- Sign up on the big websites/real estate agencies and set up property alerts. I used Rightmove, Zoopla, and I also checked the agencies Diggins & Co, Connells, Haart regularly. They are business sharks, don’t be played by them, but by all means use them to gather infos. There might be some smaller, local agencies that cover just your area of interest. The customer service I received from the smaller agencies was better, they were more relaxed, personal, and pressured me less.
- Zoopla has the register “House prices“, if you put in a post code, you can see the property history, and prices around your preferred object. I used this as a compass to see what our neighbours’ house cost, and it helped me in setting my max price for bidding on the house.
- Do house viewings as much as you can, just to get a general sort of idea of what the price/object/neighbourhood relation is. So that when you decide for an object, you’ve had comparisons before.
- Watch out for double glazed windows or not, age of boilers, condition of heaters. I was surprised the energy efficiency standards in the UK are like 30 years behind those of other Western European countries. It can save you lots of money.
- Some agencies can put you on a “hot list”: you get a text message as soon as a house is in on the market, and can view it even before it’s put online. This happened with my house, I was the 2nd one to view it, half a week before it was online.
Mortgage & Other Expenses
- Check your credit score with equifax.co.uk, experian.co.uk, noddle.co.uk, clearscore.com, if possible. I tried one of them once but failed to get results because it asked me for my past home addresses in the UK for the last 3 years (I didn’t bother trying out the rest). Some lenders require you to live in the UK and/or EU for at least 3 years, so when you talk to them, make sure to address the topic of your immigration date so it won’t be an issue when you do the mortgage application. Checking out your credit scores is recommendable because it’s what the lenders also see about you. You might have everything set, but once you make the mortgage appliation, your credit score is rubbish and you will end up with a denied mortgage.
- Real estate agencies employ brokers which have a pool of lenders, their offers are of course limited. Whole market brokers are better because they can look at the whole pool of lenders available, their product range is much broader. Both of them have fees, the cheapest I found was 250GBP, maximum was 500GBP.
- Mortagages usually go for 2, 3, and 5 years with fixed interest rates. The interests are lower for the 2 years and then rise progressively. The idea is that if you get a good/bad interest rate you can renegotiate, and/or change your lender after the end of the 2, 3, 5 years. There are also tracker rates which are variable according to the lender’s will, and loosely based on the Bank of England base rate. It’s a bit of a gamble whether you get a good deal or not, so it really depends on how big is your deposit, your income, and how much you can afford monthly to pay back the mortgage. I made my decision based on my salary and how much I already pay for rent in this area. This determined the bid I placed on the house, and the lender, plus interest rate, that I chose.
- Taking out a mortgage usually involves an arrangement fee, evaluation fee, etc. Your house bank might have a good deal for you, if you have at least 10% deposit (mine didn’t, my deposit is only 5% so my house bank wouldn’t offer me a mortgage), and they won’t ask for the extra fees mentioned above. I was lucky and found the Post Office offered mortgages (by chance, I went to post a letter and the lady asked “Are you looking for a mortgage?” Like I had my desire written on my face). They are loaning me 95% of the house price. They don’t take arrangement fees etc. because the mortgage specialist is directly employed at the Post Office, and not indepent like other brokers.
- Mortgage agents will ask you for your previous addresses, it’s useful to have your old rental contracts at hand.
Decision in Principle
– like a verbal agreement, only worth information for you, not binding at all.
Agreement in Principle
– commitment of the lender that they’ll lend you the funds. Kind of guaranteed that you’ll get the loan, except you’ve lied horribly about something, it’s just like saying “cool, these guys are good to go”. Mine is valid for 6 months, I’ve heard others are 3 months. If it expires before you buy a house, you can get a new one but mortgages advisors have told me it will leave a trace in your credit score. Not a very bad thing but something to avoid. Definitely not to do 3 or 4 times, then it’s bad. Some lenders do an agreement in principle that leaves no trace (Soft Trace) on your credit score (Halifax I think it was). You can get an agreement in principle from one lender and decide to do the mortagage application with another, it’s non-binding for you. If you are in a hurry to place an offer but aren’t sure what the best deal overall is for you, then you can chose to get an agreement in principle from a lender that leaves a soft trace on your credit score, and then chose another lender for your mortgage application.
– here it gets serious, it’s the last step of the lending process, it’s asking officially the lender for the funds that will be transferred to the house seller. It’s what you do once you’ve successfully negotiated for a house, at the same time, you assign a solicitor to your buying process.
