The home buying process mapped out

Join us as we map out the journey that first-time buyers take when they become homeowners. This is going to be a long one, so grab a cup of tea, get comfy and remember to bookmark this page to come back to whenever you need it.

The four phases of getting on the property ladder

• Phase one: Preparation
• Phase two: House hunting
• Phase three: Buying the property
• Phase four: Moving in

Phase one: Preparation

‍When people who have just completed their goal of home ownership are asked what they would do differently next time, the most common answer is that they’d start preparing earlier.

This is because the preparation stage involves: 

• Building your credit score
• Saving for a deposit
• Working out your budget
• Getting a mortgage in principle
• Deciding what area you want to live in 
• And thinking about what’s important to you in a property

Saving for a deposit can take several years, and building your credit score can also take a little while too (around six months or more). That’s why if you’re planning to buy a property, it’s best to get started sooner rather than later. 

Building your credit score

For many people, that first encounter with credit scores, credit histories and the Credit Reference Agencies comes when exploring mortgage options. Getting to grips with this is absolutely essential when getting on the property ladder.

In particular, they want to judge how reliable they think you’ll be in making your payments on time.

Your credit history also determines what deals you’ll be able to access, and those with a better credit history may be offered lower interest rates.

Your credit scores are numbers that give you an idea of how healthy your credit reports are looking. The higher the credit score number, the more ‘creditworthy’ you appear to lenders and the more likely it is that your application for credit will be accepted – not to mention you could be offered better interest rates and deals. (Better interest rates on a 30 year mortgage, anyone?)

By the way, you have three credit reports, not just one! You can check your reports for free and as often as you’d like without harming your credit score by using these three services:

• ClearScore (uses Equifax data)*
  
• Credit Club (uses Experian data)
  
• Intuit Credit Karma (uses TransUnion data)
  

From there you can create a plan to start building your scores. Loqbox can help you with that. Find out more about how it works here.

*For transparency, if you sign up and follow this link, Loqbox may get a small referral fee from ClearScore. But don’t worry! It’s totally free for you.

‍The three main Credit Reference Agencies (CRAs) are responsible for keeping track of your credit history, generating your credit reports and calculating your credit scores. ‍

To do this they collect information from a range of sources like banks and local councils, to assess key metrics relating to accounts you have opened, the payments you’ve made, your address history and things like whether you’re on the electoral roll or not. 

This is all information that lenders will have available in your credit history to make a decision on your application.

Just because you may not have run into problems financially before doesn’t mean your credit history and credit score will be good. If you’ve never had a credit agreement in the UK, such as a credit card, a loan or a mobile contract, there will have been no occasions for companies to report your successful payments. This will mean that you have no credit history. And no credit history can be as challenging to overcome when applying for a mortgage as having a bad credit history.

Why? Because it means that how you deal with credit is unknown to a mortgage provider. There’s no information available on how you handle credit, and so lenders will likely regard you as a high-risk customer.

Saving for a deposit

When it comes to home-buying, the deposit is the amount of cash a buyer will pay upfront towards the price of the property. The remaining amount will usually be arranged in the form of a mortgage.‍

So if you are buying a home for £300,000 and you put down a £30,000 deposit, that deposit is 10%. You’ll then need a mortgage for the value of £270,000 to cover the other 90% of the value of the property.

You will be expected to pay off your mortgage to your lender — with interest — in monthly payments over the term of your mortgage deal. The average term for repayment of mortgages is 25 years.

Working out your budget

The general rule of thumb for working out your budget is to multiply your salary (or combined salaries if you’re buying with a friend or a partner) by four.

‍However other factors will also impact how much you’re able to borrow including:

• your credit history
• the current economic environment 
• the amount you’re able to put down in a deposit

Barclays have a mortgage calculator here which you can use to see how much you might be able to borrow.

When considering your budget, you also need to remember the other costs involved when buying a home. These include, but are not limited to:

• Mortgage advice (although this can sometimes be free)
• Conveyancer’s fees (the same as solicitor’s fees)
• Stamp duty 
• The home buyer’s survey
• House insurance (which is mandatory when taking a mortgage)
• Removal fees

You may also want to put some money aside for things like furniture and decorating once you’ve moved in, especially if you’re buying your first home, and moving from furnished rental accommodation. You will likely need to buy a lot of things when you move in.

Mortgage in principle

Most estate agents will not allow you to make an offer on a property without first passing their checks. These checks include making sure you are actually able to pay what you’re offering.

