Learn About House Buying
We must know to buying a house with not complicated and confusing business.
Buying a house can be a complicated and confusing business. Particularly because it's something most of us do only once or twice in our lifetimes. Our Learn About Guide is here to help. From finding your dream home to moving in, you'll find all the advice you need right here.
"Doing the sums,
Choose the right mortgage,
Finding a conveyancer,
Making an offer,
Conducting a survey,
Exchanging contracts,
Completing and moving in"
Doing the sums
The amount you will be able to borrow is primarily determined by a few key factors:
Your income
Your employment status
The size of deposit you can provide
Your current financial commitments
Use our online calculators to work out how much you can borrow as well as how much the total mortgage will cost you.
Choosing the right mortgage
With over 4,000 mortgages in the UK it's important to consider and evaluate what's available. Our Learn About Mortgages guide can give you more information on the types of mortgages that providers currently offer.
You can also use our online Mortgage Wizard to draw up a short list of mortgages taken from most of the leading mortgage providers in the UK. Or you could visit a Bradford & Bingley adviser who could answer your questions and find a mortgage from the wide range we have assessed.
Once you have chosen and applied for your mortgage, the lender will need some supporting documentation from you. This will include some or all of the following:
* Evidence of your income and financial commitments, such as recent pay slips, a P60, your latest mortgage statement and your bank statements
* Information from credit reference agencies, your employers, other lenders and your landlord
* Proof of identity, such as a passport or birth certificate
* Proof of address - a utility bill or bank statement will usually be sufficient
Finding a conveyancer
Buying a property involves a fair amount of legal work or 'conveyancing' so you'll need a conveyancer. They should give you a quote for their services that will include details of the fees you need to pay third parties, such as search fees and stamp duty.
Most lenders will be prepared to accept your choice of solicitor, as most experienced conveyancer will have acted for the lender in question before.
The conveyancing may take longer than you had imagined, but don't be tempted to rush things. Your house or flat is probably the most expensive thing you will ever buy, so it is important to be sure there are no loose ends.
When a conveyancer conveyances your property, they will need to do all this:
Obtain the deeds that prove it legally belongs to the person you are buying it from.
Research where the property's legal boundaries are and pass this information on to you.
Prepare a fixtures, fittings and contents list which makes it clear whether or not things like carpets and kitchen appliances are included in the purchase price. They will also ask the seller if they know of any material, structural or other defects to the property that you should know about.
Advise you on a draft contract for sale, prepared by the seller's conveyancer, setting out the terms of your purchase.
Carry out a search of local planning information to uncover details of any upcoming development that could affect the property's value, such as a new road.
Agree a date for completing which suits both you and the seller.
Making an Offer
Once you've found the property you want to buy, the next step is to make an offer, normally through the estate agent.
Negotiating
Most sellers build a certain amount of leeway into their price, so it is usual to offer less than the seller is asking. In deciding what you are prepared to pay, bear in mind things like the property's state of repair and how much you would have to spend on building work or redecoration.
Your first offer might be up to 10% below the asking price. It is then up to the seller to either accept that price, or to try to negotiate a higher one. If there are several potential buyers interested in that particular property, the seller may have enough bargaining power to insist on the full asking price. In a strong market a property may sell for more than the asking price.
If you know that many people will be interested in the property (because there is a lack of good properties of that type on the market), you should consider offering the asking price up front to avoid a 'bidding' war.
Once your offer has been accepted, the estate agent will confirm this in writing. You can then go ahead with arranging a survey and finalising your mortgage arrangements. However, the acceptance of your offer is not legally binding until you and the seller exchange contracts.
Gazumping
In a time of rising house prices the seller may be tempted to abandon you if a higher offer comes along. This process, known as gazumping, is more common in England and Wales than it is in Scotland.
Being gazumped could leave you out of pocket on expenses like legal costs and the survey fee, but that is unfortunately a risk you have to take. The sale is secured by law only when contracts have been signed and exchanged.
Scotland and gazumping.
Under the Scottish system, sellers generally set a certain date by which all bids for the property must be in and make their decision from those bids. The seller then confirms his acceptance in writing. If the seller then gets a better offer and wants to change his mind, his solicitor will refuse to act for him on the new transaction, as doing so would leave him open to charges of professional misconduct. Rival solicitors are free to take the business if they wish, but this seldom happens in practice.
Conducting a survey
Once your offer has been accepted, you'll need to arrange a survey to assess the property's condition and value. Your mortgage lender will need a basic valuation at the very least before they will allow your mortgage to go ahead.
We recommend you get a very detailed report on the condition of the property in order to protect not only your lender's interests, but also your own. Make sure that the surveyor you use is a member of the Royal Institution of Chartered Surveyors or the Incorporated Society of Valuers and Auctioneers.
