Your guide to buying a new home
Buying a home is one of the biggest moves you will ever make. But it doesn’t have to be as stressful as some will have you believe. By understanding the process and planning properly you can ensure YOU are in control every step of the way.
To successfully get from when you decide to buy a home to collecting the keys to your new home takes planning and the careful management of a step-by-step process that involves a number of different parties.
The following is a guide to the major steps that you will need to take if you are to realise your ambition of owning your own home.
Step 1: How much can I afford?
Before looking for a home, you need to work out how much you can afford to spend.
Step 2: Choosing your new home
There are many ways to search for your dream home. First you need to decide roughly where you want to live and then see what is available in your price range. You can search on the internet, in the local newspaper, through local estate agents – or just by walking or driving around the area where you want to live.
Step 3: Sort out a solicitor
Once you have found the home you want to buy you will need legal support. A solicitor or conveyancer will handle the legal side of buying your home.
Step 4: Arrange a mortgage
You’ve already worked out your budget . Now it is time to secure the best deal (every little percentage point counts!)
Step 5: Exchange contracts
Sign on the dotted line, and everyone is committed. From this point on you are legally bound to the purchase of your new home, and should be able to confirm a fixed completion date.
Step 6: Legal completion and handover
This is it! The day the monies transfer, and you get your keys
Step 7: Move in
At last – the moment you’ve been waiting for and the house becomes your home.
Choosing your new home
Buying a new home is usually the biggest investment a person will make in their life. It is therefore extremely important to make the right decisions. Most are common sense but it’s an extra bonus to have a check list of the right moves to make. So here are some points to carefully consider.
Let your computer do the walking! Assuming that you have decided on your preferred location, use the Internet to find out which house builders have developments in that particular area. Some have excellent websites and by going online you will be able to establish dwelling sizes, prices and availability, from the comfort of your own armchair – 24/7.
When you approach your chosen development(s) make sure the general environment is roughly what you expected and has easy access to all the important things in your life.
Don’t rush things. Take your time with the sales team. A sales team is one of the major benefits of buying a new build home. They are qualified professionals who will help you along every step of the home buying process and will want to make sure they are giving you their very best attention. It is very important to ask the sales team about all the home’s main features and room sizes. Make sure you know all about its energy efficiency characteristics, how much you can expect to spend on utility bills and if it has any special water conservation measures.
And remember, just because it is a new home does not mean that you cannot make the house builder an offer. Obviously you will be in a much better position if you can move quickly, are a cash buyer or have signed, or are about to sign, the contract on your existing home sale – but anyone can make an offer. They can only say ‘no’!
Finally, go back to the development as many times as is necessary to make sure that you are totally confident with your ultimate decision. At least three times is best.
| ||Get online access to housing developments |
| || Make an appointment with the sales team |
| || Check room sizes, plug positions and your proposed furniture layout |
| || Check local amenities |
| || Don’t rush things |
| ||Visit the development three times before making your decision |
Getting a mortgage
Most home owners will need to get a mortgage to be able to afford their new home. However, despite interest rates having been at historically low levels for two years now, mortgage availability is tight and people are finding it more difficult to get a mortgage.
This is a result of the ‘credit crunch’ that has seen lenders – the banks and building societies that provide mortgages - reduce how much they are lending.
Latest figures from the Council of Mortgage Lenders (CML), the body that represents the lenders, show that the amount of money being lent to home purchasers remains at a consistently low level.
Larger deposits are also being required by lenders to secure loans. Clearly this is affecting first time buyers most, as they do not have the benefit of any equity accrued from an existing property.
First time buyers are having to find deposits of around 20%, which, with an average house price of around £165k, means finding a deposit of around £30k.
It can seem like an impossible task - but there are still ways to buy. Last year over 220,000 first time buyers managed it!
House builders across the country are working hard to help. In the last three years alone they have invested almost £1billion in shared equity schemes to help first time buyers purchase their first home.
And if you’re looking to move up the property ladder or to relocate there are literally hundreds of schemes to help you buy your dream home.
Before applying for a mortgage there is a number of steps you can take to improve your chances of a successful application;
- Pay off outstanding debts and cancel those DDs you don’t really need! Mortgages are assessed on your outgoings versus your income. So reducing your monthly outgoings will make it more likely that the lender looks favourably on your application
- Save! All lenders will require a deposit. But the larger your deposit, the more chance you have of securing a loan and the better the rate of borrowing you will get
- Look about. There are literally hundreds and hundreds of mortgages out there, all aimed at different types of people in different circumstances. So make sure you do your research to work out which one is best for you and which one you can afford. If you can’t decide, make an appointment with the mortgage advisor at your bank, or speak to an independent financial advisor.
For more information visit the the CML web site
If you haven’t decided on your mortgage ask the advice of the house builder’s sales team. They will know of any special mortgage deals that are on the market which meet your requirements. Or they will be able to direct you to an independent financial adviser.
Once you have found a mortgage deal, you will need to provide a lot of information to the lender. Try to have all this information together before you first meet your financial advisor or mortgage provider – it should help to speed up the process of securing the mortgage on your new home.