They will ask for: 

• proof of deposit 
• a mortgage in principle to show this (sometimes known as an agreement in principle).

Therefore, unless you’re a cash buyer, a mortgage in principle is something you will need before you’re able to put in an offer.
A mortgage in principle is a certificate you can get from a lender which states how much money they’re happy to loan you to buy a house (in theory). In most cases you can obtain these online, by filling out a form on a lender’s website. When you submit that application, the lender will soft check your credit report.

‍A soft credit check will not impact your credit report and will not be visible to other lenders. If the lender accepts your application, the mortgage in principle will then be emailed to you, and you’ll be able to show this to your estate agent when putting in an offer.

Note that a mortgage in principle is not the same as a full mortgage application in which the lender will hard check your credit report, as well as examining a range of other factors to include checking your payslips and bank statements. The mortgage in principle is only a pre-agreement, and in theory, is not binding.

Decide what area you want to live in

This one might have an obvious answer for you, or it might not. If you already know where you want to look for a new home, please feel free to skip. If you’re not sure, then read on.

When looking for where to buy a new home, several things are important. Here are a bunch of questions for you to consider…

• How easy will it be for you to commute to work, what are your options for doing so, and how long will it take?
• Where’s the nearest train station? If you have a car, or plan on having visitors drive over to see you, is there easy parking at your property?
• What can you afford in the area you’re looking to buy in (you can look into this more with sites like Rightmove)? Could your money go further if you looked at different areas?
• If you have children, or are planning to, are there good schools nearby?
• If you have cats that go outside, what about busy roads? If you have a dog, are there nice places to take them for a walk?
• How easy is it for you to get out of town when you want to?
• What council tax band is it in (as this will affect your ongoing costs)?
• In terms of lifestyle, do you want to be in the hustle and bustle of the city with lots going on? Or do you want to be out in the countryside with peace and quiet?
• How near to your friends and family do you want to be?

Think about what’s important to you in a property

Different from the above point about the area, this is a question about the property itself. When you think about your new home, what’s on your wishlist for what it will have/or not have?
For example, for people who love cooking and entertaining, a kitchen and dining room might be really important. For those who have a dog, a garden is essential. Some people hate bungalows. Some people want to live in a flat with a balcony overlooking the water, or the city. What features are important to you?
(i.e. you wouldn’t buy a property if it didn’t tick these boxes), and which are the nice-to-haves that you would love if possible but you can live without.

Phase two: House hunting

Once you know what you’re looking for (budget, location, property) and you’re in a position to start making offers (credit history, deposit, mortgage in principle), you can begin house-hunting seriously. Here’s how this phase looks.

Begin the search online

Search sites like Rightmove, Zoopla, OnTheMarket and individual estate agencies for properties in your budget, and in the area you want to live in. You can set up saved searches and email alerts to turbocharge the efficiency of your browsing.

Many properties are now listed with virtual tours of the property which can help you decide whether you want to view the property in real life or not.

Contact the estate agents to arrange viewings

When you see something you like the look of enough to commit to a viewing, all you need to do is contact the estate agent selling that property to arrange a time to visit. This is really easy on sites like Rightmove, Zoopla and OnTheMarket as you can click to call or email the agents.

Unless the homeowner is showing you around the house themselves (less likely), viewings will take place within the working hours of estate agencies. This is typically 9am–5pm, Monday to Saturday.

Going to viewings

While there, as well as having a look to see how many features on your wishlist this property ticks, you also want to notice how well the property has been looked after. Is it tidy and well presented?

And have a think about things in the immediate environment. What’s parking like? Is it noisy? You also have the opportunity to ask the estate agents questions about the property and the sale while you’re there.

It’s worth discussing with the estate agent exactly what you’re looking for in a new home because even if this property isn’t doing it for you, they may be able to contact you next time something they think will suit you comes up.

Putting an offer in

This is where it gets fun! So you’ve been to see the property, and maybe even gone back for a second viewing. You love it. You want to make an offer, so you’ll need to provide proof of identification and funds to the estate agent before they will put your offer forward to the seller.

Proof of funds will include both a proof of deposit and a mortgage in principle. Unless you’re a cash buyer and don’t need a mortgage, in which case you’ll just need to provide proof that you have the money.

