interest and charges as a result.
STAMP DUTY RATES 2019-2020
16 Make removal arrangements
Where you are buying a property to live in yourself – as distinct from renting it out – you will need to make removal arrangements once you know the completion date.
The completion date is agreed in advance and inserted in the contract on the date contracts are exchanged.
17 Check that completion has taken place
On the date fixed for completion, keep in contact with your conveyancer and the estate agent. One or both of them will inform you once “legal completion” has taken place.
That will occur when the seller’s conveyancer has received the balance of purchase price (the price less the deposit paid on exchange of contracts).
18 Collect the keys and move in
Once legal completion has taken place, the estate will be in a position to release the keys to you. The property is legally yours and you are free to move in.
19 Check that your conveyancer has registered your ownership
After legal completion, your conveyancer must register you as the new owner – or “registered proprietor”” of the property. If you are buying with a mortgage, they must also register your lender as the owner of your mortgage – also known as a charge.
Before applying for registration, they must pay any stamp duty payable by you on your purchase.
The stamping and registration process normally takes 2 to 4 weeks. Contact your conveyancer for an update if they don’t confirm registration within that time period.
Once registration has taken place, you should receive a copy of the official register of title showing you as the new owner of the property – and giving details of any mortgage affecting your ownership
Hopefully this blog has assured you that the steps to buying a house or flat are fairly simple and quite easy to understand. Furthermore, legal completion can take place relatively quickly – often within 7 to 9 weeks of the price being agreed.
To ensure that your purchase goes as smoothly as possible:
- Choose an experienced conveyancer
- Ideally, opt for a conveyancer who comes highly recommended by someone you know and trust
- Carry out as much due diligence as you can on the conveyancer – before hiring them.
Are you looking to buy a property for the first time? Are you reassured that the steps to buying a house or flat are “nothing to worry about”? If you still have reservations or concerns, what are they?
Disclosure: Some of the links in this post and on this website are affiliate links and if you go through them to make a purchase I will earn a commission. I only link to products or companies I consider to be of quality.
Rebel Property Coach
About the author
London-based blogger Dalton Barrett has over 30 years experience as a property solicitor, conveyancer, investor and coach. Read about his unconventional worldview of property here
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