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How to purchase a house: your step-by-step information

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Buying a home – whether it’s your first or your fifteenth – is commonly ranked as one of life’s most stressful events. Over the past couple of years mortgage chaos and an uncertain outlook for the housing market have added further complications.

Recently there has been some welcome news for borrowers as mortgage rates have begun to fall after a period when the Bank of England kept interest rates high in a bid to tackle inflation. However, despite the drops thousands of homeowners are seeing their mortgage bills increase by hundreds of pounds a month, although house prices are recovering.

Even during less volatile times, buying a house involves a seemingly endless list of tasks and decisions – but you can cut the stress by using the right tools and finding the right professionals to provide support at key moments. 

To help you keep track of what you need to do – from working out what you can spend right through moving in your belongings – we set out the key steps on how to buy a property. 

Step 1: Know how much you can afford to spend on a property

The first step to buying a property is working out what you can afford and how much you can borrow. 

As buyers face higher mortgage rates the amount of their budgets that has to be used to pay mortgage interest increases, reducing the amount of money they’re able to borrow.

As a general rule, lenders will allow you to borrow 4.5 times your basic salary, so if you are buying with a partner it will be the same multiple of your combined incomes. A couple jointly earning £90,000 would be offered a mortgage of up to £364,500, for example.

However, some lenders will increase this for certain well-paid professions. 

There are other factors that can impact what you can borrow. Lenders will want to know about your monthly outgoings such as household bills that may reduce the amount they are willing to offer you. 

If you already own a property, you might be able to use the equity built up in your current home – plus any extra savings – to increase your borrowing if you’re looking to move up the property ladder. But, for first-time buyers, borrowing will depend on your income and deposit. 

Saving a larger lump sum may result in you being offered a better rate from your lender, as you’ll reduce the size of the mortgage you need. 

Step 2: Choose a mortgage broker

Considering the current market volatility, it can be worth getting some help navigating what the best deals are for your circumstances – it doesn’t always mean those offering the cheapest rates.

Both existing homeowners and those trying to get on the property ladder have been caught by mortgage market chaos, as rising interest has fed through to product rates with lenders changing their pricing at short notice. 

A mortgage broker can look across the whole market and advise on what options are best for you. 

Many people, including existing mortgage holders, may not feel equipped to make more complex decisions – such as whether to opt for a tracker or a fixed-rate mortgage –  without expert guidance. 

It’s worth setting some time aside to find a broker that works for you, as their expertise and experience can vary. 

Our guide on how to choose a mortgage broker can help you find one, weigh up the pros and cons of paying a fee for this service, and what to do if you think you’ve been given bad advice.

Step 3: Apply for a mortgage

Once you have an idea of which mortgage is right for you, it is time to apply. If you’re working with a mortgage broker, they can help you with this process, and will usually sort and send the relevant paperwork on your behalf. 

If you’re going it alone, you’ll have to do this for yourself. Note that different lenders’ processes and required documents may vary.

Regardless of how you’re applying, you’ll likely need to gather a few months’ worth of utility bills, payslips and bank statements as a starting point.

Before applying to borrow such a large sum, it’s a good idea to familiarise yourself with your credit report. A poor credit score could mean you’re refused a mortgage; major lenders will be looking for evidence that you can be trusted to repay what you owe, and tend to require mortgage applicants to have a high score.

However, the good news is that a credit score is not a fixed figure – it is a live report on your use of credit, as well as things like being on the electoral roll – and there are simple steps you can take to improve it. 

If a lender is willing to grant you a mortgage, it will give you a “mortgage agreement in principle”, setting out how much it is willing to lend. In combination with your deposit, this will set the maximum amount you’ll be able to spend on a property.

Step 4: Go through ID checks

Throughout the buying process you will be asked to show ID to multiple people, including your lender, lawyer and estate agent. 

These parties are required by law to make sure you are who you say you are, and they’ll run money laundering and fraud checks.

Official identification usually means a passport or UK driving licence, as well as proof of your current address, such as a council tax bill or other utilities bill that features your name. You may also be able to use an EEA member state identity card as proof.

