A step-by-step guide to buying a house

Our step-by-step guide to buying your first home - from saving and how to find and buy a house, to finance, mortgages and moving in.

Person looking happy with keys to new home

 

Should I buy or rent?

The first thing to look at when it comes to buying your first house is to think about whether you should buy or rent a home.

There are pros and cons with each option and your decision might ultimately come down to your financial situation.

If you’re able to buy a property, you have a deposit and you can afford the mortgage payments, it’s generally a less expensive option.

Not only are mortgage costs usually cheaper than paying rent, you’re also paying into a property you own, rather than lining a landlord's pocket. 

Buying a house also tends to provide more stability. You’re not at risk of having to move out if the landlord decides they want to sell the place. 

However, renting could be a sensible option in some cases. 

Your personal situation might also mean you’re not able to buy a property.

If you have a poor credit score or debts to pay back and you’re unable to get an affordable mortgage it might not be the right time. In this case it could be worth renting until you’re in a better financial position to buy. 

Other reasons for renting instead of buying could be if you’re about to move jobs, or location, and don’t want to commit to a big financial tie such as getting a mortgage

 

How long does it take to buy a house?

Once you've got your deposit and are financially ready to buy, you should be able to start the steps to buying a first home. How long this takes depends on a number of factors including:

  • The time it takes to find your property
  • The length of the chain you enter
  • The complexity of the conveyancing process
  • Any bumps along the way that slow the process down

Ideally you would hope that once you've found your property, it would take 3 to 6 months for the purchase to complete. However, it may take longer.

 

How to buy a house 

You’ve probably already started to think about where you want to buy and the kind of property you’re after. But how do you actually go about finding and buying a house?

Browsing online estate agents like Zoopla make it easier to look for houses. They should also give you an idea of the sort of price you may pay. 

Aside from the cost, there are lots of other factors to consider such as:

  • What the surrounding area is
  • How long your work commute would be
  • What the local nightlife is like
  • Your proximity to parks and local shops
  • How good nearby schools are 

Once you’ve worked your needs out, you can start browsing.

Look out for these features when reading the description of the house:

  • Floor plans
  • The age of the house
  • Storage space
  • Energy efficiency rating
  • Double glazing
  • Council tax
  • If it’s in a conservation area or it's a listed building.

Make sure you're clued up on what to look out for when viewing a property

You should get an idea of how much space you have in the property and get a rough handle on running costs. 

It could also be worth looking to see if there are any local planning permission applications in place. If a giant supermarket is about to be built you'd want to know about it before you buy a property.

Bear in mind that if you're buying a flat or leasehold property there are a few more legal complexities to consider and additional costs.

Before you buy you need to consider the length of the lease. If it’s less than 80 years you may struggle to get a mortgage on it. Leases can be extended but it is another cost to pay.

Leasehold properties also have additional costs: there's ground rent to pay to the freeholder and service charges for the maintenance of communal areas as well as the building itself.

As a result of these complexities, the conveyancing charges for leasehold properties are usually higher.

 

What house can I afford?

Before you start looking at houses, book an appointment with a mortgage adviser.

They should look at details including your income and profession, and give you an idea of what you might be able to afford. 

You can search for an adviser online, such as through a website like unbiased.co.uk. It could also be worth getting recommendations from people you know.

Before you book your meeting, check what fees are applied by the adviser if you do take a mortgage out with them.

On average, you could expect to borrow around 4 times the amount of your income, or combined income if you’re buying with another person. You choose the length of time the mortgage lasts for, but the average is 25 years.

How much you pay back each month will depend on:

  • The size of your deposit
  • The length of the mortgage
  • The interest rate

The interest rate is set by the lender and may vary according to whether you choose a fixed or variable rate mortgage.

 

Do I need to sell my house first?

There's no rule to say you need to sell a property before you buy a new property.

The benefit to doing this is that you have the money from the sale to put towards your new place. You should also be in a stronger position to negotiate on the price of a property and the timing of a sale because you won't be pressured by having somewhere to sell. Yet most people who already own property buy and sell at the same time.

It's also possible to put in an offer on a house before you sell your property.

But if you have an offer on your home, or you've sold it, you're in a much stronger position. This is because you may have the money, or at least a more solid idea of how much you might get for your home. You may also be seen as a more serious potential home buyer if your existing property is under offer or has been sold.

 

Types of mortgages and agreement in principle

There are 2 main types of mortgage: repayment and interest-only. 

With a repayment mortgage you pay interest and capital off each month. However with an interest-only mortgage you only pay interest every month and pay off the capital at the end.

The risks associated with interest-only mortgages means they are now much harder to come by. New deals are only typically offered to landlords, or those looking to become landlords, as buy to let mortgages.

You can’t apply for a mortgage until you've had an offer accepted on a property. However you can arrange a mortgage in principle confirming how much you can borrow and what kind of house you can afford. This can be helpful and show your commitment when you do make an offer on a property. Most estate agents require proof of an agreement in principle before you offer on a property.

