A guide to buying a home

You’re unlikely to ever make a purchasing decision on the same scale as buying a home. It’s not just the cost involved that may be daunting, but also the sheer amount of administrative effort that you need to put in before you proudly get to hold the keys to your new home.

Whilst this is a practical guide, we understand that a home is much more than just bricks and mortar, and that choosing a place for you and your family to live is a deeply emotional process, that can often be extremely stressful.

By breaking the process down into individual steps and explaining exactly what each step involves, we hope that this guide can remove at least some of that stress, and help you to feel fully in control of the house-buying process.

Breaking the process down

Every house purchase is unique, and will differ depending upon whether you have a property of your own to sell or are making your first house purchase, but there are certain elements of the procurement process that will be relevant in almost every case;

• Choosing a location and viewing properties
  
  
• Finding a mortgage, and getting a mortgage agreed in principal
  
  
• Making an offer
  
  
• Conveyancing
  
  
• Searches and surveys
  
  
• Securing the appropriate insurances
  
  
• Making removals arrangements
  
  
• Exchanging contracts and locations
  
  

Let’s tackle these matters first, before looking at the financial implications of buying a house.

Finding the right property

Before focusing in on particular properties you need to think about the area in which you’re going to live. You may have to move to a specific geographical location – i.e. a specific town or city - because of issues such as employment or family matters, but even within this scenario there are still likely to be areas which are more suited to you than others. When you’re weighing up exactly where to focus your search for a home, take account of issues such as the following:

• The local amenities – do the facilities in an area match up with your requirements? If you’ve got children you might be looking for good local schools and parks, for example, while if you’re a foodie it might be the local restaurants that top your list of priorities. In more general terms, look into the proximity of services such as doctor’s and dentist’s surgeries as well as the kind of local shops you might need when you run out of milk on a Sunday evening.
  
  
• Transport – how simple or otherwise would your commute to work be from this area, and how much would it cost you? If you don’t drive you might want to consider actually sampling the local bus and train provision, bearing in mind that if you live here you might have to take this particular overcrowded train five days a week. Given the widespread switch to hybrid working, commuting might not be the issue it once was, but bear in mind that you might change work patterns or employer at some point in the future. If you’re going to be driving into work then make sure you visit the area during peak traffic times to monitor exactly how busy the roads get – even the best property in the world will lose its appeal if you end up spending a big chunk of your life sat in traffic jams.
  
  
• Schools - if you’ve got children or are planning on starting a family then you need to visit the local authority’s website to find out the catchment areas for the local schools. If your heart is set on a particular school and you’re willing to pay the premium price a good school often generates within surrounding properties then you don’t want to make the mistake of purchasing a property which is just the wrong side of the catchment boundary. Boundaries of this kind sometimes shift from year to year, so make sure that you’re looking at the latest information. 
  
  
• Air quality – the air quality of an area is an issue which has come to the fore in recent years as the devastating health impact of air pollution becomes clearer. In simple terms you can check whether any specific properties are located close to a busy road, but more generally you can look up air pollution forecasts on the government’s UK Air website.
  
  
• Neighbours – if possible, take some time to chat to the people who live in the area you’re looking at, or close to a property you’ve got in mind. They may be able to provide the kind of granular local detail – issues with the property or with surrounding properties – that you simply won’t find anywhere else.
  
  
• Planning – take a look at the local authority’s website to see if there are any planning decisions on future developments which could impact on a property you buy. New transport links could mean an easier commute and a boost to the value of the property, for example, but could also negatively impact the air quality of the area.

Viewing properties

Although the early days of looking for a new home will now invariably involve lots of scrolling through listings on property sites such as Zoopla and Rightmove, there is really no substitute for viewing a property in person. Not only will a personal viewing of the property enable you to gauge its potential in terms of things like the size and layout of the rooms, it will also enable you to gauge whether it has that intangible ‘something’ that makes you feel like it could be your next home. If you do find a property you like on first viewing, you should go to look around it more than once, and preferably at different times of the day.  

Working with estate agents

When you’ve decided on an area or a number of areas in which you’d possibly like to purchase a home you then need to register with estate agents based in those areas. You can register free of charge, and doing so doesn’t place any obligation on you to work with that estate agent. The advantage of registering with an estate agent and maintaining contact throughout the process could be advantageous, as estate agents will sometimes inform registered buyers about suitable properties before listing them for general sale.

