In a recent video, I decided to go over the steps to buying a property in the UK. I often get asked about this, so I thought it would be a good idea to summarise the main points in a blog post. Hopefully, this will help people that are just getting into the property investment game or even simply buying their first home to live in.
You need to know whether you are going to be buying the property residential or buy-to-let. This is the first thing a mortgage broker is going to ask you. Residential means that you are going to be living in the property, buy-to-let means you are going to be renting it out. You will also need to know how you will be financing the property: cash or mortgage.
2. Get a solicitor
People often ask, when should I get a solicitor? Should I wait to find a property? No. You should find a solicitor immediately. You will need a conveyancing solicitor, i.e. one that deals with property transactions. You can get a solicitor through recommendations or by simply searching for one online. You can always change solicitor at a later date, if necessary. At this point, you will just be contacting them asking if you can put them down as your solicitor, as you are thinking about buying a house. You should not need to pay them anything at this stage.
3. Get a mortgage broker
Don’t go to your bank and ask them for a mortgage. They can only offer you the mortgage products that their particular bank offers. You are unlikely to get the best deal and you may even be declined. You need to speak to an independent mortgage broker. They can search all the products available and find you the best fit. You should not be charged for this initial consultation.
If you are buying somewhere to live in yourself as a first time buyer, you can borrow a maximum of 95% of the purchase price. If it is buy-to-let you can typically borrow 75% of the purchase price of the property. The rest you will need to come up with yourself. That is the deposit. This can be a gift from a family member, but it can’t be a loan from a bank (as the lender wants you to have ‘skin in the game’).
5. Find a house
Now you need to find a house. Don’t do this until you have done the above steps. That way you can answer the estate agent’s questions about your solicitor, broker and deposit. You can find properties on portals such as RightMove or contact estate agents directly.
6. The viewing
Generally speaking, you won’t be able to put an offer on a house without first viewing it. There are ways around it if this isn’t possible, for example paying someone to view the property for you or using a deal sourcer.
7. Putting an offer forward on the house
Putting an offer on a house is very simple. Just contact the estate agent with your offer and they will let the seller know and get back to you. Never offer the full asking price; you want to get a discount.
8. Getting the memorandum of sale
This is a one page document that says the sale is going ahead. To get it you will need to provide: proof of identity; your address; your solicitor’s details; your mortgage broker’s details; a Decision In Principle (DIP) from your broker, which is a document from the lender saying that in principle they will be willing to lend for this property; and proof of funds for the deposit.
9. The sales progression
The sales progression typically takes about 3 months. This is because the solicitor needs to do searches on the property; these are checks on everything from drainage to who owns what on the property. When the ball is in your court (e.g. your solicitor needs you to do something) do it as fast as possible; when the ball is in their court, be patient.
10. Get an independent building survey on your property
This isn’t a legal requirement but I would highly, highly recommend you do this. This means that the property will be checked that it is in fit condition. If something goes terribly wrong at a later stage and it isn’t brought up in the survey when it should have been, the surveyor is liable. If you don’t get a survey, you’re on your own.
11. Exchange and completion
Congratulations. You are now on the final steps. You exchange contracts first which means that both sides sign the contracts. Completion is when you pay and your solicitor registers the property in your name.
If you would like to get into the nitty-gritty of buying a property and getting a good deal, why not come to my next crash course? You can book a free ticket here.