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To buy new property is one of the most exciting and nail-biting times in life. There are so many things to consider that it can sometimes feel overwhelming.

Taken step by step and breaking down the entire process, we’ll run through, beginning to end, all of the factors involved in buying a property.

If you’re wondering about all the whys and wherefores, and the steps in buying a property in the UK, read on to find out about:

  •       Estate purchases
  •       Conveyancing
  •       Property viewing
  •       Mortgages
  •       Property purchase
  •       Deposits
  •       Stamp duty
  •       And much more!

The Process of Buying a Property

When you’re reviewing mortgage options and the best loans to get for your prospective property, using a mortgage broker helps to simplify the process.

Working with one of our mortgage advisors, we’ll take your financial situation into account, we’ll discuss your individual needs and we’ll scour lenders from all over the country (including specialist lenders whose deals aren’t available on the high street), and come up with a list of highly competitive mortgage products for you to choose from. All you have to do is provide us with some information and we’ll do the rest.

Rather than spend countless hours looking for the right mortgage deal for your dream home, let us do the hard work for you; one less thing to worry about!

Transparency and clarity are things we prize; to that end, we’ve decided to create this handy page describing each part of the property buying process and detailing the costs of buying a property. Whether you’re a first-time buyer or on the hunt for the next rental home in your budding property empire, you’ll find some useful and demystifying information below.

 

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Estate agents

Where it all begins; once you’ve seen the property you’re interested in, you’ll need to arrange for a viewing with the estate agent that is dealing with that property. Most of the time this is easy to ascertain simply by looking at the “for sale” sign on the property itself.

What are estate agents, and what do they do?

An estate agent is an integral part of the steps in buying a property. They arrange all viewings, will guide you around the home and help to manage negotiations between homeowners. When you make an offer, it will be through the estate agent who then relays your offer and the response from the seller.

They also help with the reverse; when you are selling your home you will need to contact the estate agent who will then market your home to potential buyers. They will arrange for professional photography of your house and use information from the local housing market to ensure that your home is priced competitively. They also vet buyers, ensuring you only get people who are serious in their desire to buy your property.

Difference between a local and national estate agent

During your hunt for a new home, you’ll likely come across many estate agents in the same area, all offering a range of different properties. There are high street chain estate agents that exist around the entire country and local independents that service only a small area, so what’s the difference?

  •       National chains may have less flexibility, having a set series of processes they must adhere to
  •       Independents offer a more personal, bespoke service.
  •       Independents often have better local knowledge
  •       National agents have access to a much wider pool of resources

No matter which estate agent you go for, they should all have a good working knowledge of the industry and of the local housing market. Before contacting an agent to begin the process of buying a home, conduct research online to read their reviews and see how they conduct business.

Property viewing

Arranged through an estate agent, when viewing a property an agent will probably accompany you around the home, talking to you about the various advantages of the property.

Remember, they are trying to sell it, so will likely embellish as much of the positives as possible while omitting any negatives.

To get a well-rounded sense of the property, consider asking these questions when you are on a viewing:

  •       Why is the owner selling?
  •       How long have the owners lived here?
  •       What’s the area like?
  •       How long has the property been on the market?
  •       Has there been any work done on the property?
  •       Have the sellers found a property?
  •       What is the council tax band?

All of this will give you a better idea of the story around the sale of the house. It will also give you vital information that will help you arrive at a decision as quickly as possible; you don’t want someone else swooping in and stealing the sale from you (this is called gazumping, which we’ll cover below) if you are especially interested in the property.

When conducting a viewing, be observant of the state of the worktops in the kitchen and bathroom. Take note of any cracks in ceilings or brickwork, and be aware of the signs of mould or damp.

Also, don’t feel like you have to rush. Take your time, soak in the feel of the home and take as long as you need to explore the property; it may, after all, be where you spend the next few years of your life.

Property valuation

There are a few essential factors that are considered when determining the value of a property.

  •       Plot size
  •       Age
  •       Location
  •       Condition
  •       Room count

The local area will also be considered. Things like public transport links, local schools, noise and crime levels all come to bear before the value of a property is decided upon.