It’s now possible to access highly detailed information on issues such as the kind of price you can expect to be asked to pay for a property in the areas you’re interested in. Property sites such as Zoopla, Rightmove and Home don’t only list properties for sale, they also let you research things such as sold properties, checking the sold price against the asking price and accessing descriptions, floor plans and pictures. By researching online you can build a detailed picture of what you’re likely to be able to purchase in a specific area for the kind of budget you’ve got, or alternatively how much a property you’re interested in should cost. 

As well as utilising the power of the internet you should take the time to establish contacts with local estate agents. If you tell them the type of property you’re looking for and your budget, they’ll be able to offer advice as to whether you’re being realistic or not, how long properties of the type you’re interested in take to sell on average and how many buyers you’re likely to be up against when a property of this kind comes onto the market.

When you find a property

If you find a property you’re interested in, particularly if you’ve been looking for a while without any success, it can be tempting to make an offer and pin it down as quickly as you can. This would be a mistake, however, because, while there is clearly a lot of emotion involved in choosing a place for you and your family to live, the emotion should never be allowed to override the facts which govern whether the property is suitable or not. Never forget that people selling properties spend a great deal of time working with the help of detailed guides like ours, to make the property in question as appealing as it possibly can be. You need to make sure the property is everything you think it is at first glance, and you’ll only do this by looking around the property extremely carefully and asking all the right questions. These are just some of the questions you need to be asking the homeowner:

• How many viewings has the property had?
  
  
• How long has the property been on the market?
  
  
• How many offers have been made on the property?
  
  
• Does the property have a lease, and if so how long is it? (See more on this below)
  
  
• Have there been any disputes with neighbours?
  
  
• Have any renovations been carried out on the property and if so what are they?
  
  
• How old is the boiler in the property and when was the last inspection?
  
  
• Why are the homeowners moving and are they absolutely certain that they want to sell now?
  
  
• When was the property last rewired?
  
  
• Are the homeowners part of a chain and when do they wish to move?
  
  
• Could they tell you about the people who live next door or upstairs?
  
  
• Exactly what is included in the sale – i.e. will you be purchasing curtains, carpets, kitchen fittings etc.?
  
  
• If the property doesn’t have a drive, is there an allotted parking space or residents’ permits available?
  
  
• If the property has a real fireplace, is it safe to use and when was it last used?
  
  
• Has the property suffered any issues with subsidence?
  
  
• Which council tax band is the property in – this is something you can check on the government’s website.

You need to ask if there is a lease on the property and, if so, how long it is. Owning a leasehold property effectively means renting it for an extended period of time while the freeholder actually owns the land itself. If there are less than 80 years left on the lease – even a day under 80 years – it can be very difficult to either sell or re-mortgage the property, and a lease extension could cost as much as tens of thousands of pounds.

Property checks

Whilst professional survey’s (or searches) will be carried out by a specialist that should uncover any underlying structural issues with a property, you can discover a lot when you’re viewing the property by asking the right questions and looking for the right things. Take your time when you’re viewing a property – 20 to 30 minutes should be allowed – and don’t feel embarrassed about asking what might feel like awkward or ‘nosy’ questions – this is all about making an investment of perhaps several hundred thousand pounds.

• Damp – look out for peeling wallpaper, condensation on the windows, mould and/or wet spots. Take a deep breath to see whether the house smells musty at all. Look inside cupboards for any signs of damp.
  
  
• Doors and windows – open the doors and windows to make sure that they open and close smoothly.
  
  
• Light switches – flick all the light switches in every room on and off to make sure they work, and turn the cooker on and off, checking all of the rings on the hob (if the cooker is part of the sale).
  
  
• Power points – count the number of power points in each room. Older houses which haven’t been rewired recently often have too few power points for the number of devices the average person now has to plug in.
  
  
• Plumbing – turn the taps on and off and flush the toilets. Make sure that the cupboards under any sinks are dry and monitor the water pressure from the taps and any shower and the heat of the water from the hot taps.
  
  
• Heating – ask for the heating to be turned on to check how hot the radiators get and how quickly they warm up and whether the heat spreads across the surface of the radiator. Check the radiators themselves for signs of leaks or rust.
  
  
• Locks – make sure that all of the locks on the exterior doors meet the relevant insurance standards. In most cases this will mean a minimum of a five-lever mortice deadlock. Make sure window locks are fitted and check for any signs of break-ins.
  
