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New Year, New Home: A step-by-step guide to buying a new home

Posted 25 January 2017 by Ben Salisbury

If you plan to buy a new home this year, use this guide from the WhatHouse? team to ensure you have got all parts of process of buying a new home covered

Take control of your New Year ambition to find a new home by finding out exactly what you need to know about all aspects of the process of buying a new home from which location to choose, how to get a mortgage to tips on viewing a property and putting an offer in.

The start of 2017 provides the incentive to review your strategy for buying a new home, planning your property purchase and carrying it through successfully.

It is undoubtedly the biggest purchase of your life and it’s vital to avoid even small mistakes that can be costly, so this guide aims to ensure you have the right strategy to ensure your house purchase goes according to plan.

1 - How to look for a property

Traditional property search methods have focused on local estate agents and the local press bringing together a selection of properties for sale in your local area so you can see what is available for your budget.

Your local estate agent will normally welcome a general chat about what you are looking for and your budget and will then be able to alert you at the earliest opportunity about properties that fit the bill and how quickly they normally sell. This is helpful as some properties get sold before they are advertised.

Over the last decade or so, information on property in the local area has been revolutionised by the internet, bringing a range of options from a variety of search portals allowing us to search for a property anywhere from the comfort of our own homes.

Search tip: When looking online for a property, remember asking prices can be optimistic showing what the buyer would like but with room for negotiation. For new build property you will normally have to pay the asking price. Keep an eye on a variety of both traditional and online sources and find out how long the properties stay on sale for to work out whether asking prices are realistic, how quickly you need to get your offer in and how often the type of property you are looking for comes up for sale.

2 – Local housebuilding plan

Neighbourhood planResearch what properties are available in the area you want to live in. You need to check for potential new developments that you might want to live in and that could blight an existing home that you might want to move into.

You can check the government’s own planning portal to see what is allowed and what planning applications have been made in your area.

Also, check your local council website for planned developments and for the local plan. Most areas have one now showing what areas are marked for potential new housing developments over the next 15 or 20 years.

By doing this you will have a better chance to find out if the street you want to move into could be part of a building site for the next few years.

3 - The local market

The internet makes it straightforward to check what the current going rate is for the type of home you are looking to buy in a specific area. Check out the prices over a period of a few years to get an idea of the direction the local market has been going.

This will give you an idea of the likely price you can expect to pay to secure your property. However, it’s impossible to be accurate about the future direction of house prices, even though it seems for most of the last 15 years prices have been heading exclusively upwards in most areas.

However, official data from the Office for National Statistics (ONS) shows that even before the financial crisis struck in late 2008, average house prices had been falling for a year from a peak of £190,003 in September 2007 down to £184,267 in May 2008 before plummeting to £154,452, their recent low in March 2009 (the same month interest rates were dramatically cut to 0.5%). It took until August 2014 for average prices to recover to £191,932, above September 2007’s previous high.

But the ingredients are out there to be able to have a decent chance of working out what you should pay for a particular property in the area you want to buy in at any given time.


The sequence of finding a new home

Step 1 - Find a property: Research the area, check estate agents and search online.

Step 2 - Put in an offer: After researching the local market put in a realistic offer or tell the seller what you're willing to pay.

Step 3 - It's accepted: Get a mortgage in place. Get a survey done to check the property's condition. Arrange for a solicitor to deal with legal issues.

Step 4 - Exchange: You pay your deposit and sign the paperwork to take ownership of your new home. At this point there is no turning back without major cost.

Step 5 - Completion: You pay the remainder of the purchase price in exchange for the keys and deeds and the property is now legally yours.


4 - The local area

Location, locationBefore you decide to buy a property in a location, you should conduct your own detailed research to ensure there are no hidden surprises in your chosen area to catch you out.

Location and what the local neighbourhood is really like can make or break a move so find out by visiting at different times. Check out the area during the week as well as weekends and in the evenings. Walk around on foot at take note of the atmosphere, how crowded and how congested the area is. Visit the local parks and pubs at different times of the day and week.

See how tidy the streets and gardens are and ask yourself is this an area that local people take pride in their homes or does there seem to be crime and trouble around. Try and talk to people who live in the area to get an idea of any problems or strengths of the area.

If you know the specific property you want to buy then find out if your immediate neighbours are noisy or there are lots of comings and goings from the property. Don’t ask them directly but ask people a few doors away what the neighbours are like.

Check to see if the street is a rat-run for unsuitable traffic, or next to a train line or even worse, underneath a flight path. These are all potential problems that won’t be in the promotional material.