It should be noted that the valuation of a property is not a survey or a mortgage valuation, these are separate things carried out at different points in the buying process. The valuation will be carried out through a surveyor or estate agent, and will provide a figure arrived at through observation, research and experience.

For older or larger properties, you can also get a Royal Institute of Chartered Surveyors (RICS) accredited red book valuation. RICS is the cream of the crop when it comes to surveying; the red book is a document that covers the strict professional standards they must adhere to so you will be sure that using a RICS surveyor gives you the very best standard when it comes to surveying.

Times when you might need to use a RICS surveyor:

  •       During divorce proceedings
  •       Disputed that need resolving through mediation or arbitration
  •       Properties being sold by charities
  •       Calculating probate
  •       Rent reviews
  •       Transferring of assets into a SIPP pension fund

Getting a property survey

A survey is a great way to discover any problems with a property before you fully commit to a sale. You will usually have a survey carried out after an offer is accepted. Most of the time a survey tells you that everything with your property is fine, that’s what you want to hear. But also, it flags up any nasty surprises that may lie in wait, giving you the ability to make a more informed decision on whether you want to buy the property or not and avoid unexpected repair costs once you move in.

RICS reports value plain, jargon-free survey reports, giving you a straightforward and concise appraisal of the property.

The type of survey you need depends on the type of property. Considering the age and condition of the house, RICS offer three levels of building survey to suit these different needs.

Cost Provided Item Unit Average UK Cost
Level One Survey Condition Report £300
Level Two Survey Condition & Homebuyer Report £450
Level Three Survey Building Survey £550
These costs are ballpark averages for the UK.

 

Ideal for new builds and well-maintained properties. This report will point out any urgent repair needs and larger defects and explain the risks and legal issues attached to these.

Points out structural issues and any other hidden problems. This is a more in-depth survey that is often used for newer properties. Can also include a property valuation.

Best for older properties and those in obvious need of repair and major renovation. This is an extremely comprehensive report that highlights any issues with the property and will also have advice on the options for the repair and maintenance of those issues.

There is also an option called a new-build snagging survey. This is very handy if you’re thinking of buying a new build property and need to check if it has any faults, allowing you to deal with these before you move in. These surveys start from £300 but how much you pay will depend on the size of the property.

Home buyer reports include information on:

  •       Information about the property and the location
  •       Estimated costs around rebuilding the house for insurance purposes
  •       Damp, drainage and insulation assessments
  •       Checking for woodworm and rot in timbers
  •       Any repairs that require specialist attention
  •       Major faults in the loft or other parts of the property that could affect its value

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Title deeds and land registry

When you have bought a new property the change of ownership is registered with the land registry. Changing the title deeds to be in your name validates your ownership and indicates you legally own the property.

Title deeds are documents that show the history of ownership for any given property. Without title deeds, you would have no firm legal ownership over your new home.

The title deeds also show you the boundaries of your property, not just the structures on it. They are extremely useful in dealing with any boundary disputes that arise and allow you to see how much of the surrounding area you own.

Local authority searches

This is a vital part of the conveyancing process. If you’re buying a house with a mortgage (and we hope that you are), the lender will require a local authority search to be carried out. The local council carries out this search and is a way for the lender to be reassured of the property’s value in the context of its local area.

Usually requested by your solicitor after your offer has been accepted, this search includes information on:

  •       Planning agreements and conditional planning permissions
  •       If the property is located in a tree-preservation area
  •       If your new home has a listed building status
  •       Any financial charges registered against your new property
  •       Required improvement or renovation grants
  •       If the property is in a conservation area
  •       If the property is in a smoke control zone

 

These include:

  •       Any proposals for new roads, traffic schemes or railroads near your new property
  •       Upcoming planning decisions that could affect the property or surrounding area
  •       Any environmental factors where the property is situated
  •       The levels of Radon Gas
  •       Risk of subsidence and any concerns with the infrastructure and energy use of the property

 

These searches take two to six weeks on average and will cost between £50 and £250 depending on the local authority. The length of time is due to human factors and can’t really be helped. It will depend entirely on the staff levels of your local authority and how busy they are; you can keep abreast of any developments during this time by keeping in contact with your solicitor.

