House buying process

Once you are determined on the type of mortgage and have found the house you want, the rest of the house-buying process is uncomplicated.

Make an offer

Once you have found your new home, your offer to buy it can be made to the existing owner, normally via the estate agent. Basically, this is the sum you are prepared to pay and any conditions which are attached to this offer, such as subject to contract, estimation, inspection, mortgage advance, completion by a certain date, and so on. If accepted, this is the starting point of the whole mortgage process.

Subject to Survey and Contract means that neither purchaser nor seller is legally bound to go through with the transaction until a survey has been carried out and contracts have been exchanged.

 

Appoint a solicitor/conveyancer

The term used to describe the transfer of property from one person to another is called conveyancing. The term 'conveyancer' is usually used to cover both solicitors and licensed conveyancers.

It is usual for the purchaser to appoint a conveyancer at this stage to act on their behalf. In England and Wales a conveyancer may not act for both the purchaser and vendor in the same transaction. The conveyancer will check all legal details on behalf of the purchaser. These details include that:

• the purchaser will receive vacant possession
• the vendor has good title that is registered as owning the property
• no local redevelopment will affect the property
• no new roads/boundaries/planning applications will affect the purchaser's title

 

Formal application for loan

You apply for a mortgage from your preferred lender. The application form must be filled in and this will include meticulous information about you, the purchaser, and the property under consideration. It is now that the lender will normally require proof of earnings, although some schemes allow income to be self-certified. The proof required can take the form of pay-slips, P60, employer's references or typically three years' audited accounts for the self-employed. At this stage the process of repayment and type of mortgage should also be considered and, if relevant, a proposal for life assurance finished and presented to the insurance company to ensure the purchaser is acceptable for cover before progressing further. If not acceptable, the method of repayment selected may need to be reconsidered.

 

Valuation and survey

This is normally a precondition of a mortgage offer being made and can take one of three forms: valuation, HBSV Report, or a Building Report.

• Valuation : Where a purchaser is buying with the aid of a mortgage loan, the lender will need to value the property to make sure it is of sufficient security for the loan. The valuation will be carried out by a qualified valuer, but will not describe any structural fault; it is basically the value they would place on the house if it had to be sold.
  Because the lender has carried out a valuation it is a mistake to assume that the property is free from defect. The borrower will normally pay for this valuation, although many lenders, in an effort to attract the borrower, are refunding this cost on completion of the loan.
• The Home Buyers' Survey and Valuation report (HBSV) : In most cases, the Home Buyers’ Survey and Valuation (HBSV) report will be adequate on a property built in the 20th and 21st centuries, unless it is in a particularly poor state of repair or is to be altered comprehensively.
  Brief and inexpensive, the HBSV report takes a usual format common to all chartered surveyors and offers 'a wide-ranging but brief appraisal of the property, reporting on its general condition, any factors likely to affect materially its value, the value on the open-market and an estimate of the reinstatement cost for buildings insurance purposes.' It also doubles up as a commissioning form and contract between you and your surveyor.
  The HBSV report is likely to cost from £300 upwards according to the size and value of the property. It may be possible to arrange for an HBSV report to be undertaken by the lender’s inspector at the same time as the valuation report, possibly saving part or all of the valuation fee. Most larger lenders offer this service, which can save as much as £100 - £200 compared with commissioning both reports separately.
• The Building Report : Buying an older property is actually a riskier business than buying a home built in the last eighty or so years. As well as the simple factor of deterioration due to age, building techniques have widely improved in recent years, with the introduction of damp-proofing, proper foundations, modern plumbing, heating and wiring, and so on. A more detailed evaluation of the fabric and structure of the building is therefore recommended, to assess the condition of the building and the need for repairs or modernisation. In this instance, the RICS recommend a Building Report or, as it was traditionally known, ‘a full structural survey’.
  A Building Report should also be considered essential if the property is to be altered in any major way, such as extended, remodelled, renovated extensively or, in some cases, converted to a home from some other use such as a shelter, church, school, and so on. It is also recommended for buildings of unusual construction such as timber or cob. The cost of a Building Report is likely to vary from approximately £500 for a two/three-bedroom terraced house upwards, according to the size and value of the property. This may seem a substantial amount but, in most cases, the cost of repairing any faults discovered by the survey can be negotiated off the purchase price. In the current buyers’ market this reduction can often more than offset the cost of the survey.