Step 5: Start house hunting

One way to start your search is to register with the big online property platforms, such as Rightmove and Zoopla. You can set parameters to look for properties of a certain type, size and price in specific areas, and set up alerts to let you know whenever there’s a new property that fits the bill. 

You can also make contact with buying agents in the areas where you are looking, and ask them to keep a lookout for the kind of property you want. 

Once you have a budget in mind it is time to think about other property features that are important to you. Consider whether you prefer a new-build or older property, if it needs a garden or nearby green space, and its energy-efficiency rating .

Think about whether you’re looking to carry out renovations, or would prefer a home that already has most of what you are looking for.

As well as the positive characteristics, it is worth thinking about the aspects of the property you are willing to compromise on. For example, would you be happy to live further away from shops and amenities or a transport hub? 

These factors may impact the house price, getting you a better deal – but they could also devalue the property when you go to sell. 

Step 6: Make an offer

Coming up with an offer price for a property is the start of a negotiation, usually based on the asking price the seller’s estate agent has specified. If you are unsure how much to offer, researching local house prices and what price recent sales went for will give you an idea of a price bracket. 

In July, half of the houses sold in England and Wales were at a discount to the asking price, according to data from  estate agent Hamptons. This is the highest share of homes sold after reductions for nine years, and may be down to the extra financial pressure on buyers due to high mortgage rates.

Low bids are likely to be more successful if the property has been on the market for a while, or if the seller wants to move quickly. 

However, if there are multiple interested buyers you may face a bidding war, and need to be mindful of how far you can stretch your finances and your current mortgage offer. 

If your accepted bid is either above or below your mortgage in principal you may need to go back to your lender to ask for a new agreement. But, unless there have been significant changes this is likely to be a straightforward process. 

Step 7: Find legal representation

Finding a lawyer is an important step in buying a home, and you will need one as soon as your offer has been accepted. 

Your lawyer will run the necessary legal checks on the property and manage the legal work for the house purchase.

The area of law around buying and selling property is called conveyancing, and there are three groups of professionals who are qualified to carry it out on your behalf; solicitors, chartered conveyancers and chartered legal executives. 

Although your estate agent or broker may be able to recommend someone to do this, it is worth shopping around for a few quotes to get an idea of the level of service on offer.

For instance, you may want to choose whether you want to have a named representative working with you throughout the process, or a general firm, where different people will pick up tasks. One firm might conduct business remotely, while others will meet face to face – so it’s about going with your preferences. 

Step 8: Organise a property survey

By the time you have made an offer, you will have hopefully had the chance to view the property at least once to check the condition. 

However, you will still need to get a survey of the property in order to satisfy yourself and your lender that the house is as described and there are no hidden issues.

Surveys need to be carried out by a professional surveyor, and the type of property you are buying may determine what level of survey you need. A surveyor will be able to advise you on the right one. 

At the end of the process you will be provided with a report on the property, detailing any issues – such as damp or cracks in the walls – and may advise on how they can be fixed.  If there are major problems  it could affect the property’s value, and you may want to revise your offer or pull out of the purchase.

If you are unsure of anything in the report you can go back to the surveyor and ask for further explanation, or even a referral for an expert opinion.

Step 9: Exchange and completion

Exchanging on your new home is the final step in obtaining legal ownership of the property and commits you to the transaction. 

Your lawyer will be able to advise on your exchange and you should be given a final completion date – the date you can get the keys and move in – which can either be simultaneous or a few weeks later. 

It is also the point where you need to put down your deposit. There are a few things you need to do before you exchange, including ensuring you can pay other costs such as stamp duty, and having your mortgage confirmed. 

Once you have an exchange date you will also need to get home and buildings insurance, as you are now the owner of the property. 

Exchanging is legally binding, so if you back out for any reason after this point you may lose your deposit and have to pay compensation to the seller. 

Step 10: Moving in

After you have completed, you can move into your new home, or begin any work on the property you are hoping to complete before taking up residence. 

Despite all of the organising and admin you’ve already done, this part of the process calls for a lengthy to-do list.