There are two kinds of surveyor's report beyond a basic valuation:
A House Buyer's Report comments on the condition of only those parts of the property which are easily accessible or visible. The surveyor will recommend any further investigations they think are necessary - for example if they think the wiring needs checking or there is the possibility of some structural problems.
A Full Structural Survey involves a more extensive investigation. A full survey is more expensive than a House Buyer's Report, but it should tell you much more about any work that may need doing on the property.
Full surveys are recommended in many cases, particularly if you are buying a property that is more than 100 years old or the building is more than three stories high.
When you set out on the home-buying process, you should budget for the cost of more than one survey. You might find the surveyor's report on your first property uncovers serious faults (such as subsidence or rot) which means you want to withdraw your offer. Even if there are no problems with the property itself, another bidder could step in with a better offer at the last minute. Either way, you will have to start the whole process again, and that includes organising a survey for the next property where your offer is accepted.
Where the survey does reveal serious problems, you are free to withdraw your offer. If the problems can be fixed, you may be able to use the survey results to negotiate a reduction in the sale price to compensate you for this extra expense.
If you apply through our site, we will help you organise the survey and choose between the types of report.
Exchanging contracts
As soon as the survey is complete and you've read and checked the formal mortgage offer from the lender, your solicitor will be able to draw up a contract for you and the seller to sign. Once the contract is signed there is no going back, so it's important to make sure you are happy with all the arrangements.
Exchanging
When you have signed the contract, your solicitor will deliver it to the vendor's solicitor in exchange for the contract the vendor has signed. From this point onward, both you and the vendor are legally committed to the deal.
You will normally have to put down a deposit of 5% or 10% of the purchase price and you also need to make sure the building is insured, as you are now legally obliged to buy it.
Stamp Duty
When the purchase is complete you will need to pay stamp duty, based on the value of your house. The following stamp duty rates currently apply when buying a property. No stamp duty is payable when selling a property. You should be aware that stamp duty rates are applied to the full property amount.
Price Stamp Duty
�0 to �120,000 nil
�120,001 to �250,000 1%
�250,001 to �500,000 3%
above �500,000 4%
In some inner city areas there may be exemptions.
Completing and moving in
All that remains after exchanging contracts is to pay the money needed to buy the property, less any deposit already paid at exchange, on the agreed date. Your solicitor will get the mortgage funds directly from the lender and the remainder (if any) from you, and then pass it all on to the vendor's solicitor. Once payment has been confirmed, you can collect the keys to your new home from the estate agent and move in.
Buying a house can be a complicated and confusing business. Particularly because it's something most of us do only once or twice in our lifetimes. Our Learn About Guide is here to help. From finding your dream home to moving in, you'll find all the advice you need right here.
"Doing the sums,
Choose the right mortgage,
Finding a conveyancer,
Making an offer,
Conducting a survey,
Exchanging contracts,
Completing and moving in"
Doing the sums
The amount you will be able to borrow is primarily determined by a few key factors:
Your income
Your employment status
The size of deposit you can provide
Your current financial commitments
Use our online calculators to work out how much you can borrow as well as how much the total mortgage will cost you.
Choosing the right mortgage
With over 4,000 mortgages in the UK it's important to consider and evaluate what's available. Our Learn About Mortgages guide can give you more information on the types of mortgages that providers currently offer.
You can also use our online Mortgage Wizard to draw up a short list of mortgages taken from most of the leading mortgage providers in the UK. Or you could visit a Bradford & Bingley adviser who could answer your questions and find a mortgage from the wide range we have assessed.
Once you have chosen and applied for your mortgage, the lender will need some supporting documentation from you. This will include some or all of the following:
* Evidence of your income and financial commitments, such as recent pay slips, a P60, your latest mortgage statement and your bank statements
* Information from credit reference agencies, your employers, other lenders and your landlord
* Proof of identity, such as a passport or birth certificate
* Proof of address - a utility bill or bank statement will usually be sufficient
Finding a conveyancer
Buying a property involves a fair amount of legal work or 'conveyancing' so you'll need a conveyancer. They should give you a quote for their services that will include details of the fees you need to pay third parties, such as search fees and stamp duty.
Most lenders will be prepared to accept your choice of solicitor, as most experienced conveyancer will have acted for the lender in question before.
The conveyancing may take longer than you had imagined, but don't be tempted to rush things. Your house or flat is probably the most expensive thing you will ever buy, so it is important to be sure there are no loose ends.
When a conveyancer conveyances your property, they will need to do all this:
Obtain the deeds that prove it legally belongs to the person you are buying it from.
Research where the property's legal boundaries are and pass this information on to you.
Prepare a fixtures, fittings and contents list which makes it clear whether or not things like carpets and kitchen appliances are included in the purchase price. They will also ask the seller if they know of any material, structural or other defects to the property that you should know about.