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Freehold vs leasehold

Put simply, a freehold parcel of land is one that you own, a leasehold is a building that you own but the land it’s on is owned by someone else. When your lease expires, you will have to vacate the property. This can be decades or even centuries but it is something that’s best to check before you commit to buying.

Before buying a new home, make sure that you have freehold ownership. This means that you own the land and any structures standing on it. Most houses that are for sale will be freehold but it is best to check, to make sure.

Property chain explained

As the name suggests, a property chain is where a series of home buyers are connected through the transactions of the homes between them.

If you are a first-time buyer, you will have no chain so moving home will likely be easier than those with a large chain behind them.

No chain properties are those that require no other transactions to complete other than your own.

If you are part of a large property chain, any link that is broken, I.e. if another homeowner were to pull out of a sale, could cause significant delays or cause the chain to collapse altogether. That is a worst-case scenario but it is worth noting that the more people involved, the higher the likelihood that something will go wrong somewhere.

This is mostly in the form of delays, as other homeowners need to wait for surveys to be done, or if there are any complications with the homeowners report.

If you do encounter problems in the chain connected with your property, communication is the key. Keeping in contact with all relevant parties ensures there is no miscommunication and any delays can be prepared for and dealt with.

Mortgages

We at The Mortgage Broker are the experts at finding you a mortgage. Getting the best mortgage deal, with the most favourable interest rates, manageable repayments, and a desirable term.

There are many different types of mortgages you can get and as many lenders, as you can shake a stick at. The best thing to do is employ the services of your friendly neighbourhood mortgage advisor.

Finding a good mortgage deal is a long and tiresome process, one that we are happy to take off of your hands. Discovering the right mortgage for you requires only a few pieces of information and then we can get to work.

The most common types of mortgage are:

Fixed term – Usually 2,3 or 5 years. A fixed term mortgage provides you with a set number of years with a fixed interest rate. This allows you to budget effectively and feel secure.

Variable term – This type of mortgage allows you to potentially make amazing savings but has a big catch. A variable rate mortgage means that the interest rate on your payments will change from month to month to reflect those offered by your lender. The advantage of this is that if the interest rate falls you will gain significant savings but if the rate increases, you could see your repayments skyrocketing.

Tracker – A tracker mortgage works in the same way as a variable mortgage except that it will follow the interest rates set by the Bank of England, not the lender.  

There are other types that are more useful for buy-to-let landlords and those in financial distress. There is a correct mortgage product for everyone, no matter your circumstances.

The interest rates used to calculate your repayments will be based on those your lender has set or those set by the Bank of England. Naturally, the higher the interest rate, the higher your repayments. Several things can mitigate this, such as having a large deposit and securing a fixed-term mortgage at a lower rate. This way you can ride out any volatility in the market before you have to remortgage.

Loan to Value

The Loan to Value (LTV) of a property will always be expressed as a percentage. What the LTV indicates is the amount of debt used to buy a home against the value of the property itself.

To make it as simple as possible; say your home is worth £100k and you have a £20k deposit so your mortgage is £80k. This means that you have an 80% LTV.

The lower your LTV is, the better you will look as a prospective mortgage holder to the lender. The larger your deposit, the less that will need to be lent to you and the less you will have to repay. You are, essentially, a less risky prospect than those with a lower deposit amount.

Conveyancing Solicitor

Conveyancing is the legal process of transferring ownership of a property between seller and buyer.

When an offer on a house has been accepted, you will need to hire the services of a conveyancer or conveyancing solicitor to deal with the legal side of things. They will handle all of the contracts, offer legal advice if needed, carry out searches and transfer the money to pay for your new home.

The stages of the conveyancing process are as follows:

Instruct your solicitor – find the right solicitor for you and then instruct them to begin work on the legal side of your home purchase.

Drafting contracts and raising enquiries – your solicitor will examine the draft contract and raise any enquiries with the seller’s solicitors. This is where you can check if it is freehold or leasehold.

Arranging property surveys – if you choose to get a survey done, your solicitor can advise if there are problems highlighted that need fixing. They will communicate these to the seller’s solicitor.

Conducting searches – your solicitor will conduct legal searches of your property. This is when local authority searches occur. They will check with the land registry to get the title register and title plan, both of which are legally needed to sell the property.