  
• Rugs – lift rugs and mats to check for signs of any stains of the floor hidden underneath.
  
  
• Phone signal – get out your phone around the house to check whether there are any 4G or 5G dead spots.
  
  
• Attic – take a look in the attic in daylight, checking the condition of the woodwork and looking for any holes, cracks and rot. More generally, is the attic/loft the kind of space which could be converted in the future?
  
  
• Exterior walls – take a look at the property from outside, checking the exterior walls for cracks and any signs of mould.
  
  
• Roof – take some binoculars and check the roof for issues such as tiles which are missing or have slipped out of place. If possible, visit the property when it is raining to check the gutters for any leaks or blockages.
  
  
• Compass – this may sound strange but learn to use a compass and take one with you in order to make sure that the ‘south facing garden’ actually does face south and catch the sun.
  
  
• Neighbours – as well as asking about the neighbours and any possible disputes, take a quick look at the properties either side of the property you’re viewing. If they are in a poor condition this could end up impacting on the value of your property.
  
  
• Make a snag list – if you do spot any small issues which aren’t necessarily deal breakers, such as broken kitchen cupboards etc. make a list of them and pass it to the sellers, asking for them to be fixed before you purchase the property.
  
  
• Light – as well as checking whether the electrical lights work make sure that there is a good level of natural light in the main rooms of the house.
  
  
• Interior walls – look for any cracks in the walls or ceiling, in particularly any which are big enough for you to fit the edge of a 10p piece in.
  
  
• Garden – look around the garden to establish how much work and maintenance will be required and whether it is overlooked by neighbouring properties. Also look for trees with large roots which could ultimately cause structural problems and whether there is a clear divide between this garden and the neighbours’.
  
  
• Security – are burglar and fire alarms fitted and do they work?
  
  
• Connectivity – are broadband and TV connections currently in place and to what standard?
  
  
• Energy – what is the EPC rating of the property?
  
  
• Work – if any work has been done on the house, can you see the sign-off documents and details of any planning permission?
  
  
• Second opinion – take someone else with you when viewing a property, preferably someone who is not as emotionally invested in the property and deciding whether to purchase it.
  
  
• Photographs – ask the homeowner if you’re allowed to take photographs and videos as you view the property. You’ll probably be looking at a number of properties so these images will help you to remember which is which, at the same time as offering a more realistic view of the property than professional shots taken by an estate agent.  
  
  
• Estate agent – if you’re interested after viewing a property then talk to the estate agent about it. An estate agent is legally obliged to tell you about any serious problems with the property that they are aware of.

Applying for a mortgage

When you’re absolutely certain you’ve found the property you’re looking for you’ll need to apply for a mortgage. This involves the lender calculating your household income from the basic salary of householders plus any other income sources such as freelancing, commissions, bonuses etc., and then balancing this against household bills and spending as well as debts such as loans and credit cards. This is how lenders check ‘affordability’, i.e. how much money you will have available every month to meet mortgage repayments. This will also be ‘stress tested’, which means that lenders will look at whether you would still be able to afford the mortgage repayments in the event of a change in circumstances such as having a child, retirement or a hike in interest rates. They will also undertake a credit check in order to review your financial history and establish how much of a risk you represent as a borrower. This means that, before applying for a mortgage, you should get in touch with the three main credit reference agencies to have a look at the information they hold on you and ensure that there is nothing incorrect in the details. The three main credit reference agencies are:

• Equifax
  
  
• Experian
  
  
• TransUnion

Documentation

When you’re planning your mortgage application you’ll need to pull together the following documentation:

• Utility Bills
  
  
• A P60 form from your employers
  
  
• Your payslips from the last three months
  
  
• Photo-ID such as a passport or driving licence
  
  
• Proof of any benefits received
  
  
• Bank statements from your current account for the past three to six months. In many cases, print outs of online statements will not suffice – you will need to provide hard copies or cpies certified by your solicitor or bank. The same applies to utility bills.
  
  
• If you are self-employed you’ll need a statement of two or three years’ accounts
  
  
• You’ll also need to provide details of the property you wish to buy, as well as the name of the estate agent handling the sale and your solicitor.

The list given here represents the minimum basic documentation a lender will ask for, so don’t be surprised if your lender asks for more information.

Do you need a mortgage advisor?