Stuff the Mortgage Specialist Wants From You:
When mortgage brokers talk to you, they will ask you for:
- Don’t forget the extra costs involved in buying a house in the UK! Stamp duty, surveys, searches (drainage water search, environmental search, and some other I can’t remember), and solicitor fees. Visit this stamp duty calculator for calculating extra costs which helped me set my maximum bid. To be on the safe side, I orderd a RICS HomeBuyer Report (Royal Institute of Chartered Surveyors). This is a more in-depth survey of the home.
- When choosing your solicitor, ask them if they work with your lender and vice versa. Some lenders don’t approve of a solicitor for whatever reason, just clarify both parties are good to work with each other.
- Solicitor: better choose one that has the policy of “fees only payable on completion”. If the house sale falls through because one of the parties drops out of the chain or for whatever reason, you might have to pay the whole fees if you don’t look closely at their offer. Some of them only charge for the work they did, prefer these ones.
- Leave room for any insurances you might want to add, such as Critical Illness Cover, Income Protection, stuff that will insure you in case you can’t pay back the mortgage. Mums also can be insured, if something should happen to you as a mum, your household will be financially affected too, so there’s an insurance for that.
- If you are a First Time Buyer and End of Chain, you are the best, golden buyer a seller can dream of! Flexible, with no other history of mortgages and debts, virgin, pure, pristine. Use that recklessly to your advantage when negotiating, that’s your leverage!!
- Set yourself a maximum limit and stay tough, don’t overstep it. It’s easy to feel the heat of the agent and think, “oh, just 2k higher, just 5k higher”, and in the end, you’ll find you waaay overstepped your max. And you’ll be paying your mortgage until you die. Don’t. Pay it until you retire, you don’t want your home repossessed when you’re senile, and with no income except your pension.
- Once you find a place, don’t let your hormones, dreamy side, imagined realities, etc. get the better of you (I did, several times…), don’t think with your heart, aka, ooooh the cosy area here, our kitchen there, the cat’s pillow there. No, it’s a business transaction, you might want to sell the house in a few years, and it has to be a sellable item and attractive to other buyers too. This bit might be redundant but I’ll mention it anyway because I did get carried away a few times, although I was sure I was being COMPLETELY rational. If you are reading this, you’re probably an expat, chances are you will move on in a few years (think BREXIT). Or you are interested in the Greater London area, your job might take you elsewhere soon.
- Research the object, try to find out how long it has been on the market. If it’s been 4-6 weeks DO NOT bid the asking price, they should be reducing it.
- Market prices: agents cover each other, don’t trust them. When a house was for 330k, I asked another broker from another agency if the price was justified. He said yes. I later found out it sold for 295k after being reduced to 310k. Don’t believe everything they say, even though they might belong to different companies, they will cover each other so as not to ruin each others business.
- Assume for every price you see for an object that is new on the market that it’s been overpriced with approx. 20k. Sellers need to have room to go down on their price if they don’t get any offers. The objects that have good prices go away in a matter of 1-2 weeks because obviously, buyers know when the price is justified.
- Look for what I call the “Golden Threshold”: there is a magical boundary in house value where you get a HUGE difference in house quality once you cross it. It’s a ridiculous increase in quality for a comparatively small price difference. E.g., here in this region by Greater London, it seems to be 400-450k. This means that houses that cost around 250k-300k are absolute crap, they have to get lots of renovations, and are good only for investments, or if you want to live in a building site for months first. Then, 300k-350k are pretty decent, 375k is still OK, just slightly better, the improvements are still progressive according to the price. But suddenly, at 400k upwards you get really, really nice houses, huge gardens, or new kitchens, an annexe or something of the sort. So, for a difference of 25k you do a huge leap in quality and you are suddenly in another league. There’s like a disproportionate improvement even though you can’t see this price difference between say, 325k and 350k.
- Normally, you can bid on a house with an Agreement in Principle. However, if you choose a mortgage broker that works with the agency (even they are freelance and not tied to the agency), or another one that has worked with them previously, for example my Post Office mortagage specialist has worked with the agency selling the house before, things can be sped up and easier. They just called each other on the phone and my bid was accepted. So if they know each other, you probably won’t need the Agreement in Principle. Here, everyone has their own style, I found that they don’t all follow a strict code in the selling process. Maybe it’s village life, but, if you are interested in a house, ask the selling agent what they require from you before placing a bid, it might be less complicated than you think. The house is now online marked as “under offer” although the agency has nothing from me, only my mortgage specialist’s word that I’m a good buyer. I do have to add that I talked to the mortgage specialist extensively beforehand, and showed him my payslips, bank statements, etc. Once I assign the solicitor this Thursday and apply for the mortgage, then the property will get taken off the market.
I will try to keep this blog updated with the results of the house buying process. Maybe I stumble on some other stuff that can be useful.
©Kenna Lee Edler