Signing contracts – after all drafts of the contract have gone back and forth between your solicitor and the seller’s solicitor, it is time to sign on the dotted line!

Exchange of contracts – you will agree with the seller on a date to exchange the contracts. Your solicitor will exchange the contract for you, reading them to each other over the phone to ensure they are identical. They are then sent in the post to one another. Once the contract has been exchanged, you are legally bound to buy the property.

Transfer of deeds – at this point, your solicitor will begin the process of getting the deeds changed to be in your name so you are the legal owner of the property.

Completion – normally at around midday on the agreed completion date. The solicitor confirms that all money due is received, the seller moves out, and you move in.

A solicitor’s fees for buying a property will depend on the type of services you need from them and will vary from solicitor to solicitor. The average solicitor’s fee for conveyancing is £2,339. This includes legal fees and conveyancing disbursement.

Stamp duty

After completion is when you’ll have to pay Stamp Duty. This is a land tax that will be paid through your solicitor.

Stamp duty was first introduced in the 1600s and is a one-off fee payable to the government on the transfer of property from one person to another.

You will need to pay stamp duty if you:

  •       Buy a freehold property
  •       Buy a new or existing leasehold
  •       Buy a property through a shared ownership scheme
  •       If you take on a mortgage to buy a share in a property, i.e. transferred land or property in exchange for payment

Several factors influence how much you will need to pay.

If you’re a first-time buyer and your property is worth £625,000 or below then you won’t pay any stamp duty.

If you already own a property and are buying an additional property, your stamp duty will be a larger amount.

If you’re not a UK resident, your rate of stamp duty will be different.

The amount of stamp duty you pay will be a percentage of the value of your home.

The rates are:

0% – £0 £250,000 (£625,000 for first time buyers)
5% £250,000 – £925,000
10% £925,000 – £1,500,000
12% £1,500,000 +

Use our stamp duty calculator to quickly see how much stamp duty you will need to pay for your new property.

 

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Home Insurance

You have no legal requirement to purchase home insurance, though lenders will usually require you to have buildings insurance to help protect their investment.

Getting home insurance covers you in the event of any unforeseen circumstance. You may think it’s a good idea to forego it since it will save you money, but in the event of a catastrophe, you’ll pay far more in the long run.

What are the different types of insurance and what do they cover?

Building insurance – covers the cost of repairing damage to the structure of the building. Roofs, walls, floors and any permanent fixtures.

Contents insurance – covers the cost of replacing damaged, destroyed or stolen items. Different levels are depending on the value of the contents in your home.

Life insurance – pays a lump sum to your loved ones in the event of your death within the term of the policy. You can also add critical illness cover to make sure you don’t lose your home due to any prolonged period of illness.

Income protection insurance – this provides you with a replacement income in the event that you are unable to work due to illness or injury.

It’s best to get insurance in place before completion day but you can apply for it at any time. It’s crucial to get the right insurance for yourself and your home. In conversation with us, we can help point you in the right direction and advise you on the best course of action.

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Energy performance certificate

An Energy Performance Certificate (EPC) rates the energy efficiency of your home. The highest rating you can get is A, the lowest is G.

EPCs use the well-known colour-coded system you’ll be familiar with when buying a fridge or a TV and is an easy way to see, at a glance, the energy efficiency of your new home.

An EPC is valid for ten years and also covers things like the estimated energy use and costs of your home, recommendations on how to make your home more efficient and an energy performance certificate.

EPCs are required when properties are built and also when selling a property. You’ll need to commission an EPC before putting your house on the market because it will need to be shown to prospective buyers.

You can arrange to get an EPC through your estate agent and it will cost anywhere from £60 to £120 depending on the size, age and location of the property.

When buying a property, the EPC should be displayed on the property listing. It will give you a  good idea of the amount you’ll be paying in bills every month, though it is just an estimate based on averages. It is also useful as a guide to making improvements to the home to increase its energy efficiency.

Gazumping

This can occur after you’ve put an offer in on a property. The hilariously named act of gazumping is not, in fact, hilarious at all. This is when another party puts in a higher offer on the house you are in the process of buying and that offer is accepted, losing you the home you had put the offer on.