There is no legal obligation to work with a mortgage advisor when looking for the right mortgage, but it can be extremely helpful. Independent mortgage advisors will have knowledge of the products available which you simply can’t match, no matter how much research you do. They will also save you the time and trouble of talking to multiple different lenders, and point you in the direction of those lenders who are particularly suited to your circumstances – i.e. if you are self-employed, haven’t been with your employer for a long time or are unable to put down a large deposit.

You will also have more consumer rights if you take advice from a professional, in as much as you’ll be able to make a complaint to the Financial Ombudsman Service if it transpires that the mortgage was unsuitable. A mortgage advisor will also be able to check over your finances to make sure that you meet the criteria of a particular lender and may be able to tap into exclusive deals with lenders. If you do use a mortgage advisor, make sure that you understand how much they will charge. Some charge a flat rate fee or an hourly rate, often dictated by factors such as the product you opt for or the value of the mortgage. Others work on the basis of a commission paid by the lender, with the borrower not having to pay a fee.

When a mortgage advisor makes a recommendation, they are obliged to provide you with mortgage illustration documents. These will set out the details of any mortgage you’re being offered, including the following:

• The frequency and number of repayments
  
  
• Fees or charges which need to be paid upfront in order to be given the mortgage
  
  
• The total cost of the mortgage over the full term including the interest charged
  
  
• The type of interest charged – i.e. fixed or variable- and the Annual Percentage Rate of Charge (APRC)
  
  
• How your repayments will be affected by any rise in interest rates
  
  
• Whether the mortgage has any special features, such as allowing you to underpay or overpay
  
  
• Whether any penalties will be charged for making overpayments on the mortgage
  
  
• What will happen if you decide not to take out the mortgage
  
  
• The reflection period provided, which must be at least seven days but might be longer

Once all the necessary checks and paperwork have been completed you will be offered a mortgage agreement in principle (AIP). This means that a mortgage lender has agreed that they would, in principle, lend you a specific amount. This is sometimes referred to as a decision in principle (DIP). When you have an AIP in place you become a more attractive buyer in the eyes of someone selling a property and any estate agent acting on their behalf.  

Making an offer

A mortgage agreement in principle, combined with a reasonable deposit, will put you in an excellent position when you decide to make an offer on a property to an estate agent.

You should inform the estate agent how much you’d like to offer. This should be in writing, but a telephone call and follow-up email should be sufficient to prevent any confusion arising further down the line.

If you have advantages such as being a first-time buyer and therefore not part of a chain then convey this information to the estate agent – in an overcrowded market it might make you the more appealing buyer.

Deciding exactly how much to offer for a property can involve a difficult calculation. The received wisdom is that you should offer less than the asking price and then engage in a period of negotiation, but if the property in question is particularly sought after, or the housing market in general is going through an overheated period, then you may actually need to offer the asking price or more to secure the purchase.

A useful guide to a fair price can be provided by similar properties in the same area, and you can find this out on websites such as Zoopla or the Land Registry.

Negotiations

You may be lucky enough to have your first offer accepted but usually it will be followed by a period of negotiation. These negotiations will be conducted via the Estate Agent on behalf of the owners of the property, and the main piece of advice is not to let the prospect of having an offer accepted persuade you to end up offering more than you can comfortably pay.

A lower bid (below the asking price) could be successful if the house has been on the market for a long time, or if the seller is looking for a quick sale, you are the only buyers to make an offer, or you offer a completion date which is appealing to the seller.

The more details you have in place, such as a mortgage agreed, deposit saved etc., the more the seller is likely to accept a little below the asking price. A good working rule is to offer between 5% and 10% below the asking price, since the seller is likely to have factored this in and put their house on the market for more than they would realistically expect. The estate agent will usually tell you if any bids higher than yours come in, leaving you free to make a second and sometimes third offer.

If your offer is accepted, you should ask for the property to be taken off the market and draw up a written list, agreed with the estate agent, of all the fixtures and fittings included in the sale.

The seller may ask for a ‘holding deposit’. This is often the case in more volatile markets and is the sellers’ way of ensuring that you are serious about buying the property. On occasion, the deposit will be refundable if either party pulls out of the sale, in others it is only refundable if the seller pulls out of the sale.

The seller might ask for a non-refundable holding deposit, but this is to be avoided, as it would put you in the position of risking losing your money if the seller opted to go with another buyer. Many Estate Agents are dubious about the worth of holding deposits, feeling they prolong the process unnecessarily, but if you do provide a deposit it should be paid to the sellers’ solicitor and not directly to the seller. 

