Where Am I Going To Live Pt II
Remember when I wrote that post on alternative living options? Well, it turns out I’m not going to live on a houseboat. Nor am I going to become a squatter. Funny that.
As a basic gal, I guess I was destined for a few years of renting (and just as many rent hikes), before scraping together some cash to buy a place of my own. But where to start? I am well and truly clueless…
Luckily, we have the internet. And whilst the below might seem very obvious to you, a step by step guide to buying a property is very helpful for me!
The Planning Stage
The planning stage seems to be all about the £££.
Step one - Save for a deposit
A deposit is the amount of money you pay upfront towards the full cost of a property. Your mortgage covers the rest.
Unless you’ve been gifted / inherited this, you’ll likely need to save up over time.
Usually there is a minimum deposit you need to hit - a certain percentage of the property’s full value. But it goes without saying that the more you save for your deposit, the less you will need to borrow (with interest).
Step two - Get prepared for a mortgage application
A mortgage is a financial loan that you borrow, often from a bank. You then make regular payments over a period of time to repay the loan, as well as interest on the loan. The property is the collateral - if you fail to make your repayments, the lender takes the property. To make things a bit more complicated, there are different types of mortgages (which is another blog post in itself).
To get prepared, you’ll need to collate the right paperwork. Things like your passport, pay slips, bank statements, utility bills, evidence of being on the electoral roll etc.
You also need to check your credit report is healthy, as this shows your spending behaviour and is used by the bank to determine whether you can get a loan. Doing a soft check won’t impact your score.
Step three - Work out how much you can actually borrow
The size of your mortgage (and the interest rate you are offered) depends on the following:
Your income
Your regular expenditure
The size of your deposit
Your credit rating
You can use an online mortgage calculator to work this out. Alternatively, if you’re a finance / Excel wizard, you can make your own! But speaking to a mortgage advisor might be the best course of action as they can explain the above in a lot more detail!
Step four - Apply for a mortgage in principle
I’m not going to lie, I hadn’t heard of a mortgage in principle until I was chatting to a friend last year. It is a personalised doc confirming an amount of money which a lender believes they would be able to lend you, based on the above information. Estate agents often ask for this (apparently) but be aware that sometimes they are only for certain types of properties.
The Exploration Stage
If you can get through the above without losing the will to live, then you level up to the fun stage - exploring!
Step five - Identify the areas in which you can buy or the types of property within a certain area
Ultimately, the area you can buy in or the type of property you can buy is determine by your property price range - which is your deposit plus your mortgage.
Once you’ve identified these areas, get out and explore them! Walk around the neighbourhood, locate the nearest station (and check your commute), ensure the local coffee shops are up to scratch. I’m quite excited about this step - I might even reboot my inspiration series for this very purpose.
Anyway, imagine yourself living in the area. Does it feel right?
Step six - Begin house hunting
If the answer is yes, it’s time to start house hunting. Contact local estate agents, set up property alerts and stay organised.
I’ve heard that when you start viewings, you learn what you are looking for very quickly.
Still, come armed with some key questions: how long has the property been on the market etc. I also think my post on rental viewings is still relevant here.
The ‘Take Action’ Stage
Step seven - Make an offer
If you think you’ve found the one, it might be time to make an offer. Double check how much homes in the area have sold for to ensure you are making a sound financial decision and keep in mind your max limit from your above workings.
Step eight - Arrange you mortgage
If your offer is accepted, you need to firm up that mortgage. Complete the application form and send any documents the lender requires. Again, it might be best to enlist the help of a mortgage advisor here, to get the best deals and help with any admin.
Step nine - Hire a solicitor or conveyancer
At this point, you’ll also need to lawyer up (well, solicitor / conveyancer up)! They work to find out everything you need to know about the property - from running local searches, to checking boundaries, negotiating key dates and getting the contract ready to sign. Ultimately, they help you transfer the legal ownership.
According to this Zoopla article, conveyancers are specialist property lawyers, whilst Solicitors offer a full range of legal services (so property may not necessarily be their specialist area).
Step ten - Organise a survey
There are three different types or levels of survey:
A basic condition report
A standard homebuyer’s report
An in-depth building survey
The second is the most common, whilst the third is for run-down or unusual properties.
If the property comes back with big problems (things like structural issues or damp), you can then negotiate the price of the property to offset the work that will need to be down. If the problems are major, you might even consider pulling out of the sale.
Step eleven - Exchange contracts
Once your solicitor / conveyancer has completed their searches and you are happy with your survey results, the contract terms should be agreed, signed and exchanged - becoming binding. At the exchange of contracts, the deposit must also be paid.
Step twelve - Prepare to move
I’m sure there are checklists for preparing to move house all over the internet! I feel this is the perfect opportunity to purge your belongings (hello Facebook marketplace) and cancel the direct debits you no longer require.
Step thirteen - Get ready for stamp duty
Again, stamp duty could be another post in itself. It was first introduced in England in 1694 and is the tax paid when you buy a property. It is in banded thresholds, based on a property’s value (The Telegraph). These thresholds have changed quite a bit over recent years, as ministers use it as a political tool. Your solicitor / conveyancer should organise this, as well as any other payments due.
Step fourteen - Complete the sale!
Completion day is when the ownership is officially transferred and you gets those all important keys. The seller must move out… obviously.
So, I’m setting off on my fourteen step journey. Maybe I’ll be stuck in the planning phase for a while. Maybe that’s okay. One thing I know for sure is that I really do want to put my own stamp on a place and get so excited by the thought of a little renovation.
