How to buy a home: a step-by-step guide –
Introduction 👋
Buying a house has got to be one of the most exciting (and expensive!) grown-up goals to work towards. 🤩
It can be a really difficult thing to do – not everyone gets to own a house.
In the UK, around 63% of people own a house, and the average age of buying your first home is 32.
But how do you actually buy a house? 🤷♀️
How much do you have to pay?
How does it all work?
Today we’re going to explain step-by-step how buy a home to live in!
(Important note: buying a home can be a unique process for each person, and this is an explanation of the general steps taken in the UK to buy a home.)
1. Save up for a deposit 💰
When you buy a house, you have to put a big chunk of money towards buying part of the house – this is called a deposit. 💸
The average house price in the UK in 2022 is £281,000.
This means at a minimum you would need a deposit of either:
- £14,050 – 5% deposit (for a 95% mortgage, where you borrow 95% of the value of the house – these types of mortgages aren’t always available because they’re lending you a lot of money)
- £28,100 – 10% deposit (for a 90% mortgage, where you borrow 90% of the value of the house)
- £42,150 – 15% deposit (for a 85% mortgage, where you borrow 85% of the value of the house)
This is often the hardest step to buying a home, and can take people a very long time to save up!
Should I save for a house? – pros and cons🤷♀️
2. Am I ready to buy?🕵️♀️
The next step is to consider whether it’s the right time for you to buy.
Some things you might want to think about are:
- Rental agreements – If you’re renting a home already, when does your agreement end? Can you get out of it early?
- Emergency savings – Do you have enough savings to cover emergencies?
- Debts under control – Are your debts under control? If you’re struggling with debt you might struggle with a mortgage.
- Happy to settle down – Once you buy a house it can be difficult to sell it again if you change your mind. Are you happy to settle in one place for a long time?
- Know enough about home ownership – Do you feel like you know enough about becoming a home owner to take the leap?
- Is it a good time to buy – Are house prices expected to drop (making your new home worth less!)? Are there any government schemes in place (or coming out soon) that will make buying a home easier/harder?
- Credit rating – When you take out a loan to buy a house, they’ll often check your credit score first. How is your credit score looking? Is it good enough for a home loan? What is a credit rating? 📈
- Buying with another person – If you’re buying with someone else, are you confident that it’s a commitment you should make? Are they on top of their finances? Are you paying for the home fairly and equally? What will you do if you change your minds later on or your relationship breaks down?
3. Check what you can afford 📈
Next, you should work out:
- how much banks will let you borrow to buy a home 🏦
- how much you can afford to pay for a home comfortably 💸
You can work this out through using a mortgage calculator – like the one below from Money Helper!
https://www.moneyhelper.org.uk/en/homes/buying-a-home/mortgage-affordability-calculator
4. Find homes you like within your budget 🗺️
Where you want to live 🗺️
When deciding on what area you want to live in, there are lots of things to consider.
You should think about things like:
- Prices💸
- What’s nearby? 🗺️
- Transport links🚉
- Nearby workplaces 💼
- Green spaces🌴
- Natural disasters 💦
- Crime 🦹♀️
- Closeness to your family/friends 👪
- Air quality 🍃
- Environment 🏞️
Each of these are explained in our grown-up lesson: How to decide where to live: 10 things to check 🗺️
Types of home 🏡
There are also lots of types of home to choose from!
You could consider homes like:
- Flats/apartments 🏢- Flats are buildings which are split up into smaller homes. In a flat you might have neighbours living on the floor above you, below you, and next to you.
- Terraced houses 🏘️- Terraced houses are houses that sit in a row and share walls with the houses either side.
- Semi-detached houses 🏠🏠- Semi-detached houses are houses that share just one wall with another house. You might still have other houses next to you, but you will only share a wall with one other house.
- Detached houses 🏡- Detached houses are houses that don’t share walls/aren’t attached to any other houses. You could still have neighbours living on the plots of land next to you.