Even if the seller accepts your offer it is not legally binding until contracts have been exchanged. This is when a property is referred to as being sold subject to contract (SSTC) and means that, as a buyer, you are still at risk of being gazumped by someone else having a higher offer accepted. If this happens there is little you can do except perhaps make a ‘counter-gazumping’ higher offer. 

Conveyancing

The conveyancing process which follows an offer being accepted included searches, the property survey and your solicitor examining any draft contract.

Conveyancing is the name given to the legal process which takes place once an offer on a property has been accepted. This process will involve things such as drafting and checking contracts, carrying out searches, paying any stamp duty due and dealing with the Land Registry. This can be done on your behalf by either a conveyance or a solicitor. If you use a solicitor you should ensure that they have recent experience of working with property law.

Professional searches

When you buy a property with a mortgage, the lender will inform your conveyancer of what searches need to be made. In simple terms, searches are designed to identify any issues which might impact on the long-term value of the property. These might include anything from a debt being attached to the property to the risk of flooding or subsidence or the fact that it has been built on contaminated land.

Carrying out a survey is actually optional, but is highly recommended as it will inform your thinking on what constitutes a fair offer, and enable you to budget for any work that needs to be done on the house. In some cases the results of the survey might provide an argument for negotiating a lower purchase price or asking the seller to get any problems identified fixed. If the surveyor you use is registered with the Royal Institute of Chartered Surveyors (RICS) then they will offer surveys at three different levels – some with a valuation included and some not – while a surveyor registered with the Residential Property Surveyors Association (RPSA) will offer two levels. The amount charged for the survey will vary depending upon the size and type of the property and the location.    

There are three main searches which need to be carried out before exchanging contracts:

Local authority searches – these will highlight planning issues, building control, highways issues and pollution issues.

Environmental searches – these will look into flooding issues, landslide issues, subsidence issues and contaminated land issues.

Water and drainage searches – these searches involve the local water company and will look at questions such as:

• Who has ownership of the piping, drains and sewers
  
  
• Whether the property is connected to a public water supply and sewer
  
  
• Whether the supply of water is rateable or charged on a metered basis
  
  
• Where the public sewer and drainage pipes are located
  
  
• Whether permission from the water company will be needed before you extend the property

Your conveyancer should also check the Title register and Title plan for the property. Both of these documents can be purchased through the Land Registry:

Title register – this will include details of previous owners of the property, how much they paid for it, any debts or charges registered against the property and any rights of way over the property.

Title plan - this is a map which sets out the location of the property and the general boundaries of the property.

Insurance

Before exchanging contracts you’ll need to take out buildings insurance for the property, to ensure that you are covered in the period between exchanging contracts and completing the sale.

The majority of mortgage lenders will make it a condition of providing the mortgage that you have building insurance in place from the day on which you exchange contracts. Once contracts have been exchanged you are legally bound to buy the property, and if it burned down or was flooded between exchanging contract and completion, then no insurance would mean no cover for your loss. In the case of a new-build property, the insurance you purchase doesn’t need to apply until the day of completion itself.

It is also prudent to consider taking out Life or Critical Health Insurance to protect yourself, and your loved ones in the event that such matters occur in the future, affecting your ability to make the mortgage payments.

Signing contracts

Before signing the contract, your solicitor will have made sure of the following points:

• Any enquiries you have made regarding the property have been dealt with in a satisfactory manner
  
  
• That the expected fixtures and fittings have been included in the purchase
  
  
• That both parties have agreed a completion date, usually one to four weeks after contracts have been exchanged
  
  
• That arrangements have been made for the deposit to be transferred into your solicitors account so that it will have cleared in time for the contract to be exchanged. Although the deposit may be less than 10% of the value of the property, you will still be liable for 10% if you pull out of the agreement at a later date. If you pay a 5% deposit and then pull out, for example, you will lose that 5% and legally be liable for another 5%.

Exchanging contracts

The exchange of contracts is one of the most important milestones in the whole process of buying a house, not least because it represents the point after which the seller can no longer accept any other offer.

Once a date for exchange has been agreed the process usually involves both conveyancing solicitors reading out the details of the contract on a recorded telephone call, to ensure that both contracts are identical.

The exchange of contracts marks the point at which your agreement to buy the property is legally binding. It is very rare for a purchase to fall through after this has happened. Your conveyancer will now lodge an interest in the property, which means that you can pay the seller and then apply to the Land Registry to have the deeds to the property transferred to your name.

