Buying a home can be a stressful and confusing time. With several different parties involved, it can sometimes be difficult to keep track of your progress, or to know what is happening next. In the guide below, we’ve laid out what we think are the 10 key stages of the home buying process, along with a brief description and explanation for you to refer to.
Scroll through to any of the steps below for further information about each stage of the property buying process…
Consult an independent mortgage adviser
Protection
Decision in Principle
Credit Searches/Application
Valuation/Survey
Offer
Legal Work
Exchange of Contracts
Release of Funds/Payment
Completion
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1. Consult an independent mortgage adviser
It is best to consult with an independent mortgage adviser, as they will have access
to the widest range of lenders. Some mortgage advisers are tied or multi-tied, which means that they only have access to a restricted choice of lenders. Using an independent adviser is especially valuable if you might require a lender that specialises in certain types of mortgages, such as borrowers with adverse credit history, high loan amounts or specialist buy-to-lets (such as Holiday Lets or Houses of Multiple Occupancy).
It is also worthwhile to work with a mortgage adviser who regularly works in the area where you are looking to purchase, as knowledge of the local area can be advantageous.
2. Protection
Arranging protection is an essential part of the home buying process. The most common forms of protection arranged alongside a mortgage can help to prevent you from losing your home in the event of a long-term illness (Income Protection) or a critical illness (Critical Illness Insurance). For couples or families, it is also important to arrange life insurance, to protect others in the event of your death.
Please refer back to our previous blogs for further information on income protection and critical illness cover.
3. Decision in Principle
Once your independent mortgage adviser has sourced and recommended a suitable mortgage product for your circumstances, you can then apply for a Decision in Principle from the lender. The adviser will submit some of the fundamental details to the lender about yourself and the requested mortgage. The lender will assess this information, and make an initial decision as to whether or not you meet their lending criteria. Once a Decision in Principle has been granted, you will then be able to submit a full mortgage application to the lender. Initial credit checks may also be carried out at this point.
4. Credit Searches/Application
When submitting your full mortgage application, your adviser will now submit all of the relevant information to the lender and an underwriter will assess your circumstances. Full credit searches will now be carried out, and documents may be required for proof of your income, savings etc.
5. Valuation/Survey
Once the underwriters are satisfied that your circumstances and requirements are in-line with their lending policy, the lender will then obtain a valuation of the property. This is to check that you are paying a reasonable and realistic price for the property.
At this stage it is also worth considering if you would like a survey carried out on the property; if so, what type of survey?
6. Offer
Once the valuation has been carried out and approved by the underwriters, the lender will then produce an offer letter, which is their confirmation that they are willing to lend you the money. Offer letters can sometimes come with specific conditions that should be read and understood fully before proceeding.
7. Legal Work
Now that an offer has been issued, work on the legal side of the homebuying process is key. By this stage, your solicitors are likely to be completing the relevant searches and making any necessary enquiries to the vendor’s solicitors. You can now look to set a date to exchange contracts, and agree on a suitable date to complete the purchase.
8. Exchange of Contracts
Upon exchanging contracts, you are now legally committed to purchase the property. You also take over all legal responsibility for the property from the current owners. It is therefore very important that you have buildings insurance in place prior to exchanging contracts, to protect against any possible damage that may occur from this point onwards. You will also pay any land registry fees and/or Stamp Duty Land Tax that is due around this time.
9. Release of Funds/Payment
After contracts are exchanged, your deposit will need to be paid to the solicitors, so that they can finalise their arrangements with your mortgage lender. When your completion date is nearing, your solicitors will request the full mortgage amount from the lender, so that they have the money ready to be sent to the vendor’s solicitors on the day of completion.
10. Completion
Completion day - the funds will be transferred to the vendor’s solicitors so that the whole transaction can be finalised. Once you have confirmation from your solicitors, you can then pick up the keys and begin unpacking!