- Maisonettes/Duplexes 🏬- Maisonettes are flats that cover 2 floors, and you get your own main door to the home. This means that you don’t have to share a corridor with other homes.
Types of ownership 📜
There are two main types of ownership that you can have for a home. They are:
Freehold 🏡
This is where you permanently own the land/home. You are officially the “landlord” of the land.
Leasehold 🏢
This is where you temporarily own the home. With “leasehold” homes you usually have a legal agreement with the “landlord”/”owner”/”freeholder” called a ‘lease’. Your lease tells you how many years you’ll own the property for e.g. 50 years, 100 years, 20 years.
If you’re considering buying a leasehold home it’s really important to check how long is left on the “lease”, so you know when your ownership of the home will end.
It’s quite common for apartments/flats in the UK to be “leasehold” homes, because there are lots of homes on the same plot of land.
Searching for a home 🔍
You can find a home to buy by:
- Looking at property websites👩💻 e.g.
Zoopla (UK) https://www.zoopla.co.uk
Zillow (USA) https://www.zillow.com
- Checking newspaper listings 📰
- Looking for “for sale” signs in your local neighbourhood 🪧
- Joining social media groups to look for listings 📱
- Asking friends and family 👪
- Visiting estate agents (estate agents are businesses that sell, rent, and manage buildings)🏬
Be very careful when dealing with online adverts for home sales – they can be scams! 😨
Make sure to check that any home you want to buy is from a legitimate person/organisation. ✅
Once you’ve done some searching, put together a list of homes you’d like to consider buying. ✍️
5. Get an AIP (Agreement in Principle) 🤝
Once you’ve found a selection of homes you’re interested in, it’s worth getting an Agreement in Principle set up, in case you want to make an offer to buy one of them.
(Also known as a “Mortgage Promise” or “Decision in Principle”)
A mortgage Agreement in Principle (AIP) gives you an idea of how much you could borrow before you apply for a mortgage.
An Agreement in Principle doesn’t mean that you’re committed to take out a mortgage with the provider.
Getting an “Agreement in Principle” usually only involves a soft credit check, which means there’s no impact on your credit score. What is a credit rating? 📈
Getting an AIP can be really useful when making offers to buy houses, to “prove” that you’re making a serious offer, and have the support from a bank to buy the home. ✅
6. Book viewings 🧐
Before you decide on a home to buy, you usually get to go and visit it first at a “house viewing”. 👀
House viewings give you a chance to inspect the house, so that you can decide if you want to live there or not! 🕵️♀️
It’s great if you can view lots of different homes so you can:
- Decide what you really want from a home after seeing them in-person
- Get a really good idea of what’s available for the price range you’re looking for
- Build experience looking for potential issues with homes
- See the home up close, so that you can look for potential problems e.g. bad construction, damp issues
7. Make an offer 💸
Once you’ve decided on a house it’s time to make an offer. You could either offer:
- Above the “asking price” – Often this will happen if there is a lot of competition to buy the house (make sure to keep in mind your budget and that you don’t offer more than you can afford!)
- The exact “asking price” – Often this will happen if someone doesn’t want to risk having a lower offer rejected.
- Below “asking price” – Often this will happen if you think that they are likely to accept a lower offer, which can save you some money.
Researching how much similar houses in the local area have recently been sold for can be really useful in helping you to decide how much to offer for a home. 🤔
It’s important to remember that the seller is not legally bound to sell you the house until you have exchanged contracts (step 11).
This means that until then, there is still a chance that they will:
- Offer the house to someone else 🔀
- Cancel the sale ❌
8. Find a mortgage 🏦
Once your offer has been accepted, it’s time to get starting on applying for the loan to buy the house (the mortgage!).
Since buying a home is expensive, it’s important to shop around for your mortgage, to get the best deal.
It’s very common for people to get help from people called “Mortgage Advisors”, who can help you work out what kind of loan would be suited to you and how much it’ll officially cost.
Sometimes Mortgage Advisors will ask you to pay a fee for their help, so it’s worth shopping around to get a good deal.