You can also find free information online about local community groups, leisure facilities, transport links and school league tables and Ofsted reports. These are all worth researching to help get an overall picture of the area.

You can check by postcode for crime statistics in your local area here 

5 - Where to look and what to avoid

Deciding where to buy involves assessing a range of factors and also checking if there are any other issues that mean you should avoid the area, such as flood risk.

You should find out which areas are commutable to your job and check the transport links to see if it is a practical location for you or if the commute will be too difficult, stressful or expensive.

If you have children then how easy is it to access decent local schools and if you are in a rural location is there a bus service to the school you want your child to attend?

Flood risk is an increasing problem in the UK and if you choose to buy a home in an area prone to flooding it may be impossible to get insurance, although in April 2016 after years of consultation the insurance industry and the government released the Flood Re scheme that helps homeowners in flood risk areas to get affordable home insurance.

However, even if you can get insurance, after seeing the devastation flooding can cause to property in the UK in recent years, you might not want to live in a property that has a flood risk. The Environment Agency provides detailed reports on whether an area has a risk of flooding and looks at the reasons why.

Another factor to consider when deciding on the area to choose to buy is whether the development is part of a government scheme like Help to Buy which may make a home you thought was out of reach, affordable.

6 - Target your property

New home plansOnce you have selected the property you want to put an offer in for you need to drill down into the details by checking the sellers for all relevant information on your potential new home.

You need to drill down deep into the detail of the property and don’t be afraid to ask questions of the seller. After all, this is the biggest financial decision of your life and choosing your new home has a huge impact on you and your family, so it’s vital to get it right. Here are 10 important questions to ask and aspects to check.

  • How long it has been on the market and if it has been for a long period try and find out why.
  • How many viewings has there been and have any offers been made?
  • Is the property leasehold or freehold
  • Ask to view the gas and electricity installation reports and maintenance checks and check how old the boiler is
  • What are the neighbours like and have there been any disputes with them or between other neighbours?
  • Are the sellers sure they want to move, what is their timeframe and is there a chain?
  • How long has the seller lived in the property?
  • What renovations have been done and when was the property last rewired?
  • What council tax band is the property?
  • Does it have its own parking space or residents' permit space?

Find answers to these important questions before putting an offer in.

7 - Viewing a property

Naturally, the seller will aim to present the property in its best possible light, so be curious, delve into corners and cupboards and don’t be afraid to ask questions. Remember, this is your moment to find out anything you want and everything you need to know about a property you could spend many years living in and paying for, so don’t be reticent!

There are potentially all manner of things to check so if you have a friend or relative who is in the building trade or even better an architect or surveyor, take them along. Their know-how could save you from the expenses of a survey if they spot an obvious problem that proves you should not put an offer in.

Common potential problems that you should look out for when viewing a property include:-

  • Check light switches kitchen appliances work as upgrading the electrical system can be expensive and could be added to a list of snags that you can use for negotiating purposes.
  • Look for cracks or stains in the ceiling and on the walls. This could indicate plumbing problems
  • Check the plumbing works OK by turning taps on and off and checking the hot water temperature and by flushing toilets.
  • Similarly, check the boiler: Does it fire up as it should? Ask the seller to turn the central heating on and check the radiators
  • Are you connected? What is the broadband like in the home and do you get a mobile signal? Increasingly, households need reliable broadband for working from home and for home entertainment. If you have a family, each member might want access to Wi-Fi simultaneously.
  • Has the property got an attic? If so, will it be emptied and what is up there. You can also inspect some of the woodwork of the property, the timbers to see if there is any rot or holes.
  • Check for damp – Look at the walls and paintwork or wallpaper. Are there any wet spots, dark spots or mould or condensation on the windows?
  • Check the locks – Make sure your potential new home is secure and that door locks are sufficient for insurance purposes. Most require a certain standard, commonly a five-lever mortice deadlock. Also, check that there are locks to the windows, that they work and there are keys.
  • Look under mats and rugs just in case they are hiding any stains or other unwanted surprises.
  • Check outside of the home to see if the brickwork needs repointing and check the roof for any damaged or missing tiling and take a look around the garden to see if any fences need repairing or replacing. Check the gutters don’t leak.

You can make a list and ask the seller to fix them before you get the keys or use our free snagging list to help negotiate a lower price.

8 - Buying a new build home

A new build home offers all sorts of advantages because they require little if any work before being ready to move into. New build homes are more energy efficient so will cut your water, gas and electricity bills. Housebuilders regularly offer incentives such as paying stamp duty or legal fees or offer free carpets for new build homebuyers and there is usually the option of selecting individual styles on flooring, colour scheme and other features of your new home.

