For most people, buying a house is the most significant (and expensive) purchase they will make in their lives. It can also be quite a stressful time, with so many emotions invested in acquiring that dream home, the eye-watering sums of money involved and all the bumps in the road along the way. As with any stressful situation, it helps to know what you’re getting yourself into. So we’ve come up with a step by step guide that will help prepare you for the road that’s to come.

Ready to get started on your journey to home ownership? Here we go…

Save for a Deposit

This stage might start a long time before you even begin to consider applying for a mortgage. In fact, the Nationwide recently estimated that it will take the average buyer 8 years to save for a 20% deposit on a first home. Therefore, even if the idea of purchasing property seems like a distant dream at the moment, it’s a good idea to begin squirrelling away what you can; a little a month now could well make a big difference in the future. When it comes to dividing up your monthly salary, it’s well worth remembering the sage advice to ‘spend what you don’t save – don’t save what you don’t spend’.

Build Your Credit Score

Even if you have saved enough for a deposit, there’s one more significant barrier to overcome: your credit score. This is different to your savings as it is based not on how much money you have, but your record of borrowing and paying back money over time. Therefore, as with your savings, it’s a good idea to start early. Incorporate some credit building habits into your daily life that will help your score become nice and high when it comes to that first mortgage application. Make sure you know what behaviours will help build your score, and watch out for mistakes that might hurt your credit rating too.

And don’t forget – one simple way to build your credit score is to pay your rent through Credit Builder. Find out more here.

Know Your Limits!

Once you’ve saved your deposit and built your credit rating, you might well feel ready to start the hunt for your new home. Before you begin looking though, it’s useful to know exactly how much the bank will allow you to borrow. In the old days this was simple – the bank tended to allow between four and five times your salary. Nowadays there’s a little more to it as they will look more closely at your monthly outgoings, any other debts you might have and of course, your credit history. Chatting with your bank before you start your hunt is a good idea as the amount they’ll agree to lend, plus your savings will give you a ballpark figure of house prices to begin looking at.

You may even wish to get an Agreement in Principle (AIP) which is a more formal agreement in which a lender will lay out how much they would be prepared to give you.

If it seems like you’ll just never be able to afford the home you want you may want to look at some of the government’s help to buy schemes.

Choose Your Home

Now for the fun bit! Get online (or on foot) and start checking out some of the houses you’re interested in. This stage can feel overwhelming as you’re suddenly forced into considering the relative merits of a two-bed semi versus a Victorian terraced; the cost of re-rendering that outside wall with the extra £10K you’ll fork out for the privilege of a parking space….

Our advice? Take your time. It’s the biggest purchase you’ll ever make, so it’s worth thinking hard about. Visit lots to get a feel for what you really like. Make a list of all the features you want in a home, then put them in order of priority. You likely won’t find a single house that ticks off all the items on the list, but you’ll have an idea which houses come closer to your highest priorities.

And when you find a home that meets your needs…

Make an Offer

You’ve found a home that’s within your budget and ticks as many of your boxes as possible. This is when things start to get real – it’s time to make an offer. Contact the selling estate agent and advise them how much you’d like to purchase the property for. Remember this is a negotiation; many buyers come in with an offer that’s lower than the asking price initially. Look around to see what other, similar properties in the area have gone for recently to gauge whether the asking price reflects market value. The estate agent will inform you whether your offer has been successful, and whether there are other bidders on the property.

It’s worth remembering that at this time there is no contractual obligation to buy the property if your offer is accepted. You are free to pull out if something better comes along or you get a funny feeling about the property. However, if your offer is accepted and you want to proceed, it’s time to move on to the next step…

Select a Solicitor

When you have a good idea of the home you want and are confident you have the means to buy it and your offer has been accepted, it’s time to get a legal team involved. The legal process of buying a home is called conveyancing, and your conveyancing solicitor will take care of two main functions. Firstly, they will request surveys on the property to check for any anomalies such as building work that has been carried out but not signed off or structural damages.

Secondly, they take care of the financial side of the transaction, transferring the mortgage funds from your lender to the seller.

It’s worth bearing in mind that not all solicitors are created equal. Some will chase up estate agents on your behalf, get paperwork signed quickly and keep you updated at every stage. Others… well, they’ll do the opposite. With buying a house such a stressful experience anyway, the last thing you want is to be dealign with a solicitor whose approach only amplifies the stress. Therefore it’s best to begin thinking about this in advance. Ask around for recommendations – a good solicitor will make the experience so much easier.

Negotiation

If you’re one of those lucky few that makes a reasonable offer on a property with no complications and the purchase goes through in a matter of weeks – congratulations. In most cases it’s a little more complicated than that, so be prepared for a bit of back and forth between your solicitor and the estate agent before things move on to the next stage.

Typical issues that may arise between initial offer and exchange of contracts include:

The seller doesn’t accept your offer. How much more are you willing (and able) to offer for this property?

The surveys come back reporting issues. These might be structural such as damp or faulty wiring, or legal such as building work that has been carried out without being signed off. In this case you may wish to negotiate with the seller that they carry out the required work, or that they drop the price in accordance with what it may cost to fix it yourself. You may also decide that the property just isn’t worth it and decide to pull out.

You get gazumped. Ouch. This one hurts. Just when you thought everything was going ahead, someone comes in with a better offer. Unfortunately this is completely legal in the U.K. If this happens to you then you’ll need to decide whether to put in a higher offer or to start your search again.

Get Your Mortgage Approved

Assuming you successfully navigate the negotiation stage, your next step is to agree your final mortgage. A couple of things to bear in mind here.

Firstly, the AIP you obtained all those weeks ago is usually only valid for two to three months. Therefore if you’ve had a major hit on your credit score since then you may find the lender refusing the mortgage. Make sure you don’t miss any payments on your other commitments during the house buying process. It’s also worth remembering that it’s an agreement in principle, the principle being that the bank considers the property safe to lend against (i.e. that they could get their money back by selling it off should they have to take it off you.)

Secondly, you don’t have to go with the lender you obtained your original mortgage from. Shop around for the best rates and consider what type of mortgage will best suit your situation.

(If all the language around mortgages is making your head spin, check out the Credit Builder Mortgage Jargon Buster here)

Exchange Contracts

Now things really start to happen. With your mortgage in place and your offer accepted, you begin the final leg of the journey. Now is the time to think about completion dates, sorting out any building insurance and putting the champagne on ice. Or maybe in the fridge, because this part can still take a while.

Firstly you need to give your solicitor the deposit. This payment is an important moment as it finalises your legal commitment to buying the property. You’ll then receive a breakdown of all the other payments that need to be made, including the remainder of the house price, any stamp duty and the solicitor’s fees.

The solicitor then takes care of moving the money from your account to the seller’s. They carry out a final set of searches, usually a formality, double checking that you haven’t lost all your money and that the property hasn’t mysteriously changed hands overnight.

Then finally, finally, you sign the transfer deed which legally confirms you as the legal owner of the property. You pay your stamp duty, confirm your ownership of the property with the Land Registry (usually around £200) and…

Pick Up Your Keys!!!

You’ve done it! It’s time to move into your new home. You’ve completed one of the biggest and most stressful transactions of your life. Time to pull out that champagne!

Don’t forget – if you’re currently renting a property and hoping to get a mortgage, you can increase your chances and improve your credit score by signing up to Credit Builder – the easy way to build your credit rating as a tenant.