As we emerge from the COVID pandemic, an increasing number of people seem set on moving to new and less populous locations, and many first-time buyers are looking to cement their roots before another wave – or a different pandemic hits. Whatever the reasons, the UK’s housing market is becoming increasingly buoyant, but this is still a process fraught with issues, and a number of options.  So, just what do you need to know when purchasing a house in the UK in 2020 and beyond?

Regardless of what type of buyer you are, the process of buying a property remains pretty much a standard model, with a number of well-defined steps, and it all starts with viewings and finding the property that suits you.

Get a deposit. This is the most fundamental part and you cannot realistically move until you have a deposit sorted out.  It is now impossible to find 100% mortgages, so you are likely to need a deposit – a sum of money that you have saved up or been gifted – to secure a mortgage.  Amassing a deposit demonstrates commitment to the mortgage-process. You will usually require a deposit of at least 10% of a property’s value to be offered a mortgage, although some types of new build purchase may only require a 5% deposit (using Government Schemes such as Help To Buy). The lender would then supply you the remaining 90% of the property’s value. This means that if you wanted to buy a £150,000 property, you would need to save up at least £15,000 and then borrow the remaining £135,000.  Many people put down bigger deposits, as it reduces the amount that they need to borrow and helps secure a lower interest rate on the mortgage.

Getting a mortgage. Many people will look to commence the property search prior to securing the mortgage however our experience shows the best approach is to always find out what you can borrow and ultimately what this will cost you on a monthly basis before attempting to look at properties. Having this information will give you confidence in the search process but will also give you a much better idea of what your maximum buying power is and having an agreement in principle is now a MUST, as many estate agents or builders will not allow you to view a property without the evidence you are serious/qualified buyer.

To get a mortgage, you’ll need to complete a full mortgage application. You’ll need to show appropriate ID and proof of income, as well as having to complete a mortgage interview but we can conduct these via the phone or a virtual meeting. If you’re self-employed you will have to provide additional evidence of how much you earn.  When choosing a mortgage product not only will we establish your borrowing capability and what this equates to monthly, we will also explain all the various mortgage types and incentives available in the market place. The choice may seem daunting but with some personalised questions and establishing what you may require from the mortgage will enable us to make a recommendation for you. Below is a quick overview of some of the deals available:

Fixed rate mortgage. The interest rate you pay will stay the same throughout the length of the deal regardless of what happens to interest rates. You’ll see them advertised as ‘two-year fix’ or ‘five-year fix’, for example, along with the interest rate charged for that period.

Variable rate mortgage. If you have a variable rate mortgage, the interest rate can change at any time. Make sure you have some savings set aside so that you can afford an increase in your payments if rates do rise. Variable rate mortgages come in a number of forms:

Standard variable rate. This is the normal interest rate your mortgage lender charges homebuyers and it will last as long as your mortgage exists or until you take out another deal. There can be frequent changes in the interest rate, which might occur after a rise or fall in the base rate set by the Bank of England, and these can affect your monthly repayments.

Tracker mortgage. These move directly in line with the Bank of England’s base rate plus a couple of percent. Therefore, if the base rate goes up by 0.5%, your rate will go up by the same amount. These usually have a short life, and typically last between two to five years, though can be longer.

Discount mortgage. This is a specific discount that is applied to the lender’s standard variable rate mortgage and is only in force for a certain length of time, typically two or three years.

Capped rate mortgage. Your rate moves in line normally with the lender’s standard variable rate. But the cap means that it can’t rise above a certain upper level, offering some additional re-assurances.

Once your mortgage has been agreed in principle and the relevant certificates issues, you can commence the property search knowing the mortgage is provisionally waiting for you subject to finding a suitable property.

Viewing a property. In most cases, you will be shown around a potential purchase property by the estate agent trying to sell it. You will normally meet them there and will have a chance to look over the entire property, with the estate agent on hand to point out features and to answer your questions.  They will rarely point out the downsides of a property, or may not have the answer to all of your questions. 

At this point, you should be asking as any questions as possible, and take a researched list of queries with you.  You should also ask about local services, such as shops, public transport, schools, etc.  Get as much information as you can at this point and return for other visits if you plan to buy.

Making an offer.  Once you have found a property that you like, you can put an offer in to the estate agent.  Make sure that you do this both verbally and in writing, and ask the estate agent to stop actively promoting the property.  You do not have to offer the full asking price and can make an ‘offer’, though the seller does not have to accept this and can continue to accept offers. 

Get a solicitor.  There will be many legal processes to go through, so you will need to have a solicitor to help you through it all. You will need to have legal checks on the property and ensure that the property meets the mortgage lender’s requirements, and other legal aspects.  Known as conveyancing, this can be done either by a solicitor, a licensed conveyancer or a chartered legal executive practitioner.

You usually have to pay for the suite of searches up front, and while you should wait until you have a mortgage offer confirmed, you should get these done as early on as possible in case there are problems.

Finalise the mortgage application. You will already have your mortgage provisionally approved and now you will confirm the finer points of the property purchase i.e. property address, selling agent details, solicitors, along with providing all the required supporting documentation. As your broker we will liase with you and all related parties until the mortgage is fully offered.

Stamp Duty. Stamp Duty is a tax you might have to pay if you buy a residential property or a piece of land in England and Northern Ireland.  Under new rules, you’re buying your main property, you will not have to pay Stamp Duty on properties costing up to £500,000 up until 31 March 2021. This will be the case whether you’re a first-time buyer or have previously owned a property. If you’re buying a second home – not your main property – you will still pay Stamp Duty if it costs more than £40,000.

Stamp duty is a sliding scale and if you buy a house for £575,000, the Stamp Duty Land Tax you owe is calculated as follows:

0% on the first £500,000

5% on the final £75,000 = £3,750

So, you would pay a total of £3,750 in stamp duty.  The 5% rate goes up o properties valued at £925,000, when it changes to 10%, and then on t £1,500,000, when it becomes 12%.  All of these values are higher for second homes.

Buying a property is a complex process which may take many months to complete.  However, with checks completed, your deposit in place, and an agreement in principle secured, there is usually little to stop you proceeding with your purchase.