In terms of what you should offer, you really have to go with what you think it’s worth. Some people will suggest you always go in under asking price to try to get a bargain. But others will offer well over asking to try to secure the property. So this one will have to be at your own discretion. You can have a look at what price similar properties in the same area have recently sold for, and use this information to assess whether you think the property you’re looking at is priced right. And you can always ask friends and family for their opinions too.

At this point, if there are other people making an offer on the same property it can also get quite competitive. You may be asked if you want to up your offer, because other people might up theirs. You have no way of knowing if they will or won’t. And so you might have a few tense days while you wait to hear back from the estate agent whether your offer has been accepted or not.

When you do get your offer accepted, it’s time to move on to phase three.

Phase three: Buying the property

The keyword here is: Paperwork. And there’s lots of it.

The full mortgage application process

The time has come to start the official mortgage application (remember, the mortgage in principle you previously received is only what the lender is willing to lend you in theory, and you are under no obligation to actually go with that lender now, as there may be better deals out there for you).


Whatever your situation, at this point, it’s a great idea to seek advice from a professional mortgage advisor. And one who is independent. Mortgage advisors know what each specific lender likes to see in an application, and what they don’t. And they’re able to suggest the best deals for you based on their knowledge of the current market.

Mortgages can be really complicated things, and these guys take the headache away when it comes to finding the best deal for you. Some mortgage advisors will charge you for their services, but some will be free as they take commission from lenders when they refer you to them.

Once you’ve been through available deals with your mortgage advisor, and selected the one you want to apply for, you’ll then begin the full application process. For this you’ll need to provide lots of paperwork. This will include things like:

• payslips 
• bank statements
• national insurance numbers
• proof of identity
  

Your mortgage advisor will fill in your application, package all this information up nicely in the way the lenders like, and send it all off.

Then it’s time to play the waiting game. Typically it can take around a month to hear back from the lender whether your full application has been accepted or not. And again a mortgage advisor is helpful here as they will chase the lender to get updates on your application status and push the whole thing along.

Also note that this application for credit will show on your credit history.

Appointing a conveyancer and the conveyancing process

Alongside your mortgage application, you’ll also need to appoint a conveyancer (or a solicitor) to get the property sale in motion. You will appoint a conveyancer to act for you in the purchase of the property. And the seller who you’re buying the property from will also appoint a conveyancer/solicitor to act for them in the sale of the property.

All conversations and questions between you and the seller relating to the property will go through your conveyancers/solicitors. This article is a useful summary of what conveyancers do.

But in a nutshell, your conveyancer will do pretty much everything from here. They will:

• arrange searches with the local authorities
• look over fixtures and fittings
• request information from the sellers
• arrange for your mortgage provider to make the payment to the seller
• also arrange for your deposit to go to the seller, and they will make the stamp duty payment to HMRC
• raise a lot of queries and perform a lot of checks
• make you aware of a whole bunch of stuff you never knew mattered!
• Then, when the time comes, they will organise the exchange and completion (more on this later). 

Throughout the whole process they will send you a lot of copies of paperwork to read through and sign off on. This means they’ll probably phone you frequently to run things by you and check in with you. During the house purchase, you may also find that you need to spend a lot of time calling your conveyancer to push the sale along when things feel a little slow. It happens.

To appoint a conveyancer, it’s always best to get a few quotes. Your estate agent will likely recommend one to you as they will get a referrer’s fee. But you are under no obligation to go with this option. At the same time, it may well be that they have chosen a particular partner because they’re very good.

You can find a conveyancer by searching on the internet for conveyancers in your area and reading reviews, or asking friends and family for their recommendations. You don’t necessarily need to use one in your area — but a lot of people do because at points you may have to physically drop paperwork into their offices. And this is obviously harder for you if they’re not nearby.

Getting a survey

This is another hold-your-breath moment. If you’re getting a mortgage, a survey is usually mandatory and is often arranged by the lender (but paid for by you.) There are many different levels of survey with differing costs. You can find out more about the options available here. But most people will go for at least a RICS HomeBuyer Report rather than just the basic one.

This level of survey will give you more of an idea about whether there are any problems with your property that may cost you a lot of money to fix. If there are serious problems identified you may need to think about dropping out of the process, or renegotiating the price at which you’re buying the property to account for these costs. Your conveyancer will be able to advise you.

