The House Buying Process
For most people, buying a house can be a stressful experience; for young people trying to get a foot on the property ladder, there is the added fear of dealing with a potentially complex and expensive process for the very first time. At APH our aim is to try and make the process of applying for your mortgage as painless as possible. Here is a step by step guide to the process:

1. Setting a price range and budget

Use our mortgage calculator to establish an estimate of how much you might be able to borrow and how much that might cost to pay back each month. That way, you can set yourself a property price range of the lowest and highest price you might realistically consider. The alternative is to speak to an APH adviser who can obtain an ‘Agreement in Principle’ from a suitable lender. This will demonstrate to an estate agent or vendor that you are a serious buyer and have your finances in place prior to making an offer. Refer to the ‘Agreement in Principle’ section of the guide below.

2. Property hunt

Finding a property takes time and patience. You will find loads of information in the media on what to do when looking for a home, so read the papers and watch the property programmes on TV (Location, Location is a good one) to gain experience on how to find the right home. You will need to conduct thorough research and why not talk to your friends or relatives for tips if they have experience of buying property.

3. Making an offer on a property

Once you have found a property you wish to buy, you make a verbal offer either to the seller or to the estate agent. You can offer an amount less than the asking price - be prepared to bargain, but remember if your first offer is refused you can increase it. However, once an offer is accepted by the vendor it is difficult to reduce it (but remember that the offer is subject to valuation and any defects not known about when you made the offer that emerge when the property is surveyed would enable you to go back to the vendor and discuss the price again). Once accepted, this offer is not binding at this stage and is conditional on the results of a valuation and survey of the property - technically, the offer is "subject to valuation and survey, and subject to contract".

4. Agreement in principle

An 'agreement in principle' is an agreement from a mortgage lender that in principle they will lend you a specified sum to buy your new home, on the condition that the property is satisfactory as security for the mortgage and provided that you are able to verify your income and satisfy any other conditions. This is an important step on the way to buying a property because if you possess an agreement in principle for the amount you are hoping to spend it means that you can make a credible offer for a property in that price range, knowing that you have a mortgage in place. Indeed, when you make an offer on a property, the vendor or their estate agent will probably ask if you have an agreement in principle.There are two extremely important points about requesting a decision from a specified lender as to whether they will offer you an agreement in principle. First, their decision is almost certainly credit scored and you should therefore consider checking your credit report before applying and certainly, avoid multiple applications as this could leave 'footprints' on your credit history which will weaken your overall credit worthiness. Secondly, an agreement in principle is not binding on either party. Even if you pass an agreement in principle, you are not under any obligation to apply to that lender or take out a mortgage with them.The result of the agreement in principle credit check is a key moment in the application process. If you pass, you can make a firm offer on a property or if you have already made an offer, provide evidence that your application is credible. To support this, we can provide you with a letter confirming the agreement in principle, if required.

5. Appoint a Solicitor

It is standard practice that you have a solicitor in place when you come to apply in full for purchasing a specific property, but ideally you should appoint a solicitor on the understanding that you will not instruct them to proceed with any work for which non-refundable fees are incurred until the sale is genuinely underway (e.g. after receiving a positive valuation of the property from the lender). The solicitor is responsible for important aspects of the property purchase, known as 'conveyancing'. This process includes:
  • Legal checks (e.g. 'investigation of title', which proves whether the vendor has the right to sell the property).
  • Advising you, the purchasers, on issues arising in the purchase process.
  • Dealing with the various financial and contractual issues, such as processing the mortgage transaction, paying stamp duty and executing the mortgage documentation.

6. Full mortgage application

Once your offer is accepted on a property that you wish to buy, you will need to submit a full mortgage application for that specific property. The main benefit of submitting a full application promptly after having your offer accepted on a property is that this reserves the rate, which is important because all rates, particularly those that are competitively priced, can be withdrawn at short notice. On receipt of your application, the lender will check your income proof and obtain any mortgage fees from you and when these are paid (usually by cheque or card) a valuation of the property will be instructed. Instruction of the valuation is extremely important where you have made your offer and the seller is keen to see evidence that you are ‘serious’. This is because the vendor is likely to be more convinced that your application is genuine and credible where you have paid for a valuation, and therefore this reduces the risk of the property going back on the market.Remember, your application is likely to require the payment of up-front mortgage or valuation fees, though some of these can be added to the loan on completion (which is worth considering given the risk with any application that it might not complete). Typically, valuation fees are paid up front and are non refundable once the valuation has happened whilst product fees can usually be added to the loan and will not usually be payable if the application fails to complete.

