The RedRoof Buyer’s Guide

Buying a home is likely to be on of the largest purchases you are likely to make in your lifetime. It is important you have all the right information, at the right time, to ensure you make right decisions.

Avoid stress by knowing what to ask, what your rights are, and what responsibilities you have as a home buyer.

Who is this guide for?

• This guide is for those thinking of purchasing a home. First-time buyers may find it even more useful, but as the buying process can change over time, even the experienced buyers can benefit from understanding the latest key steps.
• For those purchasing a home in England or Wales. More information on buying property in Scotland or Northern Ireland is available through the links.
• It is intended as an overview of the process and is not a definitive statement of the law. If you are thinking of buying a property, you should still seek independent financial and legal advice.

Who can help me?

During the home buying process a number of specialists can offer you advice or assistance:

• Lender – able to lend you money to purchase the property. Usually a bank.
• Insurer – who will provide the building insurance policy you need in order to purchase a property and the contents cover to protect your belongings further.
• Legal representative or conveyancer – Will carry out the legal work needed to buy the property
• Surveyor – Will assess the physical condition of the property and can give an independent valuation
• Mortgage broker or adviser – Your broker or advisor will recommend which mortgage is best for you
• Specialist professional or tradesperson – able to advise on any maintenance or building works that are identified in the survey
• Energy assessor – able to answer queries on the Energy Performance Certificate (EPC)

Although their primary role is to help the seller sell their property,

your estate agent will help guide you through the buying process and work with other parties to help the complete the process.

The first step when buying your new home is to calculate just how much you can afford to borrow. Most buyers will need a mortgage to purchase a home.

Your total household income and credit score will determine how much a lender will lend. This amount along with your deposit amount will give you an indication of your budget.

The bigger your deposit is, the more favourable the mortgage deals you are likely to be suitable for.

The UK Government has a range of schemes to help people buy a home. These include:

• Help to Buy: Equity Loan
• Help to Buy: ISA
• Lifetime ISA
• Help to Buy Wales
• Homebuy Wales
• Rent to Own Wales

Shared Ownership and Shared Ownership Wales may be able to help you buy when you aren’t able to afford a property on the open market in a specific location.

Make sure you are clear about what these schemes can offer you For example the Help to Buy: ISA bonus can’t be used towards the deposit nor to pay for solicitor or estate agent’s fees, or any other indirect costs for that matter.

Remember that buying the property is not going to be your only expense!

You will likely also need money to pay for:

• stamp duty (in England) or Land Transaction Tax (in Wales) (unless you are a first time buyer and fulfil certain criteria – see links for more information)
• Surveys / reports
• Building insurance / Contents insurance
• Relocation costs
• Home repairs or improvements
• Mortgage costs and life insurance
• service charges and ground rent in leasehold properties (if appropriate – more information about leasehold properties is in the How to lease guide)

Before you speak with a mortgage broker, adviser or bank, you should first check your credit score. Your credit score will show you how likely you are to be accepted for credit. The higher your score, the more likely you are to be offered a range of good mortgages.

A lender will take into consideration the total amount you can borrow and how affordable the monthly mortgage payments will be when deciding how much to lend you. This affordability assessment will take into account your income and your outgoings, it will also consider any changes that might affect whether you would be able to afford repayments in the future if for example interest rates change or if you were made redundant or lose your job.

You may want to consider paying off debts on credit cards or loans before you apply for a mortgage as the monthly repayments will weight heavily into the amount you can borrow. Information about what mortgage lenders might consider along with a checklist of what you may need to for your mortgage application, can be found from on the Money Advice Service.

Before you begin your property search you should get a mortgage decision in principle. This is a written statement from a lender estimating what you can borrow. It gives you some indication of your budget and is a strong indication to sellers that you are serious about buying a property. A decision in principle from one lender does not mean you have to take out a mortgage with them. But be careful as most lenders will carry out a credit search before offering a decision in principle. Some lenders may carry out a soft enquiry that will not affect your credit score, however, others may conduct a hard search that may affect your credit score if too many hard searches are carried out over a period of time.