If you’re in the UK, different organisations offer free mortgage advice, and can walk you step-by-step through finding a mortgage and getting it set up for free.
Organisations who have offered free mortgage advice before include:
- Stepchange – https://www.stepchange.org/how-we-help/mortgages.aspx
- London and Country – https://www.landc.co.uk/
- Moneysupermarket – https://www.moneysupermarket.com/mortgages/mortgage-advice/
Applying for mortgages usually involves filling in lots of forms in a “mortgage application”. ✍️
The mortgage will then be reviewed, and a someone will decide whether to approve your application or not for the loan. ✅❌
9. Get a solicitor 👩⚖️
Once you’ve had your mortgage approved, you will need to get a lawyer/solicitor to handle the transfer of the house for you.
Sometimes you might have a few options like:
- Using the bank’s dedicated solicitor for the purchase
- Getting the solicitor your mortgage advisor recommends to do the work for you
- Finding a solicitor yourself and hiring them to do the work
It’s worth considering how much each option will cost, but also if the solicitor has a good reputation and is qualified to do the work.
The process of having the house transferred to you is often called “conveyancing” – and this is what solicitors are in charge of.
To handle the “conveyancing” of the house to you, your solicitor will:
- Handle all of the legal paperwork
- Arrange the transfer of the house to you on the “land registry” (the government’s list of who owns all the land!)
- Research the house to make sure that it isn’t dodgy! – these are called “searches”, where the solicitor researches the house
- Finalise the details of what’s included in the house sale e.g. will curtain poles and kitchen fittings be included.
- Set up a contract to transfer the home
- Work with the seller’s solicitors to get all the documents they need
- Collect together the money, and exchange the money for the house
- Keep you updated on the progress of the house sale
During this time, you might have lots of different forms to fill in, and documents to provide for your solicitor.
10. Make sure the house isn’t dodgy 😬
Once you’ve:
- got a mortgage
- got a solicitor
they’ll get to work on making sure that the house isn’t dodgy.
This will involve arranging things like:
Mortgage Valuation 🧐
The bank will do an assessment of the home, to make sure that it’s worth the amount of money you’ve agreed to pay for it.
This gives them the reassurance that if you stop paying your loan, they can sell the house for the right amount of money.
Searches 🔍
Your solicitor will run searches to find out information about the house, and help you look for problems that might affect you buying the house.
Usually they will check things like:
- Local authority search (LAS): This search finds out information on any nearby road schemes, contaminations, or planning works as well as several smaller searches.
- Land registry pre-completion search: This search checks if the person selling you the house is the legal owner, and is actually allowed to sell it to you.
- Environmental search: This search checks your local environment and if it could impact you e.g. is the land sinking underneath the house
- Planning search: This search checks if there is any planned developments e.g. building new buildings in your local area.
- Drainage and water search: This search checks where water and waste drains around your home, and if it’s likely to impact you.
- Flood risk search: This search checks how likely it is that your home might flood
- Coal mining and mining searches: There might be tunnels underneath your home, so this search checks that!
- Chancel repair search: In the UK, there are some old laws that mean that certain homeowners might be legally required to pay for repairs to their local church. This search checks if this rule would apply to your house.
Survey ✍️
If you want, you can pay a professional “surveyor” to inspect the home and tell you if there are any issues with the home e.g. problems with the structure.
11. Exchange 🔀
“Exchange” is where both sides swap and sign the contracts for selling/buying the house.
This is the stage where you will be asked to transfer your deposit to buy the house.
As soon as the contracts are signed, you will be legally committed to buy the home.
12. Completion ✅
Completion is when the sale is finalised and the home legally becomes yours!
During completion the money for the house gets transferred, and you are given the deeds to the house and the keys.
13. Move in! 🔑
Once you’ve completed on buying the house, it’s yours! You should receive the keys, and get moving in!
Conclusion 👍
So that’s it!
Hopefully you’re feeling more confident about how to buy a home.
If you know any friends or family members who might benefit from learning about how to buy a home, share this post with them!
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