7. Valuation/Survey of the Property

A valuation is required by the lender to verify that the property is adequate security for the mortgage. There are three principal types of valuation:
  • A standard valuation: just that, a basic assessment of the property. This will not be a detailed examination and is principally to satisfy the lender that the property is suitable security for a mortgage (i.e. that the property is worth what you are seeking to pay for it - the lender needs to know this in the event that they had to repossess the property and sell it to recoup the money they advanced you, hence, the need to establish that it is 'suitable security'). You may wish to consider this basic option if: you are buying a new property; you have a qualified friend or relative on hand to conduct a more detailed survey for you; or you are confident that there are no issues about the condition of the property that you would like to be investigated by a surveyor.
  • A Home Buyer's Report: this is based on a more detailed inspection of the property and is designed to highlight key features of the property and indicate any faults. This is more expensive than a basic valuation but also provides you with much more detailed information about the property which you may be able to use to go back to the lender and renegotiate the price or terms. This option is recommended by the Royal Institute for Chartered Surveyors. It is important to stress that a Home Buyer's Report combines both a basic valuation and a more detailed inspection for your benefit and is generally arranged through the lender; it's just that the same person carries out both inspections simultaneously so as to make the overall cost of the detailed survey more economical, assuming that you would have to pay for the basic valuation anyway.
  • A Full Structural Survey: a comprehensive report on the property. A relatively expensive option but providing the most in depth report on the property of the three options. This is to be recommended where the property is of considerable age or unusual design or construction. Although some lenders will arrange a full structural survey, in most cases, you would first have the standard valuation from the lender and if it passed you would instruct a local surveyor at your own discretion to conduct the full inspection of the property.
In deciding which option to choose, it is important to remember that a property purchase involves spending a very large sum of money. Where the option of a free valuation is not available, you may find that the difference in price between a basic valuation and a Home Buyer's Report is two or three hundred pounds - perhaps a price worth paying for the peace of mind of knowing that you are spending many thousands of pounds on a property with no serious defects that you might not otherwise have been aware of.

8. Verification of identity and income

It is worth remembering at this stage that any agreement in principle that you receive is subject to valuation of the property and verification of income and identity. When both the property and proofs have been assessed satisfactorily, you will receive a mortgage offer (see next step). The lenders need to verify two points:
  • Your income: in order to be satisfied that you can afford to repay the mortgage. This will usually be verified by original or certified copies of P60s and payslips, or alternatively, an employer's reference where these cannot be obtained or an accountant's reference for self-employed applicants.
  • Your identity: in order to satisfy EU Money Laundering Regulations. This will be verified by original or certified copies of documents confirming your identity (usually photo page of your passport or driving license); and original or certified copies of documents confirming your address such as a bank statement or utility bill from the last three months.

9. The Mortgage Offer

The 'Offer' is the most important milestone of the mortgage application prior to actually exchanging contracts and then completing the purchase. When the lender has assessed both the property (or 'security') and your proof of income and identity, and is satisfied with all, they will proceed to issuing you with an Offer document that will also be copied to ourselves and to your solicitor. The Offer will set out the full terms under which the mortgage is to be advanced. From the moment the lender starts processing your full application, we will aim to have an Offer produced for your case within two weeks. In our experience, this is a reasonable time to expect the lender to verify your income and conduct the valuation. However, the Offer can be issued within five working days but it may take far longer than the two week target because of factors such as case backlog, delays in inspecting the property or difficulty in obtaining an employer's reference.

10. Final Stages of the Purchase

When you have received an Offer of advance from the mortgage company, the remaining stages of the purchase are predominantly in the hands of your solicitor. While your solicitor is your main contact at this stage, we will always be on hand to deal with any queries that arise as it is our aim to assist you right through the house buying process to the best of our ability. Post-Offer, the remaining stages are as follows:
  • Draw up contracts: your solicitor will draw up a mortgage contract which all applicants will need to sign. You will normally be asked to place a deposit with your solicitor; this will usually be for 5% to 10% of the purchase price. If you are applying for a 100% mortgage you may have to exchange contracts and complete on the same day because of the absence of a deposit, or alternatively your bank may be able to lend you the deposit on sight of the mortgage offer.
  • Exchange contracts: a date is then agreed on which contracts are exchanged. Exchange of contracts is an important milestone in purchasing a property. It is at this stage that you are legally committed to proceed with the purchase of the property. On exchange of contracts your solicitor will also recommend that you commence buildings insurance cover (we can arrange this). A date is also agreed for 'completion'. If you do not proceed after exchange you may lose your deposit.
  • Completion: this is the day you take possession of the property and actually move in. It is usually 2 to 4 weeks after exchange of contracts.

The time from Offer to completion can vary enormously. In our experience, it is this part of the process when applications can be delayed the longest, which is why we aim to obtain the Offer as quickly as possible. Ultimately, the time any case takes to complete depends on a whole host of factors but if you were to assume 6 weeks from receiving an Offer to moving in to the property that would be reasonable, suggesting an overall target of two months from commencing a full application to completing the purchase

APH's typical fee for arranging your mortgage is £250, however depending on your circumstances, a fee of up to 1.5% of the mortgage amount may be charged

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
 
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