BANK RATE ANNOUNCEMENT
On 2 November 2017, the Bank of England announced that the Bank Base Rate would increase with immediate effective from 0.25% to 0.50%.
We know that buying a home is an exciting time but it can also be confusing and complicated.
We’ve divided up the process for buying a home into 7 sections to allow you to access the stage which you're at. Simply click on the numbered sections below to read more.
Before you get to the stage of looking at potential properties, you should look at your personal finances. Specifically:
With most mortgages you will need a deposit of at least 10% of the purchase price of the new property, although some lenders, including Chelsea Building Society, provide mortgages with a 5% deposit. It’s important to also factor in the other costs such as legal costs and valuations. If you’re concerned about your current outgoings or expenditure, you should try to reduce these at least 6 months before applying for a mortgage. Lastly, you should check your credit report and make sure all the information shown is correct, particularly with regard to whether or not you show up on the electoral roll for your current address and any records of loans and credit cards.
When you have a better idea of your financial situation, it’s a good idea to look at what price property you can afford. You should check your monthly outgoings as this will give you an idea of the kind of monthly mortgage repayments you will be able to afford. If you want to look at mortgage costs, your current bank or building society should be able to help illustrate how much you might be able to borrow and how much it might cost. This will then give you a good idea of the kind of property you can afford and which areas you should be looking at.
On top of the actual cost of the mortgage, you will need to factor in the cost of stamp duty land tax if the purchase price exceeds £125,000. The cost varies depending on the price of the property. The gov.uk website has a guide to the costs.
As soon as you get an idea of what you can afford you can apply for an Approval in Principle (sometimes called a ‘lending decision’ or AIP) with your chosen mortgage provider. This Approval shows that your lender is prepared to lend you the necessary amount to purchase the property. Some estate agents will require an AIP before you can make an offer on a property.
For more specific information you can read our mortgage application process guide.
Choosing where to live is one of the most important decisions we can make in life, so it’s worth making a list of what is important to you before you view any properties. You should consider how many bedrooms you may need, what the parking situation is like and whether or not you would like a garden. It’s also key to look at local amenities such as schools, shops and leisure facilities. When searching for properties you may find it easier to use a search engine site such as Zoopla, Prime Location or Rightmove which will allow you to filter your search by different criteria such as price. You can also find property listings in your local newspaper and by visiting estate agents.
When you begin viewing properties, make sure you take someone else with you – if buying on your own, this could be a friend or relative. It’s also a good idea to visit properties at different times of the day and at weekends and weekdays – this way you’ll get a good idea of the area and local community.
Once you have found the property you want to purchase, you need to make an offer. This is usually done via the seller’s estate agent but before you do this, you should think about how much you would like to offer for the property, what your budget is and the maximum amount you can afford. If your initial offer is rejected you may want to increase the amount of your original offer but you should be careful to stick to your budget.
Any offers you make should be ‘subject to contract and to survey’ which means that a survey has to be completed and contracts exchanged before you become legally bound to proceed.
To prevent other offers being considered after yours has been accepted (sometimes called ‘gazumping’) you should ensure that your offer is also subject to the property being taken off the market straight away. Once an offer has been accepted you will receive confirmation in writing from the seller’s estate agent.
If you are buying a house in Scotland, the situation is slightly different. The seller will provide the buyer with what is known as the 'Single Survey'. The buyer may make an offer based on this survey or make an offer subject to obtaining their own satisfactory survey report. Sellers will set a final date for written offers and written acceptance is made to the buyer of the chosen bid. If the seller then decides to accept a higher offer made after this point, the solicitor would then refuse to act for them.
Once your offer has been accepted it often takes a number of weeks to complete the sale and move into your new home - especially if you are in the middle of a chain of buyers and sellers. This can be a frustrating time following the excitement of securing your property and anticipation of moving in, as you are waiting for buyers, sellers, solicitors, lenders and estate agents to complete various necessary actions before the sale can proceed. Typically this process can take up to 12 weeks. It is useful in this time to sort out packing non-essentials, getting removal quotes and getting organised for when you move. It is also good to keep a to-do list and a waiting-for list specifically relating to your move, so you can ask the relevant parties for updates and ensure that you have completed all the actions you need to in order to proceed.
It's a good idea to instruct a solicitor or licensed conveyancer fairly soon in the mortgage process and you would normally do this at the same time as submitting your full mortgage application. Conveyancing is the legal process of transferring property from one owner to another. For all mortgages with Chelsea Building Society, we require that your legal adviser is on our panel and you can check this using our Conveyancing service or by contacting us directly.
Once you have instructed a solicitor or licensed conveyancer to act on your behalf you should provide their details to the seller's estate agents and your mortgage provider.
Your legal adviser will help you deal with the contract for the property you are purchasing as well as other legal documentation relating to the property such as the transfer deed and registering the transfer and mortgage at the land registry. They will also check the title for you and carry out any necessary searches such as a local authority search, coal mining search and environmental search. Your solicitor or licensed conveyancer will have responsibility for handling any monies and making transfers between you and the seller.
A survey of any potential property is advisable and ensures that there are no nasty surprises or additional costs after you move in. All mortgage lenders will require you to get a basic valuation of the property (ie. a professional assessment of the market value for lending purposes) but it's also a good idea to get an independent survey carried out to check whether or not there are any repairs to be done. You can then decide if you want to negotiate a reduction in the price or ask the seller to complete the necessary work prior to exchanging contracts.
This is to ensure the property provides adequate security for the loan we are providing to you. Essentially, this provides the lender with enough information to decide whether the property is safe to lend on. However the valuation should not be confused with a property survey and it won't tell you about any potential underlying problems with the property.
If you want to know more see our detailedmortgage valuation section.
Your lender will normally be in a position to make a formal mortgage offer as soon as your application has been assessed, the valuation has been carried out and any relevant documents have been provided. The mortgage offer is a formal document advising that your mortgage loan has been agreed and it includes a full breakdown of costs and sets out any special conditions which apply.
When your valuation/survey has been completed and you're satisfied with the results, your legal adviser has made all necessary enquiries and completed all usual searches and you are in receipt of a satisfactory mortgage offer, then you should be ready to exchange contracts. This legally binds you and the seller to the sale of the property. Along with the contract for the property purchase you should also expect to receive other important documentation about the property including a copy of the title deeds, the results of the searches, details of all fixtures, fittings and contents included in the sale, and any other relevant information on the property. You will receive a contract from your legal adviser which you will need to sign and return. You will also need to make sure you have the deposit ready to pay to your legal adviser prior to the exchange of contracts.
One of the terms of the contract is the completion date – this is the date on which the property is legally transferred from the seller to you. You will need to agree this date with your legal adviser and the seller's legal adviser before you exchange contracts. On exchange, you'll need to pay the deposit for the purchase. The balance of the purchase price is then payable on completion. Once the seller has received all of the money for the purchase of the property, the purchase is complete and the property is yours. Congratulations!
Use our simple calculator tools to work out how much your repayments could be, how much we could lend to you and if an Offset mortgage could save you money.