Most people start their property search with online property sites or through local estate agents.

Here are some things to consider when looking for your next property:

• Where is it? – the area or town you would like to live in, you may wish to consider the feel of the area – is it a busy area? are there plenty of things to do? are there parks in vicinity? what about local shops, doctors’ surgery, schools etc.? are these important to you?
• What are the transport links like? – Check your commute to and from work? Will you be doing the school run? What will that be like?
• House? Flat? – flats are nearly always leasehold, so you will pay a regular service charge and you may have to renew the lease. Flats will mostly come with shared communal spaces rather than a private garden.
• New build or older property? – New builds can be appealing as they will be clean and energy efficient, and you may be able to make some decisions about fixtures and fittings (e.g. kitchen cabinets, tiling, lighting etc.). However, new builds may be more expensive than a similar second-hand home – this is known as the ‘new-build premium’. Second-hand homes can provide more opportunities for improvements to tailor it to what you need and allow you to add value to the property.
• How many bedrooms do you need? – How many bedrooms you need ? Will this change in the future?.
• Will it be big enough? – Does the property have enough living space? enough kitchen space? What about storage? do you have a bike, gym equipment, home office or a pram? Where is it going to go?
• Conservation area or listed building status – check if the property is included on the National Heritage list as this may affect your ability to make changes to both inside and outside the property. Such properties may qualify for Energy Performance Certificate exemption – more details can be found on the government’s website.
• Ready to move in or a “doer upper”? – Do you want to move straight in or can you get some renovation done first? Some properties will need no work; others may need updating where as some may need renovation or structural
• Pros & Cons – Properties on busy roads, backing or looking over railway lines. These properties often take longer to resell.

You should find out as much as you can about any properties you are interested in to help you decide which to buy.

Here are some good questions to ask;

• Is there anything I should know about the property before I put in an offer? Ask your estate agent for the material facts about the property as they are legally required to pass this information on to you.
• How long has the property been on the market for? If it has been on for longer than 3 months ask why they think it isn’t selling. Is there something other people have been put off by, or is it overpriced?
• Is there achain? This is where a number of people are buying and selling their properties at the same time. How many people are in the chain?
• How long have the owners lived there? If they have only been there a host period of time find out why they are moving?

When viewing the property be sure to thoroughly check the condition of the building. Here is a useful list of things to check both outside and inside the property: Which?.

Visit the property multiple times where possible at different times of the day to get a feel for the local area as well as local traffic.

Making an offer on a property can be a daunting prospect. Remember, the asking price is just that, an asking price, do not be afraid to submit an offer you deem reasonable and sensible. This is the start of a negotiation process and the estate agent representing the property is legally obliged to pass on ALL offers to the seller.

Before you make an offer on a property, make sure you consider the following:

• What is included – which fixtures and fittings does the offer include e.g. will the seller leave white goods or the garden shed?
• What the property is worth – Have you done your homework? What have other similar properties sold for in the area?
• If the property is Leasehold – What is the monthly ground rent and service charge, when is the next review of these, when was the last change?
• Seller’s circumstances – Is the seller depending on the sale of this property to purchase their next? If so this may give you the upper hand in negotiating if you are close to the expiration of the sellers offer for their next property or the expiration of their decision in principle.
• Interest in the property – Is anyone else submitting an offer for the property?

A verbal offer can be renegotiated right up to exchange, but you should think very carefully before renegotiating and should only do so when a change is justified; for example if the home survey identifies significant issues. Attempts to renegotiate the offer when a sale nears completion may cause delays and could risk the sale falling through.

If your offer is accepted, you should advise the agent of your legal representative. You should receive a memorandum of sale from the estate agent which outlines your offer in writing and provides details of the legal representatives for all parties party.

