Although many dream of that moment, the decision to buy a house is complex. It’s the most significant purchase you’ll ever make, so try to approach this step studiously and pick the right moment to buy a property.
There are many stages of buying a property you need to go through to choose the best deal for your money. We give you this handy guide to help you make wise decisions during the entire process, from home financing to final moving-in.
What Is the Process When Buying a Property?
Buying a property starts long before you find the property you want to buy. You have to prepare for this process to go through all the phases smoothly and finish them as soon as possible.
There are several general stages, with some slight differences depending on whether you’re a first-time buyer and what you plan to do with that property.
- Look at the Real Estate Market: The first step before buying a property is to obtain as much helpful information as possible, which is possible with detailed real estate market research. Determine which criteria the desired real estate should meet to be considered at all. Focus on properties in a specific suburb and the surrounding area and research offers and prices so that you can plan your budget and next steps.
- Get Mortgage Arrangement in Principle (AIP): After figuring out property costs and whether you can afford them, it’s a good idea to get the AIP. It can help you figure out how much money you can borrow, so you can focus on searching for real estate within your budget. That will also speed up the later procedure of mortgage approval.
- Save for Mortgage: Once you know how much mortgage you can get, you can estimate how much money you need for a deposit. It should be at least 5% of the mortgage, but the more you have, the better the lending terms of the mortgage.
- Find a Property: By determining how much money you can give for the property, you can narrow your search to properties you can afford. You can hire a local real estate agent to help you with your search, as they know the local market and can find you the best deal for your money. They can also arrange a property tour, so you can see your prospective home in person.
- Make an Offer: If you think you’ve found the house of your dreams, you have to act fast and make an offer. There’s a chance you’ll compete with other buyers, especially if you have an eye on a property with many prospective buyers. Discuss with your agent how much you should offer and let them arrange a deal with the seller.
- Hire a Conveyancer: When a seller accepts your offer, you should hire a conveyancer to do relevant searches on the property. These should confirm everything is okay on the legal side so you can proceed with the mortgage.
- Inspect Property: The valuation surveyour is necessary to determine property value and is usually requested by a lender. But you can also hire them to create a homebuyer survey to check the home’s condition. This survey can detect potential issues that can help you renegotiate the property’s price or reconsider your buying decision.
- Apply for a Mortgage Formally: This step should take place in parallel with the previous two, right after you’ve found the desired property and made an offer. If accepted, you have to prepare all the papers to avoid unnecessary delays. That way, you have time to act in case of problems like mortgage rejection or gazumping. But if everything goes well, you should finalise the mortgage after the property survey.
- Exchange Contracts: Until this stage, you could change your mind and give up on buying a property. But if you’ve decided to proceed, you should get a contract and give it to your solicitor for a check. If all details are correct, including a completion date, you sign it and pay a non-refundable deposit. As soon as you commit to the sale, you have to arrange buildings insurance.
- Arrange Your Move: Depending on how many belongings you have and how far you go, you can organise your moving alone or hire a moving company. In the latter case, you should research different movers, check their reputation and track record, ask about the cost estimate, and check their availability, so you can hire a company to help you move as soon as you finish the purchase.
- Complete the Purchase and Move In: About two weeks after the contract exchange, you should be able to finish the property purchase. In the meantime, your conveyancer should’ve applied to the Land Registry to transfer the deeds on your behalf. On the completion day, you pay the rest of the money to the seller and collect the keys to your new home.
When it comes to buying property in the UK, the laws are flexible, but buyers have to meet certain requirements. They undergo ID checks, maybe a few times during the property buying process. Their lender, conveyancer, and even real estate agent can ask for:
- Proof of Identity: You must have a valid ID document with a photo (a current passport, driving licence, or EEA member state identity card).
- Proof of Address: Any utility bill (except mobile phone ones), bank report, or credit card statement can be your proof of residency. If you’re a foreign national, you must live and work in the UK for at least two years to be able to buy a property.
- Proof of Income: You also have to prove where your funds come from. The lender may ask for your recent payslips, P60, P45, or Inland Revenue coding notice, or a tax return if you’re self-employed.
You can buy your property using one of the following ways:
- By Private Treaty: You find a property on the open market as the seller lists it for sale at the advertised price. Then you can get in touch, make an offer, and proceed with the purchase if the seller accepts it.
- Off-Plan Purchase: You buy a property before it’s even built, allowing you to customise it to your liking. The seller provides projects, brochures, and CGI plans for your future home.