Proof of identity
Proof of residency
- Full details of residence over the past three years (including dates, postcodes etc)
- Council tax bill
- Mortgage or bank statement
- Utility bill (gas, electricity, water, telephone)
Proof of employment
- Your last six months’ payslips (originals, not copies)
- Your P60
- Your National Insurance number
- Your tax reference
- Your tax office
- Name and address of your previous employer (if you’ve been with your current employer for less than three years)
- Last three years’ accounts (if you’re self-employed)
- Last three years’ tax assessments (if you’re a sole trader)
If you have one – details of your existing mortgage
- Name and address of lender
- Account number
- Copy of your last mortgage statement
If you are renting
- Name and address of landlord
- Rent book
- Loan agreements
- Details of existing loans and agreements
- Statement of account
You will need to declare any:
- Mortgage arrears
- County Court Judgements
- Current debts
- Doctor’s name and address
Getting a solicitor
Ensuring you get good legal advice is extremely important as it can make your home move much less stressful, whilst shoddy service in the contracts department is one of the most common reasons for delays when moving.
Solicitors – or conveyancers – are there to handle the legal side of your property purchase, from dealing with all the contracts and deeds to carrying out local searches. It’s their job to act in your best interests when dealing with the vendor of the property. That’s why it’s so important that you find a good independent solicitor.
Many people use solicitors who have been used previously by family or friends – so you have some level of recommendation of their service level.
Alternatively you can visit your local solicitor’s office and talk to someone about the services that they provide.
The internet means that you don't necessarily have to use a company in your area. You can compare legal fees and service online and then simply go for the best deal available.
However you decide to search for a solicitor there are a few steps you can take to make sure you get the one that best suits your needs:
- Experience matters. Choose a firm that specialises in residential conveyancing – it will speed things up
- Be wary of general practitioners that are jacks-of-all-trades but masters of none. But watch out for ‘conveyancing factories’ that rarely give the level of service you need if you are moving home
- Get a name. Ask for the name of the person handling your case – and that of someone else you can speak to in case they are not available. Get their direct numbers and their individual email addresses
- IT is key. Make sure your solicitor is in tune with modern communication methods. Progressive conveyancing service providers will email documents over to you and may offer online case tracking to monitor the progress of your case. Some even offer an SMS text messaging service to keep you updated
- No completion, no fee. Make sure your legal solicitor offers a ‘no sale, no fee’ service, so if your sale and purchase falls through, you don't have to pay for the conveyor's time. These days, this is widely available, so shop around
- Fix the fee. A fixed fee lets you budget accurately. Only if you start to change the nature of what you’re asking the solicitor to do will it ever change and you should always be told in advance of any increases
- Make sure your solicitor is on all major lenders' panels. The market is swamped with sole practitioners that are not accepted onto all lender panels. If the conveyancing firm you choose is not approved by your lender, they will instruct one, at your expense, which can often lead to unnecessary delays as well as increased costs.
Visit the Law Society and search under ‘Conveyancing Residential’ to get details of solicitors in your area. Or you can call 0870 606 2555, which is the Law Society.
What you will be charged
Your fee will be made up of two parts:
- a basic fee that they charge to do the work
- disbursements - what the solicitor has to pay on your behalf to third parties e.g. searches, stamp duty land tax, bank transfer fees.
Make sure you understand the quote that you receive from them and that there are no hidden extras. As with all contracts, always read the small print.
Your solicitor’s role
Your solicitor will do the following during the course of your home purchase:
- Liaise with the vendor’s appointed solicitor to raise any queries on your behalf. This can include any general questions about the development or property or issues about the extent of your ownership or legal responsibilities
- Collate all legal information, including conveyance plans, or if necessary management company details
- Carry out a local search. This involves a detailed investigation of local planning issues including planning conditions, roadways, tree preservation orders, rights of way, drainage and other information such as details of any further developments that are planned for the area
- Arrange for the transfer of deeds
- Arrange for your purchase to be recorded with the Land Registry
- Arrange for contracts to be exchanged with the vendor’s solicitor
- Arrange for the deposit to be paid
- Agree a date for completing.
Your solicitor is the professional and understands the legal process. However, it is advisable to stay in regular contact to ensure they have got all they need from you and are not waiting for information that you could be providing or chasing.
Here are a few other things to remember:
- Contact your solicitor just as soon as you’ve had an offer agreed, or, if you are buying a new build, as soon as you have reserved a home, and give him full details of your proposed purchase. You will need to confirm that the solicitor has been instructed to act on your behalf, which will need to be done in writing
- Ensure your solicitor is aware of the timescales you are working to and the date you’ve agreed for an exchange of contracts
- Pay your solicitor the fees required to carry out the local search – and chase them up for the results!
- Ensure your solicitor is aware of your payment arrangements. You will need to inform them of how you will be paying your deposit, and the mortgage offer you will have to have in place before contracts are exchanged
- Pay your solicitor the deposit and they will hold it on your behalf. The deposit will need to be with your solicitor at least 24 hours before contracts are exchanged
- Make an appointment to sign your contract. If that isn’t possible, you can arrange for your solicitor to have Power of Attorney (which must be done in writing and in advance), allowing them to sign on your behalf.