Advise you on a draft contract for sale, prepared by the seller's conveyancer, setting out the terms of your purchase.
Carry out a search of local planning information to uncover details of any upcoming development that could affect the property's value, such as a new road.
Agree a date for completing which suits both you and the seller.
Making an Offer
Once you've found the property you want to buy, the next step is to make an offer, normally through the estate agent.
Negotiating
Most sellers build a certain amount of leeway into their price, so it is usual to offer less than the seller is asking. In deciding what you are prepared to pay, bear in mind things like the property's state of repair and how much you would have to spend on building work or redecoration.
Your first offer might be up to 10% below the asking price. It is then up to the seller to either accept that price, or to try to negotiate a higher one. If there are several potential buyers interested in that particular property, the seller may have enough bargaining power to insist on the full asking price. In a strong market a property may sell for more than the asking price.
If you know that many people will be interested in the property (because there is a lack of good properties of that type on the market), you should consider offering the asking price up front to avoid a 'bidding' war.
Once your offer has been accepted, the estate agent will confirm this in writing. You can then go ahead with arranging a survey and finalising your mortgage arrangements. However, the acceptance of your offer is not legally binding until you and the seller exchange contracts.
Gazumping
In a time of rising house prices the seller may be tempted to abandon you if a higher offer comes along. This process, known as gazumping, is more common in England and Wales than it is in Scotland.
Being gazumped could leave you out of pocket on expenses like legal costs and the survey fee, but that is unfortunately a risk you have to take. The sale is secured by law only when contracts have been signed and exchanged.
Scotland and gazumping.
Under the Scottish system, sellers generally set a certain date by which all bids for the property must be in and make their decision from those bids. The seller then confirms his acceptance in writing. If the seller then gets a better offer and wants to change his mind, his solicitor will refuse to act for him on the new transaction, as doing so would leave him open to charges of professional misconduct. Rival solicitors are free to take the business if they wish, but this seldom happens in practice.
Conducting a survey
Once your offer has been accepted, you'll need to arrange a survey to assess the property's condition and value. Your mortgage lender will need a basic valuation at the very least before they will allow your mortgage to go ahead.
We recommend you get a very detailed report on the condition of the property in order to protect not only your lender's interests, but also your own. Make sure that the surveyor you use is a member of the Royal Institution of Chartered Surveyors or the Incorporated Society of Valuers and Auctioneers.
There are two kinds of surveyor's report beyond a basic valuation:
A House Buyer's Report comments on the condition of only those parts of the property which are easily accessible or visible. The surveyor will recommend any further investigations they think are necessary - for example if they think the wiring needs checking or there is the possibility of some structural problems.
A Full Structural Survey involves a more extensive investigation. A full survey is more expensive than a House Buyer's Report, but it should tell you much more about any work that may need doing on the property.
Full surveys are recommended in many cases, particularly if you are buying a property that is more than 100 years old or the building is more than three stories high.
When you set out on the home-buying process, you should budget for the cost of more than one survey. You might find the surveyor's report on your first property uncovers serious faults (such as subsidence or rot) which means you want to withdraw your offer. Even if there are no problems with the property itself, another bidder could step in with a better offer at the last minute. Either way, you will have to start the whole process again, and that includes organising a survey for the next property where your offer is accepted.
Where the survey does reveal serious problems, you are free to withdraw your offer. If the problems can be fixed, you may be able to use the survey results to negotiate a reduction in the sale price to compensate you for this extra expense.
If you apply through our site, we will help you organise the survey and choose between the types of report.
Exchanging contracts
As soon as the survey is complete and you've read and checked the formal mortgage offer from the lender, your solicitor will be able to draw up a contract for you and the seller to sign. Once the contract is signed there is no going back, so it's important to make sure you are happy with all the arrangements.
Exchanging
When you have signed the contract, your solicitor will deliver it to the vendor's solicitor in exchange for the contract the vendor has signed. From this point onward, both you and the vendor are legally committed to the deal.
You will normally have to put down a deposit of 5% or 10% of the purchase price and you also need to make sure the building is insured, as you are now legally obliged to buy it.
Stamp Duty
When the purchase is complete you will need to pay stamp duty, based on the value of your house. The following stamp duty rates currently apply when buying a property. No stamp duty is payable when selling a property. You should be aware that stamp duty rates are applied to the full property amount.
Price Stamp Duty
�0 to �120,000 nil
�120,001 to �250,000 1%
�250,001 to �500,000 3%
above �500,000 4%
In some inner city areas there may be exemptions.
Completing and moving in
All that remains after exchanging contracts is to pay the money needed to buy the property, less any deposit already paid at exchange, on the agreed date. Your solicitor will get the mortgage funds directly from the lender and the remainder (if any) from you, and then pass it all on to the vendor's solicitor. Once payment has been confirmed, you can collect the keys to your new home from the estate agent and move in.
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