Welcome to our House Buying Process page at Mortgages UK.

The House Buying Process:

The Mortgage Application and House Buying Process

The steps involved are below. You will find more detail about each step further down the page.

- Decide on the type of mortgage you want.

- Decide how big a mortgage you can afford. Use a mortgage calculator to get an idea of the size of mortgage that will be within your budget.

- Get a Mortgage Agreement in Principle

- Find a property you want to buy.

- Ask for the Home Information Pack (HIP). This will tell you important information about the property.

- Make an Offer on the Property. You can make a verbal offer to the seller or their estate agent, but you will normally be asked to confirm this in writing. Make sure that the offer states "subject to contract" so that you can pull out if you find any problems. There are no obligations on the buyer or seller until contracts are signed.

- Sale Agreed. Seller has accepted your offer. Instruct your solicitor to proceed. Discuss exchange and completion dates with the seller.

- Exchange solicitors' details. You and the seller tell each other which solicitors you are using.

- Receipt of Draft Contract. This is sent to your solicitor. They should send it on to you.

- Make a Mortgage Application.

- Arrange for a survey of the property.

- Draft contract is sent to your solicitor. Your solicitor will perform the necessary searches themselves or use the information in the Home Information Pack.

- Valuation of Property by the Lender. A surveyor will perform a survey and valuation on behalf of the mortgage lender to confirm the property's value. The is arranged by the lender but you have to pay for it.

- Background Check.

- Formal Mortgage Offer. This document is sent to your solicitor for you to sign. Once you have signed and returned this, you have your mortgage and you are ready to exchange contracts.

- Get an insurance quote for the property.

- Arrange life insurance. This is needed to cover the loan should you die.

- Find a solicitor.

- Conveyancing.

- Draft Contract approval by your solicitor. Required before Exchange of Contracts.

- Agree on Completion Date. This should be done before Exchange of Contracts.

- Formal Mortgage Offer. This must be in place before Exchange of Contracts.

- Check your survey report. You should be satisfied with the survey report before exchanging contracts.

- Check you have the deposit ready.

- Life insurance and property insurance must be in place to commence on the Completion Date.

- Exchange of Contracts. The contract of sale is signed by you and the seller. A deposit (usually 10% of the sale price) is paid to the seller's solicitor. Either an electronic payment is made or the buyer's solicitor sends a banker's draft.

- Organise moving.

- Completion. The remaining amount (usually 90%) is paid to the seller's solicitor.

- Move In.

Mortgage Agreement in Principle

An agreement from the lender that they would be prepared to lend you a particular amount to buy a property.

The lender is prepared to lend you a given amount based on the information you have provided so far.

To apply for an Agreement in Principle you will need to complete a form giving details of your income, employment status and your financial commitments.

You will be asked to provide identification, e.g. passport, to the lender, and proof of earnings.

Gives you an idea of how much a given lender will lend to you for your mortgage.

It is not legally binding on the lender, nor is it a guarantee that the lender will provide the loan. The lender will still need to check your ID, verify all the information you have given and run a credit check before making you a legally binding offer of a loan.

It is not legally binding on you. You would not be under obligation to borrow from a lender that has provided you with an Agreement in Principle.

There is no charge for an Agreement in Principle.

Note, an Agreement in Principle may involve a credit check, but the lender should obtain your consent before running the check. If too many credit checks are done within a short period, it can damage your credit rating and this in turn can lead to your mortgage application being turned down.

The Agreement in Principle is valid for a set amount of time, usually up to three months.

If you have the Agreement in Principle for a given amount, then you can reasonably make offers on properties up to this amount. A seller may ask for proof of your Mortgage Agreement in Principle before taking your offer seriously.

An Agreement in Principle is not binding on either you or the mortgage lender. If you are approved for an Agreement in Principle you aren't under any obligation to take out a mortgage with the lender.