New build homes are a blank canvas as no one else has lived in the property and offer you the chance to design the interior of your home from scratch.

Repairs and maintenance costs should be minimal for the first few years and new build properties come with a 10-year warranty from the National House Building Council (NHBC).

What to avoid when buying a new build home

Research the developer who is building your new home. Are there reviews of their work that can tell you about the quality? Is the developer a member of registered trade bodies? What is the after-sales service like?

Visit websites for the developers other sites. Find out about them, what they look like and what people are saying about them.

Look out for comments on forums that give information on specific examples of problems. Remember forum comments are likely to be one-sided, so don’t take them as gospel but use them to become more familiar with the type of issues that can blight a new build home.

If parts of the development are already complete and people have started moving in, see if you can talk to a new homeowner to find out what the buying process was like.

Go out and look at the sites and visit the local area to find out what it’s like and as with any type of new home, check out the local amenities, transport links and other facilities.

New build homes usually command a slight premium compared to older properties. However, they do depreciate from the moment the key to the property becomes your own. Compare the new build property with older ones of a similar size in the area. Check the price per square foot and compare to older properties so you can work out the level of premium you are paying and decide if you think it represents good value.

Research and find out what other similar properties at the site have sold for and see if you can negotiate with the developer. Developers can sometimes raise prices if demand is high but they can also reduce them if they want to sell the last few of a batch or they want to meet targets at the end of their financial year.

You should see detailed plans to show exactly what your new build home will be like before you instruct solicitors to complete the purchase. Make sure you have an agreed date for completion, or if you are buying “off plan” get a “long stop” completion date so that you’ll be eligible to receive compensation if the work isn’t completed by then.

The developer should show you detailed plans of the design and specification, anything less and the developer could build something of lower quality than you expect. Ensure there is  a provision in your contract for remedying a snagging list covering any small faults you find when you move in that the developer should repair in the first two years after your home is complete covered by the initial guarantee.

9 - Getting a mortgage, putting an offer in and legal costs

Mortgage processThere are hundreds of potential mortgages available but getting the best rate depends on how much equity you have in the property if you are remortgaging or how much deposit you can put down against the purchase price if you are buying for the first time.

This dictates the loan-to-value (LTV) ratio, the percentage you need to borrow against the value of the property. So, if you are buying a property for £200,000 and you have a £40,000 or 20% deposit, you need to borrow £160,000, 80% of the value of the property, so the LTV ratio is 80%.

The lower the LTV ratio, the better the rate you can negotiate for your mortgage because you are paying a bigger deposit, so the lender has less risk allowing you to get a lower mortgage interest rate.

Typical best loan rates for a range of buyers on a £150,000 mortgage


First-time buyer with 5% deposit 95% LTV – If a family member will guarantee rates are from 3%, otherwise 5%+

10% deposit 90% LTV – Short-term fixed-rate deals from around 2%, more for longer-term fixes

15% deposit or 85% LTV – Short-term fixed-rate deals from under 2%, though often with high fees.

20% deposit or 80% LTV – Two-year fix from below 1.5% with fees of around £1,500, five-year fix from around 2.2% with lower fees

25% deposit or 75% LTV – Getting lower! From 1.25% for short-term fix with HF, from 1.99% for five-year fix with lower fees

40% deposit or 60% LTV – From 1.19%, to 1.82% for five-year fix to best ten-year fixed-rate deals from 2.49%


*This is a summary and example of best rates available as at 18 January 2017. Rates can and do change and acceptance of rates is dependent on a credit check and other factors


Again, the key to finding the best mortgage deal is to search around using a range of comparison sites. Avoid agreeing to the first deal you see or going with your existing bank’s first offer.

Mortgage rates are very low compared to historical norms. There are lots of reasons for that but the biggest one is that to help protect homeowners and to try and kick-start the economy after the financial crisis in 2008, the Bank of England (BoE) cut the base interest rate to 0.50% in March 2009, then a record low, where it remained until last august when the BoE cut rates further to 0.25%.

A mortgage is the biggest financial burden that most people encounter in their lifetime, so it really is worth taking time to find the best deal as this can save you thousands, even tens of thousands over the lifetime of a 25-year mortgage.

The low base rate means there are very cheap mortgages available, including some of the cheapest longer-term fixed rate deals ever seen. Help to Buy has also encourages a much wider range of mortgages to be available for those with a lower deposit of between 5% and 15%, i.e. 95% - 85% LTV mortgages.