- At Auctions: This can be a good way to get an excellent property for a bargain, but it differs a bit from traditional property buying. It’s good to know the pros and cons of this method before you opt for it.
Lenders in the UK have a versatile mortgage offer so that everyone can find a suitable financial deal depending on their needs and financial capability. Here’s the list of common arrangements property buyers opt for:
- Fixed-Rate Mortgage: Your interest rate is locked within the agreed introductory period (from two to five years), so the instalments are predictable. It’s recommended for first-time buyers who want to plan their budget during the first years of property ownership.
- Variable-Rate Mortgage: The interest rate shifts following the market trends and base interest rate, meaning your instalments can be higher or lower. It’s a good option if you plan to refinance your mortgage or sell your house shortly.
- Tracker Mortgage: With these deals, only a set portion of the interest rate changes, following the Bank of England’s base rate. It happens during the first few years of repayment; after that, the lender can switch you to a regular variable-rate mortgage.
- Offset Mortgage: This can be a good choice if you have substantial savings, which you can use to offset your mortgage, and you’ll only pay the interest on the amount left. It can help you cut interest costs or shorten your mortgage tenure.
- Buy-To-Let Mortgage: You can opt for this one if you plan to rent a property rather than live in it. It comes with higher interest and deposit requirements, but the rental income can offset these costs.
In the UK, you can choose between several property types, depending on your lifestyle, property purpose, and where you plan to live.
The most common properties are:
- Flats: These are properties people usually buy in cities and are single units within a building. They can be studios, 2-level flats, apartments, converted flats, etc.
- Detached: These are single-standing properties, usually with a yard. They’re great if you look for privacy and are ready to pay a higher price.
- Semi-Detached: In this property type, you share a single wall with neighbours. They’re cheaper than detached houses but don’t offer as much privacy.
- Terraced: It’s a unit within a row of attached properties, so you share both walls with neighbouring houses. You can share only one wall if you opt for an end-of-terrace home.
- Cottages: These aren’t the type of cottages you’d see in the Middle Ages, but comfy cottage-style houses with one and a half storeys and all the perks of modern society. They’re common in the UK countryside.
- Bungalows: These are single-storey detached houses you can usually find in villages, with a lot of land around. They’re the cheapest out of all properties, but their popularity drops mainly because of migrations to cities.
Many dreams of sole ownership of property, as living in your own home gives you so much freedom. But you can also buy a commercial property as an excellent investment, whether for your business or renting it.
These are the steps to follow when buying a commercial property:
- Know What You Want: There are several types of commercial properties you can invest in. Decide which is your subject of interest and where you want it to be. Consider your budget, the needs (yours or your commercial tenants’) the property should meet, and what amenities it must have.
- Follow the Market: Buying a commercial property is a costly endeavour, so you should stay on track with the market trends to catch the favourable moment when the prices are lower than usual. Check local and national markets to see which trends prevail, what sellers offer, and what tenants look for.
- Choose a Financing Method: You’ll likely buy this property using a commercial mortgage, so you should research lenders’ offers and work out all associated expenses. Don’t just think about the property buying fees, but also include later maintenance costs, property insurance, etc.
- Get a Loan: Commercial mortgages are generally higher than residential ones, so the application procedure is more complex. Lenders ask for a lot of information and paperwork, which you must collect in time so that a good property deal doesn’t slip away from you.
- Make an Offer: For this step, you could use help from a seasoned commercial realtor. They’ll send an offer to the vendor’s real estate agent and negotiate on your behalf, thus lowering the risk of gazumping. When the seller accepts it, you can ask them to take the property off the market.
- Do Necessary Research: Hire a surveyour to estimate the property condition and do local authority research to find out how future infrastructure planning could affect your investment.
- Exchange Contracts: If you agree to proceed with the trade, instruct your surveyour to check the contract before signing it. Your real estate agent might negotiate some details if possible. Both sides should agree on these details and the completion date.
- Trade Completion: Before the final money transfer and collecting keys, set up insurance for your commercial property. Your solicitor should register your ownership, and you have to pay Stamp Duty Land tax. Everything should be done when all documents are signed and verified.
Yes, properties in the UK are an excellent investment if you plan to earn rental income. You can buy residential or commercial real estate and let it, thus making you a profit that should cover your mortgage payment and be a good boost to your monthly income.
Buying a property is a significant investment, so you want to ensure you spend your money wisely. It can be tricky to buy real estate with structural or legal problems, so it’s always good to hire professionals to research and inspect that for you.
You know you’ve found a good property when:
- You’re happy with the building’s condition.
