I am thinking of buying a house, what do I do first?
The first thing to do is contact us.
We will go through your affordability with you, so we would look at the same things the lender would look at. So that’s your current situation, your income, outgoings, deposit and credit score to look at the overall amount that you would be able to borrow. Or as we call it your ‘Borrowing power!’. Knowing your Borrowing power is important, so that you know you are looking at the right price range.
If you are ready to go, we would move a step further and get you a ‘Decision in Principle’ (DIP)
This would be where the lender would credit score you to make sure that you are able to secure a mortgage based on the figures we have talked through. (for more information on how to check your credit score, please see our ‘How to get Mortgage ready’ guide.)
Getting a DIP will confirm the borrowing in principle, so that any offers you want to make on properties a bit more clout, as the vendors can see you are not only serious about the property, but you have already taken the first steps to securing the mortgage too.
Starting your property search
Before you start looking at properties, it is a good idea to write a list of all the requirements that you want your new home to have for you, for example –
In addition to your questions, make a note of the maximum price that you are prepared to offer.
It is easy to get carried away when you find one you like, but having this discussed and agreed before you go for your viewings, means that you are focused in on what you are looking for and what you are prepared to pay to achieve it.
What fees will I need to pay when buying my new home?
There are certain costs involved with buying a house, aside from the usual deposit and mortgage repayments. It’s important to take these extra costs into account when planning out what money you’ll need to have budgeted for from the outset.
Once your offer has been accepted, you’ll need to find yourself a solicitor/ conveyancer to take care of the legalities involved with buying a property. The estate agency or family/friends might recommend a solicitor to you.
What do the solicitors do?
Normally your solicitor will start by sending you some paperwork over, asking you to complete the details that they need to start the work for you.
They also carry out the conveyancing process and make contact with the seller’s solicitor.
The conveyancing they will do for you includes environmental searches, as well as any other searches and enquiries with the local authority. This can help to reveal any planning issues affecting the property. Your solicitor/conveyancer will carry out duties such as flooding, mining and contaminated land searches, if necessary.
Your solicitor will report back to you on all the investigations and searches. If you’re then happy to proceed with the purchase, they’ll finalise the terms of the contract and explain these to you.
Exchange of contracts, which is when you’ll pay your deposit to your solicitor in order to exchange contracts on the purchase. Exchanging contracts with the seller’s solicitor means you’ve entered a legally binding contract to buy the property.
And finally, your completion, which is when the solicitor receives the funds from the lender, takes any fees and transfers the purchase funds to the sellers solicitor.
After this has been done, the keys are yours and you can move into your new home!
Some mortgages come with a product fee that can either be paid upfront or added into the cost of your mortgage. Your adviser will talk you through this and explain all options during the mortgage application process. There’s often also an administration charge made by the lender for arranging the credit of your mortgage.
The type of valuation you choose will determine the cost (the more in-depth the survey, the higher the fee). If you choose to have a structural survey or a homebuyers survey report, then these come with an additional cost to the standard mortgage valuation.
The different types of Valuations
Mortgage valuation – This is the basic valuation that the lender will need to have completed. Most lenders will offer to instruct this for you and some even offer this for free. However, it is purely a valuation of the property for the purposes of the mortgage lender. This isn’t a full survey and you often won’t receive a copy of the report at the end.
Homebuyers survey – This survey might be an option to would prefer to go for. This will include a property valuation as above for the lender, but will also check for any major issues, faults and repairs needed to the property, giving an average repair cost too. Your adviser will be able to tell you if your lender can instruct this for you along with an idea of costs.
Full structural survey – This is the most in-depth survey you can instruct. It’s common for older properties or listed properties to have a full structural survey as it checks for major and minor faults, along with estimated repair costs. This gives you the ability to challenge anything with the buyer from a legal perspective. This is often the most expensive option because it goes into the most detail. Your adviser will also tell you if it is something that your lender can instruct for you or whether you would need to instruct on yourself. The cost would be given to you directly from the company instructed to do the full report.
Not only will we help find the right mortgage for you, we’ll also help make sure that your home, and the people in it, are protected. Whether this means critical illness cover, life insurance or income protection, we will be more than happy to talk through the terms and conditions of different policies with you and look to get the right level of cover in place for you.
As a condition of the mortgage, you will also need to take out buildings insurance for the property. This will cover you against damage to your home caused by fire, flooding etc. Many people also choose to take out contents insurance alongside this to protect their own belongings. The cost of this would be determined by the property itself and the provider.