It is also worth noting that if you see a deal and rate that you want you can get an agreement in principle from a lender up to six months in advance, so you can arrange a deal now and if it is taken off the market or the rate is changed in the intervening six months, you can still secure a mortgage deal for that product once you have passed the affordability checks.

You can choose between a range of mortgages from tracker deals that are linked to the base rate, to fixed-rate deals that set your rate for an agreed period so you know exactly what you will pay for the length of the fixed term. Other mortgages available include standard variable rate, discounted variable rate, offset or capped. Check the links to find out more about each one.

Remember though, it is not just the deposit and the cost of the mortgage repayments you need to factor into your budget. A number of other fees apply, many of which are payable upfront:-

  • Mortgage product fee – Some mortgages charge a fee, either payable separately or bolted onto the mortgage (which means you’ll also pay interest on it).Most lenders offer fee-free mortgages.
  • Surveyor fees – This alerts you to any potential problems.
  • Valuation fees - helps produce a mortgage valuation report on the property
  • Stamp duty – A charge on the purchase of a new property. The threshold in England, Wales and Northern Ireland is currently set at £125,000.
  • Solicitor fees – A solicitor is needed to cover the legal aspects of buying a new home. These include search fees, Land Registry fees and any other legal costs.
  • Completion costs – Including removal costs, home insurance and any other costs linked to getting your home ready to move into.

Making overpayments and early repayment charges

If you can make overpayments on your mortgage, do so, because it reduces the term that you repay your mortgage over, lowering the number of times that interest is charged and potentially cutting the overall cost of your mortgage by thousands or even tens of thousands of pounds. See this link for more details.

However, make sure you don’t overpay by more than the allowable annual amount or you could face hefty early repayment charges (ERC’s). Check the terms and conditions of your mortgage product to see how much you can overpay without penalty.

New Build Homes and Getting a Mortgage - The process of obtaining a mortgage is similar in many ways to obtaining a mortgage on a resale property.

However, there are a number of differences. Government schemes such as Help to Buy are only available on new build properties.

The timescales regarding arranging and completing a mortgage may be tight because of the requirements of developers. You may have only 28 days from putting down a deposit to the exchange date which can be a challenge for mortgage lenders to meet.

Remember, if there is a delay in the date of when your new build property is ready to be lived in, this can affect the validity of a mortgage offer, which may only be valid for up to six months. If there is a delay you may need to reapply so try and get the timings right!

Putting an offer in

Completing the deal​This is a test of nerve because you want to get the best price but you don’t want to go too low and be rejected outright or passed over for another potential buyer.

The best advice is to accurately research the local market to find out what similar priced properties are selling for and compare this against the initial asking price. Over time you should be able to find this out online or your local estate agent will be able to offer advice.

Typically, you can offer between 5% and 10% below the asking price but this varies and is affected by local conditions. If there are very few properties coming onto the market and a large number of buyers, sellers can reach the asking price immediately, sometimes before the property is advertised.

10 – Leasehold or freehold?

A freehold property is probably the better option for most people but depending on the area you want to buy in and the property type, particularly for flats and apartments, you may opt for a leasehold property.

If you do, you are effectively leasing it for a set period from the freeholder so ideally you want the lease to run for the length of your life. Therefore you should beware of buying a property where the lease has less than 80 years to run because the cost of extending it is high and the property becomes more difficult to sell in the future.

If you are considering a leasehold property you need to factor in and check the maintenance charges. When you own a leasehold flat, the freehold owner is normally responsible for buildings insurance and maintaining the communal areas.

The leaseholder has to pay a small ground rent and service charges which can be high depending on the cost of the work required on the building. Check to see what these charges are and get them in writing and Google the property management company to find out if there are any complaints about them.

11 – Resale options

The last thing you will hopefully be thinking after going through this process and securing your dream home is to sell up and start again, but for many different reasons, you may want to sell your home in the future.

With this in mind, you should avoid eccentric or dramatic home improvements or repositioning of the rooms in your home which may put someone else off the property. Also, keep the exterior and garden tidy.

If your home is on the market and hasn’t sold despite a number of viewings, there may be something that is putting people off. Get advice from your estate agent or ask a friend for an impartial view.

Ask yourself, what could people be put off by? the untidy garden, the exterior of your property, the adjoining properties or streets or a lack of parking? Try and find the answer and then you can work towards finding a solution to each potential problem.

 

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New Homebuyers Guide
Together with Redrow, we’ve created a guide to take you through the whole process, step-by-step; from house-hunting to past moving-in day. There are handy tips on how to anticipate and avoid complications, and some advice on ways you can successfully purchase your ideal new home.

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