The survey will also give the surveyor’s opinion on whether the property is worth the amount you’re paying for it. If it’s under what you’re paying, then your lender likely won’t be able to grant you the mortgage.‍

Once the results of the survey are back with your conveyancer, any issues discovered in the survey will be worked on by them, and discussed with you and with your buyer’s conveyancer as they work towards a satisfactory resolution.

Once all issues are resolved, the sale can progress.

Buying with a partner or friend, but not married?

How will you own it?

Buying a property as an unmarried couple, or with a friend, is increasingly common. And your conveyancer will be asking you how you want to buy the property: as tenants in common or joint tenants? There are differences. To find out more about this, check out this blog.

If one of you is putting in considerably more money towards the deposit than the other and/or you’ll be contributing to mortgage repayments in differing amounts, then you may also want to think about whether you’ll own different percentages of the property. You can talk this through with your partner or friend, and with the help of your conveyancer find the solution that works best for you.

Home insurance

A condition of your mortgage offer may be that you arrange home insurance to cover your property, and you will need to prove you have done so by sending your certificate to your conveyancer, before they can proceed with securing the money from your lender.

To find the best deal, it’s best to shop around. You can either go directly to insurance providers for a quote, or you can have a look on the many comparison websites out there. Or both! While you’re doing this you may also want to consider those policies that also cover you for contents insurance.

Exchange

Phew. So you’ve read through more paperwork than ever before in your life. Been through the ups and downs of a full mortgage application and a survey. Possibly had moments where it looked like the whole sale was off, before finding a way to solve the problem and moving forward. And now, finally, you’re ready to exchange.

Crikey. From having your offer accepted, at a minimum, it’s probably taken at least two months to reach this point. And it’s all you’ve talked about with your friends for ages.

Up until the "exchange" (short for "exchange of contracts"), nothing is guaranteed. It’s only at this point where the two conveyancers representing the buyer and the seller swap signed contracts, and the buyer pays the deposit, at which a legally binding commitment has been made. And no one can back out of the deal. You can find out more about it here.

Completion

Often this will happen within one or two weeks of the exchange, but not always. It can depend on how many people there are in the chain, and what their timings are.

Be strategic about this. If you’re renting and you’ve paid for a full month at the beginning of the month, then you probably don’t also want to complete at the beginning of the month, because you will then have to pay both rent and your mortgage for that month.

At completion, the conveyancer will arrange for the full payment from both your deposit and your mortgage to go to the seller. You will then wait for a phone call to confirm this has taken place, and the property sale is complete. Your conveyancer will then arrange for stamp duty to be paid to HMRC within 14 days.

For more information on completion, and timings, have a look at this article here.‍

Phase four: Moving in

Woo! You made it. Check you out. Let the new home cards roll in.

Celebrate!

An essential step that you’ve long awaited. Crack open the bubbly, or however you like to celebrate, and maybe invite a few loved ones over to show them your new home.

Moving in

You’ll need to arrange for all your things to be moved to your new property. Depending on how much stuff you own and how much money you have available to pay for this service, this can range from chucking a few bags in the boot of a friend’s car, to renting a van yourself, or hiring a removals company to do it all for you.

Redirect your post

Don’t forget to redirect your post. This is easy to set up with Royal Mail and you can do so here. You’ll also need to update your address with relevant companies on and offline, remembering things like the DVLA, your bank accounts, and Amazon (or your orders will be going to the wrong address!).

Contact utility companies to set up your accounts

Somewhere in all that paperwork your conveyancer sent you will be the names of the electricity, gas, water and broadband suppliers to your new property. You don’t have to stick with these, and you can always shop around for a better deal. That’s your choice. But remember to set up new accounts with whoever your chosen supplier is when you move in, and give them meter readings.

Decorating and furnishing

Rome wasn’t built in a day, and likewise it’ll take you several weeks, months and maybe even years (if you have ambitious renovation plans) to get your new home exactly how you want it.

Furnishing can be expensive and a little bit of a challenge early on, but nothing you can’t handle after this long wait!. If you’ve come from furnished rental accommodation, for example, and you don’t have a bed, you may find yourself sleeping on the floor for a while. When you first move in it can feel a little bit like camping, albeit indoors. But it is very exciting.

Congrats on getting to the end of this home buying journey! We hope you’re more familiar with the process now, but if you’d like to find out more, you can head over to our blog.

Buying a home is one of the biggest moments in many people’s lives. Whether you’re starting to think about buying a home, or you’ve made the decision and now you’re looking at how, understanding the process is really important.