Unfortunately, this can happen any time before you’ve exchanged contracts and puts you back on the search for a home.

Gazumping is more likely to occur if the process of buying the home is taking too long; the seller can get cold feet and start to worry about whether the sale will go through. It also happens if the seller has the opportunity to maximise the profits from the sale of their home.

Although a horrible act and one not actively encouraged, it is legal to gazump. This is because until the exchange of contracts, there is nothing legally binding between you and the seller. The major downside of this is that gazumping can happen when you are very far into the buying process.

There’s not much you can do to protect yourself from gazumping, though getting home buyer protection insurance helps if the sale falls through.

Completion day

You have reached completion day, the final step in the home-buying process!

This is the day when it all happens; ownership is transferred to you, the new owner. You collect the keys from the estate agent and move into your new home.

This is the series of events that usually occur on completion day:

  •       Your solicitor will check all of the mortgage conditions have been met and request the money from your lender.
  •       Conveyancing solicitors create completion statements of all payments received.
  •       Your solicitor will transfer the purchase money to the seller.
  •       When the seller’s solicitor has received the funds they confirm completion and release the keys from the estate agent.
  •       You are notified of the completion and can move in.

You can exchange and complete on the same day, though this isn’t strictly necessary. It will depend on the chain and the timeline of moving dates. You may find you have time between the seller moving out and you moving in, or that you have to do it all on the same day.

Completion dates are usually decided far in advance, so the choice is between you and the seller. Doing everything on the same day has the advantage of speeding up the conveyancing process, it can however be incredibly stressful.

Buying a second property

You could be buying a second property to use as a holiday home; buying a rural property is ideal for this. A second home is a great way to invest your savings for yourself or your children, or as a means to become a property developer. Whatever the reasons, there are a number of things to consider.

The biggest consideration will be what you can afford to buy. If you are still repaying the mortgage on your first home, there are options to get a mortgage for a second one.

There are some things that will enhance your chances of getting a second mortgage, they are:

A large deposit – Unlike your first home, it is usually expected that you will be able to put down 25% of the value of your second home as a deposit.

Details of rental income, if any – If you are planning to rent out your second home, provide details of potential rental earnings to mortgage lenders.

Good credit score – You’ll need to show that you are a reliable and risk-free prospect before a lender will accept you for a second mortgage.

A large income – You need to show that you’ll be able to keep up with repayments, especially if you are still repaying your first mortgage.

 

There are also some additional costs to buying a second home. Stamp duty is increased on additional homes, as below:

PURCHASE PRICE OF PROPERTY STAMP DUTY RATE STAMP DUTY RATE FOR ADDITIONAL PROPERTIES
Up to £250,000 0% 3%
£250,001 to £925,000 5% 8%
£925,001 to £1,500,000 10% 13%
Over £1.5 Million 12% 15%

There is capital gains tax to consider also. Each person has a capital gains allowance of £12,000 per person. If the value of the property increases above your personal allowance you will have to pay up to 18% of the tax increase.

The other increased expense is in second home council tax. You may be able to get reductions if your additional property meets certain criteria. Homes not used as a sole or main residence can have their council tax increased by as much as 100% in some places. You can also avoid this if you use the other residence as a place of business.

Buying a property and renting it out

There are a few options for buying a rental property for your second home. The first is to have tenants live there long term, this is called buy-to-let and is a great way to generate income and invest money.

The second is to let out the home as a holiday let. If your home is going to be sitting empty for the majority of the year but you still want to use it as a getaway yourself, consider opening it up as a getaway for others; another great way to generate income rather than have a vacant property.

If planning to rent out your home, speaking with a mortgage advisor is a good step to take. We can talk you through the options you have through your current lender and see if there are others that will be more fit for the task to your specific needs. Some lenders don’t allow you to rent out your home, meaning you will have to remortgage onto a buy-to-let mortgage to enable you to do so.

Be aware that setting up your home as a holiday let will incur substantial costs to set up. It’s a lot of work and there are many things to consider. You could manage the property yourself or have a holiday cottage firm do it on your behalf, though this will mean taking a cut in your profits.

If you plan to let out your second home a lot then you should also consider a specific holiday let mortgage, details of which we will be able to advise you on.

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