If the seller refuses to sell for any reason after this point you will be able to sue them. 

Removals

If you’re only moving a small amount of furniture and other possessions into your new home then you could simply hire a van and handle the process of packing and unpacking it yourself. If you have a lot of stuff to shift, on the other hand, you might find it easier to use a professional removal company.

The amount charged by a removals company will depend upon factors such as the number of items being shifted and the distance between the two properties.

Research the kind of reviews the companies have received from previous customers and when you find one you feel you can trust with your items check their availability. You should do this before agreeing a completion date with the seller, in order to ensure that you can actually move into the property when you want to.

Completion

Completion usually around two weeks after exchange, but there is a degree of flexibility in terms of finding a date which suits you both.

On completion day the following will happen:

• Your solicitor will confirm the receipt of the necessary funds from your mortgage lender
  
  
• Your solicitor will then transfer these funds to the seller
  
  
• The keys will then be available to collect from the estate agent or occasionally direct from the seller

Once all of this has happened you’re free to move into your new home, and your solicitor will then deal with the following loose ends:

• They will pay Stamp Duty on your behalf
  
  
• They will send your legal documents to the Land Registry, and you will receive them approximately 20 days after moving into the property
  
  
• They will send a copy of the title deeds to your mortgage provider, to be held until the mortgage has been paid off
  
  
• If the property is leasehold, they will notify the freeholder
  
  
• They will send you a bill for their services

It’s probably the last thing you’ll be thinking of as you move in, but you should gather together all the paperwork relating to your new home, such as the estate agent’s brochure, to keep in a safe place for when (if) you want to sell up and start the process all over again.

The costs associated with buying a house

Now you understand a little more about the many steps that need to be taken when buying a house, let’s address the financial elements of entering into such a deal;

Mortgages

The cost of a mortgage, in terms of the monthly repayments and the overall amount paid, will be determined by the amount borrowed, the term of the mortgage and the interest rates charged. The more you borrow the more you’ll repay eventually, but a longer term mortgage could still lead to lower monthly repayments than a lower amount borrowed over a shorter term.  

The majority of mortgages are arranged on a repayment basis. This means that each monthly repayment consists of an amount paid off the amount borrowed and an amount on top made up of interest charged. In some cases the mortgage is interest only. This means that the monthly repayment is lower as it only covers the interest charged on the debt, rather than the debt itself. With a mortgage of this kind money is placed in an investment plan timed to mature when the mortgage term ends, the idea being that the money generated by the investment would be enough to clear the outstanding mortgage amount. There is a risk, however, that the investment in question would not be sufficient to clear the amount owed on the mortgage, and for this reason the majority of lenders prefer the certainty of repayment mortgages.   

Mortgage lenders compete in a marketplace in which competition for business is driven mainly by offering low interest rates. The rate offered by lenders will be one of the following:

• Variable, which means that it can be shifted up or down in response to the Bank of England’s base rate

• Fixed, which means that it can’t be changed for a specific period of time – usually two to five years

• Capped, which means that it is variable but can’t rise above a specific level

• Tracker, which means that the rate follows another rate, usually the base rate. A tracker rate might be described as ‘base rate plus 1%’, which means that the interest charged will always be the base rate with another 1% added.

Fixed rate mortgages tend to be the most popular, but you need to be aware that when the fixed rate period comes to an end you’ll be shifted onto the lender’s variable rate unless you’ve sought out another deal, and this will usually be more expensive.

Although the interest rate is often the deciding factor when choosing a mortgage product, there are other things to take into account. The range of fees and charges vary across different deals, so you need to make sure that the additional costs are not so high that they outweigh or eat into the benefit of the lower interest rate. 

Another decision to be made is the term of the mortgage, i.e. how long you’ll spend paying it off. Previously, the majority of people took out mortgages with 25 year terms, but 30 or 35 year terms have become more popular with first time-buyers having to cope with rising house prices. Online mortgage calculators can be used to calculate monthly repayments on the basis of the amount being borrowed, the mortgage term and the interest rate charged.  

Other key considerations when it comes to mortgages include:

• Mortgage Deposit – generally, you’ll need to save a deposit of at least 5% of the value of the property you want to purchase. A house with a value of £300,000, for example, and a 95% mortgage would mean you need to put down a deposit of £15,000, with the remaining £285,000 borrowed in the form of the mortgage. If you can possibly save a deposit of more than 5% then it may mean that you can apply for a mortgage with a lower interest rate.