 

How much deposit do I need to buy a house?

You need to put down a cash lump sum as a deposit on your house to get a mortgage.

Although some mortgage lenders will accept a 5% deposit and offer 95% mortgages, the more money you can put down the better.

If you're able to stump up a 10% or 15% mortgage you should get a much wider choice of lenders and should be eligible for lower interest rate deals.

 

Saving for a deposit

Buying your first home is all about saving for a deposit and this is often the biggest barrier to buying a first home.

This is because it’s hard to save for a deposit and pay rent at the same time.

There are lots of ways in which people save for house deposits. Many people are given money by family members to help them get onto the property ladder.

However, saving in the right way, could help you to reach your goal sooner.

You can, for example, pay as much as £4,000 a year into a Lifetime ISA. You should get a 25% bonus from the government if you use it to buy a house, this could be up to a maximum of £1,000 a year.

To get the bonus, the money needs to be used as a deposit for a first home or saved for later life. 

You need to be aged 18-40 to open a lifetime ISA but you can carry on paying into it until you're 50. The house you buy also needs to be no more than £450,000.

Whatever type of savings account you use, keep an eye on how long you’ll be paid the initial interest rate. With some deals this initial interest rate could drop off after a year.

Also look at how easy it is to access the money. If you can put the money away for a longer period, you might benefit from a higher interest rate.

The amount of money you can put away depends on your income and outgoings.

A way to track these is to make a strict budget and stick to it where possible. Anything you have left could then go into an interest-paying account.

And remember to look out for deals on your insurance and utilities to bring down your outgoings. 

Take control of your bills with our Savings Assistant

Go to savings assistant

 

Viewing houses and flats

Once you’ve got your deposit, you can now start viewing properties!

Here are some basic tips to follow:

  • Take someone with you
  • Photograph everything
  • Turn up early
  • Feel the walls to check for any cracks
  • Use your nose- does it smell damp?
  • Prepare questions for the seller or estate agent
 

Estate agents and making an offer on a home

First ring the estate agent and make them an offer on the house. If they accept then you’re set. But remember, nothing is final at this point.  

If they don’t accept, you might have to go back to the drawing board and increase your offer. It’s important to think carefully about whether you can afford to do this.

Once they accept, you should get a written contract entitled ‘Subject to survey and contract’.

 

Apply for a mortgage

You may already have an agreement in principle for a mortgage but you now need to formally apply for your mortgage.

You don’t have to use the lender that gave you your agreement in principle.

It’s important to get the best rate possible and your mortgage adviser can help. Deals are changing a lot at the moment following on from the Bank of England's interest rate rises. So the deals available may have changed since you started your property search.

To apply for your mortgage you need:

  • Proof of ID, eg passport or driving licence
  • Proof of current address, eg council tax or utility bill
  • Last 3 months’ worth of payslips, or your last 3 tax returns if you’re self employed
  • Your most recent P60
  • Details of any credit commitments, eg credit card statements, student loans or overdrafts

Get more information about mortgages

Find out more

 

Property and home surveys

The offer on your home is still subject to contract, and so the next step in the home buying process is to find out as much about its condition as you can. You can do this with a survey.

 

Do I need a survey when buying a house?

Although your lender does a survey to assess the property’s value, this won’t alert you to any problems, like damp in the home or a subsidence risk. This means it’s a good idea to have a comprehensive survey to ensure you know as much as possible about your new home’s condition.

If there are potential problems you then have the opportunity to either pull out of the purchase, renegotiate the price or ask the seller to pay for repairs.

 

Types of building survey

The Royal Institute of Chartered Surveyors offers 3 levels of survey.

  • Level 1 (previously called a Condition Report) - the most basic
  • Level 2 (previously called a HomeBuyer Report) - suited to standard homes in good condition 
  • Level 3 (previously called a Building Survey) - a full structural survey. This is recommended if you're buying an older, larger or significantly altered property or a planning structural renovations.
 

Who organises a survey when buying a house?

Your lender will arrange the valuation survey. 

It’s down to you (not the seller) to arrange and pay for a more comprehensive survey.

 

How much is a house survey?

The cost of the survey varies according to the size of the property, where it’s located and the surveyor doing it.

However as a rough guide you can expect to pay:

  • Level 1 - £300-£900
  • Level 2 - £400-£1,000
  • Level 3 - £630 to £1,500
 

Instructing a solicitor and conveyancing

As soon as your offer has been accepted you need to instruct a solicitor to handle the conveyancing step in the house buying process.

 

What is conveyancing?

Conveyancing is the process of transferring the ownership of the property from 1 person to another. Your solicitor should be qualified in conveyancing. Your solicitor should be qualified in conveyancing.

The process starts when your offer is accepted and finishes once the sale is completed.