Once your offer has been accepted, you need to select a legal representative. They will play a very important role in helping you purchase your home – your legal representative will carry out the appropriate legal checks on the property, complete the legal work for the purchase and, if you are funding the purchase with a mortgage, they will ensure that it meets your lender’s requirements.

They will identify any title or planning issues; advise you on which searches to have carried out, and do the legal work of transferring the ownership of the property from the seller to you.

You should instruct a legal representative as soon as your offer has been accepted, but if you have any special requirements (for example if you only want a home which you can run a business from), you might want to instruct a legal representative to check this for you before you put your offer in.

There are various legal professionals who are qualified and regulated to carry out conveyancing work:

• solicitors
• licensed conveyancers
• chartered legal executives and CILEx practitioners

Your chosen legal professionals will organise local authority searches on the defined property and/or land.

These searches tell you about any restrictions relating to the land or property. They will also advise you about any additional searches you should undertake, such as flood risk or a mining report.

It is sensible to ask your legal representative to order searches as soon as possible to prevent delays, but some professionals may also advise you to wait until your mortgage offer has been confirmed.

You typically have to pay for the searches up front.

During the process your legal representative will raise any enquiries they deem relevant or necessary. These are questions about the information which they have received e.g. the title, or the mortgage offer.

Enquiries can be raised at different points through the process and will normally need to be answered by the seller. You can choose to ask these yourself or ask your legal representative to do this on your behalf.

You should also consider the option of taking out indemnity insurance to protect against issues that maybe uncovered during the property searches. Keep any search results safe as they may come in use when you want to sell the property in the future.

Once your offer has been accepted by the seller, you need to complete a full mortgage application with the lender you wish to use.

If you have a mortgage broker they may complete the application for you. When you apply for a mortgage you will need to complete forms and of course confirm your identity by showing your ID, proof of address and proof of income. If you are self-employed you may have to provide extra assurances of your income. Finding out what the requirements before application is advisable.

The mortgage provider will carry out a mortgage valuation, where they check that they are happy to lend against the property.

A survey is a detailed inspection of a property’s condition. More information on home surveys can be found on the Money Advice Service website.

It is highly recommended that you have a survey carried out. The survey will advise you of minor maintenance and major works required on the property now or in the future.

The survey will need to be carried out by a trained professional; for example a member of the Residential Property Surveyors Association (RPSA), the Royal Institution of Chartered Surveyors (RICS) or the Independent Surveyors and Valuers Association (ISVA).

Your estate agent, legal representative or lender may refer you to a particular surveyor, but it is your decision who you appoint. You should speak with a surveyor to get advice on what level of survey service is recommended for your property.

Some buyers have a survey carried out as soon as their offer has been accepted, while others wait until their lender carries out their mortgage valuation. Don’t leave this step too late as it may delay your purchase.

Be sure to thoroughly go through your report and discuss any questions, queries or concerns with your surveyor immediately. If any major issues are unearthed by the survey you contact the seller and ask them to pay for them to be fixed before you complete; you can renegotiate your offer to take into account the cost of the work; or even withdraw your offer altogether.

The exchange of contracts is when the buyer and seller exchange the signed agreements which legally bind them.

Your legal representative will notify you when you are ready to exchange.

In order to exchange you need to have buildings insurance ready, because once the contract has been signed you, legal responsibility now transfers to you.

After exchange you will be given an estimated completion date.

 If either party withdraws from this legal commitment they may be liable for costs.

The buyer may lose their deposit or may have to pay compensation to the seller for other loses they may have incurred due to you withdrawing from the contract.

If the seller withdraws they may potentially be liable to cover your costs. Compensation may also be achievable.

This is one of the final steps and you are nearly ready to move in to your new home! Your legal representative will now transfer the remaining funds to the seller’s legal representative. The keys are handed over to you at a prearranged time. You are now ready to move in or start any work that needs to be carried out.

After you have completed the move your legal representative will register the change of ownership with HM Land Registry and settle any outstanding payments, including Stamp Duty Land Tax (in England) or Land Transaction Tax (in Wales).