- There are no structural issues, and the construction quality is good.
- There are no legal obstacles to the purchase, and the ownership transfer goes smoothly.
- It’s in a good neighbourhood.
- It has all the amenities you need.
- It’s worth an extra investment to enhance its look or functionality.
If you know how to negotiate (or hire a seasoned real estate agent to do that), you can get a fair price on a desired property. Here’s how you can know you get a good deal:
- The price fits your budget, and you can afford mortgage payments without problems.
- The price you pay is near or slightly below the “sold” prices for similar properties.
- You get a substantial discount on the listed price.
It all depends on your goals and how far into the future you look. Buying a property costs a lot, so renting can be a good short-term solution when you can’t finance the house purchase. But if you have long-term plans and want to live in your own place, it’s worth taking a long-term loan and buying a dream house.
Pros of Buying a Property:
- It’s all yours, so you don’t have to worry about the landlord’s short notice of moving out.
- It’s an excellent investment as you build equity over time which you can use to renovate your home, buy a bigger house, contribute to your retirement fund, and so on.
- You have absolute freedom to arrange your living space as you want.
Cons of Buying a Property:
- It’s the biggest cost you’ll ever have.
- You might struggle to save for a deposit.
- The real estate market is highly volatile, so property prices change fast.
- You may have problems selling or renting your property.
Pros of Renting a Property:
- It’s cheaper than buying a property, especially in some highly in-demand locations.
- Depending on your lease contract, you can be free of maintenance costs and utility bills.
- It allows greater flexibility when you have to move because of a career or life change, education, or a family situation.
Cons of Renting a Property:
- The rent you pay could be your mortgage payment. Instead, you pay it to the landlord.
- Landlords have their requirements and rules you must adhere to.
- Living in a rented property is uncertain, as landlords can decide to move you out or sell the property overnight.
When buying a property, you need to set certain criteria it should meet. It’s good to make a list of what you want in your property, what you can accept, and what is an absolute “no” for you.
We give you a list of common things to look out for when buying a property:
- Roof condition.
- Structural movements and settlement problems.
- The age of plumbing and electrical systems.
- Potential damp and mould issues.
- Pest infestation and invasive plants.
- Problematic neighbourhood.
Here are some tips that can help you get the best property deal for your money:
- Don’t focus solely on a property price; include other costs in your math, too.
- Plan renovation and improvement costs.
- Always look for properties within your budget.
- Take multiple views of the property you want to buy and conduct multiple surveys.
- Arm yourself with the knowledge of the local housing market and trends to be ready to negotiate.
In the UK, there are two common ways to buy a property:
- Real Estate Agencies: These experts can handle every stage of the property buying process on your behalf. You pay for their services, but you can have peace of mind as they know the trade and how to get everything done fast.
- Buying Property Privately: You can buy a property directly from an owner. It can be a rental home you’ve lived in for years or a house with a “for sale” sign you just saw. Real estate agents are “excluded” from this trade, as buyers and sellers negotiate through their solicitors.
If you decide on hiring a seasoned agent, we suggest some of the top real estate companies operating in the UK:
- CBRE Limited
- Cushman & Wakefield
As of July 2023, the average house price in the UK was £300,000, showing a slight drop compared to the same period last year. The real estate market shows signs of a slowdown compared to last year’s property price inflation.
When talking about property prices in different UK regions, London stands out as the costliest location, with an average real estate price of £525,629. South-East, East, and South-West come next, with average property prices of £388,873, £345,710, and £323,765, respectively.
UK Midlands are somewhat cheaper, with a price range between £240,000 and £250,000. An average property price for Wales is around £209,599, almost the same as in Yorkshire—£204,588.
You can make a well-informed decision about buying property only if you have verified information. You have to research the real estate market, refer to current prices and trends, and check experts’ predictions about price movements.
When you have an eye on a property, find similar ones on the market and compare them apple to apple. It can help you see whether the price is fair and what chances you have to renegotiate it. You can make an offer below the listed price, but be ready to boost it if the seller rejects it.
Lenders usually ask for a property appraisal when deciding on your mortgage, so you can take advantage of it to gauge the seller’s price. Maybe the inspections point out some structural issues you can use to lower the price, as repairs can be costly.
Buying property takes time, but it’s not something you should rush. You have to go through many stages, and many problems can appear along the way. But once you find the property you like and are about to finalise your mortgage, you’re only a few baby steps away from your dream house.
And if you spot damp issues that hinder you from buying it, call us now and we’ll give you the most accurate estimate on whether this repair pays off or not.