For first time buyers, saving into a lifetime ISA means that you receive a 25% top up on your savings from the government, up to a value of £1,000 a year.     

• Borrowing – the amount you borrow from a mortgage provider will vary depending upon factors such as your income, your credit score and the size of deposit you’re able to save. If you’re buying a property jointly with another person then their financial details will also be taken into account. As a general rule, a bank or a building society will offer a maximum mortgage of approximately 4.5 times your annual salary but this is just a ballpark figure and will vary according to the policies of the lender, the size of your deposit and details of your financial circumstances. When you’re calculating how much you need or can afford to borrow you’ll also need to factor in expenses such as surveys, conveyancing and stamp duty. The amount of stamp duty you need to pay will vary depending upon the cost of the property and whether you are a first-time buyer.

How much does it cost to buy a house?

Aside from mortgages and the associated repayments, t’s always worth thinking about the other expenses commonly involved when purchasing a property. In the excitement of finding your new home it can be easy to forget these additional charges, but any issue with finding the money you need or having it ready to pay could delay completion of the purchase or even cause it to fall through altogether.

• Arrangement fee – this is a fee charged for the mortgage product you purchase, and in many cases it can be included in the actual mortgage itself. The fee can be anything up to around £2000, and while avoiding an up-front payment may seem appealing, you need to remember that you’ll then be paying interest on the fee for the duration of the mortgage, meaning an increase in the overall payments.   

• Booking fee – in some cases the lender may combine the booking fee with the arrangement fee, but if it’s charged separately it’s likely to amount to something between £50 and £300. The fee is charged as the cost of making an application for the mortgage, and many lenders charge on a non-refundable basis, which means that you’ll still have to pay the booking fee even if you later decide not to follow through with the application.

• Valuation fee – the amount you pay to have your property valued depends, aptly enough, on the value of the property. In most cases it is likely to be something between £100 and £1,000. The valuation enables your mortgage provider to make a judgement on the value of your property to ensure it matches the amount they are lending to you.

• CHAPS – CHAPS stands for Clearing House Automated Payment System and is a non-refundable fee of around £50 to cover the cost to your mortgage provider of sending funds to your solicitor.   

• Mortgage account fee – in some cases you will be charged a fee for the admin costs of the mortgage for your lender. This is usually around £300.

• Mortgage broker fee – The fee for a mortgage broker is often taken as a commission from the mortgage lender, meaning that you won’t have to make a payment. It is usually around £50.

• Legal fees – legal fees, generally between £500 and £1500, might have to be paid directly to your solicitor for the role they play in helping to arrange a mortgage. This fee might also include the legal costs generated by the mortgage lender and the Land Registry fee.

• Survey fees – the valuation carried out by your lender will only cover the value of your property so you’ll need to pay for a more detailed survey, looking at aspects such as the structural integrity of the property and any planning issues.

• Stamp duty – stamp duty is the name given to the tax paid on land and property transactions and it is sometimes as much as 12%. For a first-time buyer, the amount of stamp tax due at the time of writing is as follows:

If the property costs less than £500,000 then no stamp duty is owed on the first £300,000. On the amount between £300,001 and £500,000 you’ll have to pay 5%.

If the property costs more than £500,000 than a first-time buyer will be charged the same rate of stamp duty as someone who has previously purchased property:

• 0% on the first £125,000
  
  
• 2% between £125,001 and £250,000
  
  
• 5% between £250,001 and £925,000
  
  
• 10% between £925,001 and £1,500,000
  
  
• 12% from £1,500,001 and upwards

• Moving – the cost of the process of moving will vary depending upon how much you have to move and how far you need to move it. Prices charged by a removal company could vary from as little as £250 for a local move to as much as £1000 or more to shift your belongings further.

In some cases you might opt not to shift everything in one go but to put some of your belongings into storage, particularly if you’re downsizing or two people with their own places are moving into one home. The cost of storage will depend on the amount of stuff being stored and the length of time the storage will last. If you’re planning on gradually shifting your belongings into your new home than it would be best to arrange storage on a short-term basis, paying on a weekly or monthly basis only for as long as you need to.

Whilst the house buying process is undoubtedly a sizable task, it can also be joyous, and many find that the potential upheaval is worth it in the end.