Removal costs are not always a necessity, but something you might want to consider if you’re unable to carry out the move yourself. Removal costs tend to be higher during the busier months, so it would be a good idea to get a couple of quotes before you decide on who to use
Mortgage broker fee
This is a separate fee charged for their specialist knowledge, for making the applications and getting you ready to exchange contracts. We charge a fee for mortgage advice and in addition to that we may receive commission from the lender. The actual amount you pay will depend upon your circumstances, however our fee is typically £295.
This is a one off charge and means that you then benefit from our ‘Lifetime service’. This means that we will review your mortgage and protection every few years to make sure that you are never paying more than you need to. Each subsequent review would be free of charge to our existing clients and you can have an unlimited number of reviews throughout your mortgage term.
My offer is accepted, what do I do next?
Congratulations! Now that your offer has been accepted, we are ready to move on to the mortgage application.
Getting a mortgage can seem confusing, but it doesn’t need to be. Whether we do this face to face or over the phone, we can offer the same expert advice and will be there to talk you through the whole mortgage process, from beginning to end. We’ll explain each stage of the application, making sure you understand what documentation we need from you and what the next steps will be.
We are whole of market, which means we aren’t tied to a specific lender, we work for you. We look at all the lenders and are sometimes even able to access mortgages that you wouldn’t necessarily find when searching the market yourself. Having access to all different lenders will ultimately save you time, as you won’t have to contact each individual lender to compare the mortgage terms and rates; we’ll do all that for you.
The important thing to remember is that every lender is different in what they view as the ‘ideal candidate’ to lend to. So even if you don’t fit one lender’s criteria, it doesn’t mean you won’t fit another’s, and we have a list of lenders that we can work through with you. Having an expert on your side will ensure your application goes to the right lender for your individual needs, which will make the process smoother.
Once we have gone through your documents with you, spoken about your plans, priorities, budget, throughs and concerns, we will be in a position to make a recommendation for your mortgage package which meets your requirements.
This includes the mortgage lender, repayment type, mortgage term, mortgage type, any applicable fees, tie in periods and costings. This also includes any protection products that we would recommend setting up to support you in your new home. It is important that we make sure that we don’t leave you in a vulnerable position whereby something happens that could affect your ability to make your mortgage payments, as your home may be repossessed if you fail to keep them up.
Once you are happy, we will make the relevant applications on your behalf, send over the documents required and chase the lender and providers for you. This is where we can take the pressure off you, as we can also keep your solicitors and the estate agents in the loop, so that they chase us for an update and not you!
For your life cover application, we will get the relevant medical questions answered and over to the provider so that they can underwrite your application. They would then look to agree terms of cover, ready for when you need them.
For your mortgage application, after the lender has assessed all of your documents and valued the property, they will look to agree your mortgage and produce your mortgage offer. It is at this point that the offer goes over to your solicitors, who will take over at this point to arrange exchange and ultimately completion for you.
Although we have handed the baton over to the solicitors here, we are still there for you should you have any questions right the way through!
Whilst it’s easy to think, “it won’t happen to me”, with the current Statutory Sick Pay at £96.35 per week, it’s really important to ask yourself whether you could afford your monthly bills and committed expenditure if you weren’t able to work due to ill health.
Your mortgage application is based and assessed on that fact that you are receiving your current income(s). Therefore, should anything stop you from earning or receiving your income(s), we need to make sure that you and your home are not at risk.
Here are some of the different types of protection we offer:
Income Protection – Income protection is a policy that can provide you with a regular income, should you become ill or injured and unable to work as a result. Income protection insurance policies will generally pay you a predetermined amount each month, until you either recover and go back to work, or until you retire.
Life Insurance – Generally speaking, if you have children, a partner or other relatives who depend on your income to cover mortgage payments, household bills, or any other living expenses, then you should consider life insurance, as it could help provide for your family in the unfortunate event of your death and give you peace of mind knowing that they are taken care of.
Critical Illness Cover (CIC) – This is a slightly different type of product. It is designed to pay a tax-free lump sum in the event that you’re diagnosed with a specified critical illness covered under your policy. You could use the lump sum to either make your monthly mortgage payments, pay it off completely or use for any other purpose you see fit. This is designed to take the pressure off the finances, allowing you to recover properly in your own time without worrying about your mortgage payments.
Your options will all be talked through with your adviser, who will make sure that you have the opportunity to protect what’s important to you.