It usually involves the following: 

  • Acting as the go between for you, the mortgage lender and the seller
  • Conducting searches on the property
  • Making and handling enquiries
  • Preparing and exchanging contracts
  • Dealing with the Land Registry
  • Sorting out stamp duty
  • Transferring money during the sale
 

Do I need a solicitor to buy a house?

If it’s a simple chain free transaction and you’re a cash buyer you might be able to do the conveyancing yourself. However unless you know exactly what you are doing it wouldn’t be recommended.

If you're using a mortgage to buy the house, the lender normally insists that the conveyancing is carried out by a solicitor.

 

How long does conveyancing take?

It’s possible to complete the conveyancing work within a month, however the time it takes you depends on the property you’re buying and the length of the chain you’re in. Delays with other people’s properties could hold you up.

It’s realistic to expect conveyancing to take 12-16 weeks.

 

How much are solicitors’ fees for buying a house?

How much you pay depends on the property you’re buying, where it’s located and your solicitor’s fees.

You can typically expect to pay between £850 and £1,500, although this won’t include the cost of disbursements. These are the fees charged by third-parties for example for searches, bank transfers, property fraud checks and stamp duty.

You can expect to pay more for leasehold properties as more legal work is required.

 

What is stamp duty?

Stamp duty is a land tax you pay on your home and it’s an important part of buying a house. The more valuable your house is, the more stamp duty you pay. 

  • In England and Northern Ireland, its full name is Stamp Duty Land Tax
  • In Wales it’s known as land transaction tax
  • In Scotland it’s known as land and buildings transaction tax
 

Changes to stamp duty tax

Stamp duty has been permanently cut for England and Northern Ireland. This was announced in the ‘mini-budget’ on 23 September. 

Before the announcement, you’d pay stamp duty on a home worth between £125,001 - £250,000. Now, you don’t have to pay stamp duty on a home worth below £250,000 in England and Northern Ireland.

According to Rightmove, this means that a third of homes in England are exempt from stamp duty.

First time buyers were exempt from stamp duty on the first £300,000 when buying a new home. This has been raised to £425,000. If you’re buying your first home above £425,000, you have to pay 5% stamp duty on anything above this amount.

The changes mean that home movers in England and Northern Ireland could reduce their stamp duty bills by £2,500. First-time buyers could save up to £11,250, Rightmove says. 

At the moment, it’s not clear if the stamp duty rates are changing in Scotland.

 

New stamp duty rates for England and Northern Ireland

  • Up to £250,000: 0%
  • Portion between £250,001 - £925,000: 5%
  • Portion between £925,001- £1.5m: 10%
  • Portion over £1.5m: 12%

If the property is a second property you have to pay an additional 3%.

 

For first time buyers in England and Northern Ireland: 

  • Up to £425,000: 0%
  • £425,001 to £625,000: 5%
  • Above £625,000: Normal rates apply
 

Stamp duty rates for Scotland

  • Up to and including £145,000: 0%
  • Portion between £145,001 - £250,000: 2%
  • Portion between £250,001 - £325,000: 5%
  • Portion between £325,001 - £750,000: 10%
  • Portion over £750,000: 12%

First-time buyers don't pay any stamp duty on the first £175,000 of the property in Scotland.

 

Stamp duty rates for Wales

Rates for Wales changed on the 10 October to the following:

  • Up to and including £225,000: 0%
  • Portion between £225,000 and £400,000: 6%
  • Portion between £400,000 and £750,000: 7.5%
  • Portion between £750,000 and £1.5m: 10%
  • Portion over £1.5m: 12%
 

Exchanging contracts and completion

It’s almost time to move in and complete buying your first home. The lender has approved the mortgage, the solicitor is happy with the searches and enquiries, and the seller can hand over the deeds.

There’s only contract signing to do now and paying a 10% deposit. 

Both you and the seller both sign the contract to say you’re the legal owner of the house. Then each person’s solicitor signs and swap contracts, and you then all sign each other’s contracts.  

At this point you are legally committed to buying the property (and the seller is legally committed to selling). If you pulled out after exchange of contracts you would lose your deposit.

 

Compare and buy home insurance

It's not a legal requirement to buy home insurance, however your lender may insist you have buildings insurance before it releases your funds.

This will ensure that if your property is damaged by fire, flood or theft, you have the funds to pay for repairs or rebuilding costs.

It's also a good idea to buy contents insurance which protects everything inside your home. You can buy both in 1 policy.

You could also add personal possessions cover to your policy, for a small extra fee, so your contents are protected when they’re out of the home. 

Remember you don’t have to get insurance through your lender. Shop around, compare home insurance policies and see what works best for you.

Compare home insurance quotes

 

Moving into your first home

The hard work is now done and you should have a moving in date. However, before you get carried away with house-warming plans, it’s worth thinking about how you’ll shift all your gear with a moving house checklist.

Removal companies are great for packing and moving all your possessions but they can be pricey. But if don’t have huge amounts of furniture you could save money by hiring a van. Maybe you could rope in a few willing friends or family members to help you too.