Making a Mortgage Application

You will then need to fill in another form for the Mortgage Application proper. You will have to give your full details, and those of the joint borrower if there is one. You will also need to specify the exact amount you wish to borrow and provide details about the property you intend to buy.

Documentation required by lender:
- ID, e.g. passport.
- Proof of current address, e.g. gas bill.
- Pay slips.
- P60.
- Bank details.
- Reference from your current landlord or proof of your last 12 months of mortgage payments.

Valuation of Property by Lender

The mortgage company makes their valuation of the property to check that it is worth their loan. They will send a professional valuer.

Background Check

If your lender has not already done a credit check on you for the Mortgage Agreement in Principle, they will do one now, and they will check that the information you have given them is correct.

Formal Mortgage Offer

Once a mortgage company is satisfied they can lend to you, they will send you a mortgage offer letter. This is the formal agreement between you and the mortgage provider and you will need to sign it and return it to the mortgage provider.

Usually valid for six months.

Make an Offer on a Property

Once you've found a property you like, you can make the owner an offer.

The offer you make is "subject to survey and contract", meaning that it is not legally binding. You can therefore pull out if you find any problems with the deal, or make a lower offer if the survey find a problem which can bring down the valuation.

Once your offer is accepted, it is worth asking for the property to be taken off the market for the duration of the sale, as this can help prevent you being gazumped (where the property is sold to someone else at a higher price after your offer was accepted).The seller is under no obligation to do this, and may be reluctant, particularly if you have yet to sell your property.

If you are not in a rush or worried that someone else will get the property, then you may be able to put in a low offer below the asking price. It's easy to raise an offer later if necessary, whereas if you initially go in with a high offer, it can be difficult to reduce it.

Once your offer is accepted by the seller, you will need to arrange your mortgage.

Note that a buyer's offer is not legally binding in England and Wales, even if it's accepted by the seller. The estate agent is under legal obligation to pass on other offers received for the property up to the Exchange of Contracts.

Receipt of Draft Contract

Your solicitor will receive a copy of the Draft Contract from the seller. This document includes:

- The seller's details.

- The seller's title deeds showing that they own the property.

- Your details.

- The price of the property.

- The fixtures and fittings included in the price.

Your solicitor will ehck the terms of the Draft Contract and then complete the conveyancing process as per the below.

Conveyancing

Conveyancing is the legal work involved in transferring property (buildings and land) to a new owner. Use a conveyancing solicitor or a licensed conveyancer.

The conveyancing process starts after your offer has been accepted and the buyer and seller have exchanged details of their legal representatives.

Note a conveyancer is a lawyer who specialises in the legal aspects or buying and selling property.

This involves drawing up contracts.

It is legal to do the conveyancing yourself, but often mortgage lenders will not let you, and sometimes sellers will not let you either.

If you choose to get legal help, you will need either a solicitor or conveyancer. Check any conveyancer is licensed with the Council for Licenced Conveyancers.

Detailed Survey of the Property

You get a surveyor to look at the property in detail to see if there are any serious problems with the property.

Full Structural Survey - Should identify any serious structural faults with the property. Suitable for older properties.

House Buyers Report - A less detailed survey that may only be suited to newer properties.

Exchange of Contracts

Your solicitor agrees a date for exchanging contracts with the seller's solicitor.

You pay a percentage of the purchase price as a non-refundable deposit.

A transfer document is prepared by your solicitor and once agreed must be signed by both parties to the sale.

A completion date is agreed.

Once the Exchange of Contracts has been performed, you are legally obliged to buy the property. Thus before exchanging contracts you should ensure that your mortgage offer is in place.

Land Registry fees and Stamp Duty must be paid.

Completion and Completion Date

Payment of the outstanding balance on the mortgage is made to the seller by the buyer's solicitor on the agreed completion date.

On completion, you receive the title deeds and transfer deeds from your solicitor.

The seller must be out of the property on the completion date by an agreed time.

You now own the property, you receive the keys and can move in.

Thanks for visiting our House Buying Process page. We hope it helped find what you were looking for.