Finding the right property is just the first step in the process. Buying or selling a home normally takes at least two to three months, if there are no problems or delays. So if you want to be settled in to your new pad by Christmas, here are our tips for what you need to do.
Narrowing down the search
Some people spend months searching for a property, whereas others only look at a few places before finding one they want to buy.
To avoid wasting time, you can narrow down your search by deciding which area you want to live in, and making a list of the features you need in your new property.
It’s also sensible to work out how much you can afford to spend, so you might want to consider how much you could be able to borrow before you go any further.
Our mortgage calculator can help with this. It will also tell you how much your mortgage repayments and stamp duty would be on a particular home.
Agreeing a price
When you’ve found a property, the next step is to make an offer, either directly to the owner or via the estate agent.
If a property hasn’t sold after a long time on the market, you might want to start with a low offer, well below the asking price.
But, if you know there are other buyers interested, it might be safer to make an offer closer to the amount advertised.
Don’t forget to include additional costs like stamp duty and legal fees when working out how much you can afford to pay.
On a house that costs £300,000, for example, the stamp duty bill alone will cost £5,000.
Applying for a mortgage
Once you’ve had your offer accepted, you will probably need to apply for a mortgage.
The range of mortgages you could get will depend on how much of a deposit you can afford. To be eligible for many of the top deals, for example, you would have to put down 40% of the property price as a deposit.
But even if you can’t get some mortgages, the wide array of offers available to you can still be overwhelming, especially if this is the first time you’re buying a property.
It’s vital to choose carefully, though. Going for the wrong mortgage deal could end up costing you significantly more in the long run.
So how do you choose the right mortgage for you? The two main things to consider are whether the mortgage is fixed rate or variable rate, and what fees you’ll have to pay.
Fixed rate or variable rate?
With a fixed rate deal, you pay a set rate of interest for a period of time, say two or five years. This means you’ll know exactly how much your repayments will be during the fixed term, making it much easier to budget. But, if you decide to move and sell your house before the end of the fixed term, you could have to pay some hefty early repayment charges.
When you’re on a variable rate deal, the rate you pay can fluctuate in line with the Bank of England base rate (currently 0.25%), or the mortgage lender’s own Standard Variable Rate (SVR) – this is the interest rate it charges customers who aren’t on a discounted or fixed rate deal. Variable deals are usually cheaper than fixed rate deals, and don’t tend to have early repayment charges. But your repayments could change, because if the base rate goes up, it’s likely your mortgage payments will go up too. So you would need to think about whether you could afford to pay more each month.
How much are the fees?
Don’t forget to look at the fees when you’re comparing mortgage deals. Many lenders charge an arrangement or application fee, often in the region of £1,000 or more. But you could also get a deal that doesn’t charge any arrangement fees whatsoever.
So it’s vital to take this charge into account when you’re working out the overall cost of a mortgage deal, and considering whether you can afford it or not.
You may find, for example, that a mortgage with a 0.99% interest rate and a high fee is more expensive over two years than a rival deal charging 1.1% with no fees.
Signing on the dotted line
Even when you've had your offer accepted, it’s not legally binding until contracts are exchanged.
You’ll need to get a solicitor or a conveyancer to draw up contracts, and to carry out a number of local checks, known as searches. You will need to budget between £800 and £1,500 for this.
Many people want the reassurance of getting the property checked by a surveyor before exchanging contracts. This is a sensible step, because your surveyor should be able to identify any potential problems with the house before you buy it. Surveys can cost from £250 to £600, or more, depending on how much detail you require.
After that, all that’s left to do is sign the contracts and transfer the money (deposit, mortgage balance, fees and stamp duty) to your solicitor.
If there are no difficulties or delays, this could all be done in around three months or so. Then, you can breathe a big sigh of relief, pick up the keys to your new home and get your Christmas decorations up.