First things first, once you know your completion date, you should inform your moving company (assuming you’re using one), so you can book them for the date you want to make the move. 

Before you go, it is worth contacting the utility providers of your current residence to let them know you will be leaving – some may transfer their service to your new property, while others may need notice before closing your account.

If you need to set up a new broadband service, you may want to get the process going early, as it can take several weeks to complete.

Other things to think about include getting your post forwarded, and visiting your new property again to measure for any new furniture you might need to order. 

Also, if your seller is part of a further chain, be prepared for some delays – any delays or difficulties further up that chain could impact your timeline. 

Once you’re moved in, remember to notify your local council to update your new council tax records, and take meter readings to pass on to the utilities companies. 

What to know before (and after) you move

Buying a home is a huge decision, and – in addition to the nuts and bolts of how to make the move happen – you’ll need to find out things like whether the property you’re interested in comes with a leasehold contract, and what that means for you. 

Separately, what is your plan if you’re unable to buy the property you want, but you’ve already sold your own home? And what will you do if you move in somewhere, only to find the property isn’t up to scratch?

Luckily, we have some advice on all of these eventualities.

The difference between leasehold and freehold

Leasehold properties have hit the headlines in recent years, due to possible instances of properties being sold with unfair terms, as well as ongoing concerns around cladding following the Grenfell Tower fire tragedy, with many flat owners having to pick up the cost of having flammable cladding removed. 

Buying a leasehold property means you own the property – usually a flat – for a definite period of time. Ownership is shared with the freeholder, known as the landlord, who will usually own the wider building the flat is part of. Your lease will detail the length of our term and the rights you have regarding the property, such as what changes you can make. 

These properties are also likely to come with fees paid by the leaseholder to the outright owner. Recent reforms to the leasehold have changed how these fees operate and more alterations to the system are expected under the current Government. 

If you purchase a freehold property, you’ll own both the property itself and the land it’s on. You’ll therefore be free to make any changes you like (subject to other rules, such as planning laws), but it also means you’ll be responsible for the upkeep of the property and land. 

How to manage buying and selling at the same time

If you are moving house your to-do list will look a little different to those of first-time buyers. 

As well as looking to buy you will need to prepare your home for sale, find the right documents and gather information, such as your property’s energy performance rating.

Timing will be critical, because as part of a chain you and the other buyers and sellers involved will be relying on each other for the process to move forward. 

It’s a good idea to come up with a contingency plan for what you would do should the purchase of your new property fall through, or get delayed, after you’ve already agreed the sale of your current home. 

Pulling out of the process altogether may be an option, but it could cost you – so some people may decide to rent or stay with family if there are just a couple of months to wait until the new property is ready. 

When it comes to your mortgage, it’s a good idea to speak to a mortgage broker about your options – you may be able to “port” your existing mortgage (in other words, transfer the same deal to your new property), or find a better deal elsewhere.

What if there are issues after you move in?

If you move into your new home and find there are issues with the property, or with the service you received from the professionals you used, there are some options open to you.

As a first step, go directly to the company or professional in question and use their internal complaints process. In most cases, companies will try to rectify any issues themselves.

If you’re not satisfied by the way your complaint is handled, lawyers, surveyors and estate agents are each overseen by an ombudsman – complaints can be escalated to them. 

The ombudsman will independently investigate and review the case, and have the power to force the company in question to offer redress if it rules in your favour. 

If you’re unhappy with the ombudsman’s decision and  want to escalate the matter further further, you can pursue complaints in court.  

Buying a buy-to-let property 

If you’re looking to buy a property to rent out rather than live in, much of the process is the same, but there are a few additional elements to consider. 

Firstly, the type of mortgage you apply for will be different – as you’ll need a buy-to-let mortgage rather than a residential product. 

Lenders are likely to require additional information; they will assess the expected rental income of the property when deciding how much they are prepared to let you borrow, as well as assessing your personal income.

You should also consider whether it is worth registering as a limited company; tax-wise, this can be favourable in some scenarios following changes to the mortgage tax relief rules. 

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