London House Buying Guide | 12 Steps to the Perfect Home
I love working with my clients, especially buyers whether they are domestic or international as I get to guide them on the journey to finding their next property. So in this article I wanted to share my top tips to help every buyer find the perfect home.
So let’s dive right in.
#1 Decide if you want to buy a home
Step #1 is to decide if you want to buy a home. While many people say they want to buy a home, it may not always be the right decision. While I am definitely an advocate for home ownership, I also know it’s really important to live in a space and community you love so if that means that renting makes more sense, then that’s okay too.
#2 Decide What Amenities/Features you want in your new home
If say you’ve just gotten married, it may make sense to rent together first so that you can really decide what are the important features you need in the home you purchase. Perhaps it’s storage, or maybe you thought you could live with a 1 bedroom flat and now it’s become really clear that you need 2 or even 3 bedrooms. If you have pets, this will be a key feature to look for and actually may impact the type of home you can actually buy.
#3 Decide on a budget
I often get buying enquiries from people who think they are ready to buy and the thing I say is the next step is to figure out the budget and speak to a mortgage advisor. This will give them a really clear picture of how much down payment or deposit that they will need to have, what the loan terms may be which will impact monthly mortgage payment as well as repayment or refinancing options down the road.
This may also impact whether you need to sell your existing home first if you already own a home. That’s super important because you may find that you are able to keep your existing home and that may be a good way to hold onto your existing home as a BTL investment that you can earn passive income while retaining an appreciating asset.
Part of determining a budget is not just the cost of the property, but also other major components such as stamp duty, closing costs and then the cost of ownership including potentially service charges, ground rent, council tax, utilities, etc. Stamp duty is tiered and can add up to 15% to the purchase amount. If you want to know more about stamp duty, then check out my video on Stamp Duty here.
The worst mistake you can make has just enough to buy the property but nothing set aside to afford the running costs including routine maintenance.
#4 Get a Mortgage in Principle
When you’ve determined that budget and have had conversations with mortgage advisors and lenders, you want to make sure you get a Mortgage in Principle. This is hugely helpful when you go out looking as it demonstrates that you truly have gotten a sense of what you can afford and many estate agents will ask you that as a way to gauge how serious you are as a buyer. You may also want to have ready to demonstrate proof of funds for your equity portion when you are submitting an offer or when an offer is being considered.
#5 Decide Where You Want to Live
So now that you know what kind of property you want and have a good sense of budget, you next need to consider where you want to live. London is a diverse and dynamic city and many areas have very distinct character. I recently did a video on the neighbourhood called Marylebone and beyond just budget, that will be vastly different from say Holland Park, South Kensington or Islington. Things that may determine area are of course, commute, affordability, area amenities and so on. If you can’t afford some of the areas I just mentioned, you may need to go further out into zones 2 or 3 or beyond and then you’ll have to balance area and lifestyle with commuting times. East London and south of the river are generally considered more affordable, but you will just have to make sure it’s the right fit for you.
#6 Choose a Specific Property
Now that you’ve got everything in order and you have an idea of where you want to live, now you can go house hunting as we say in America. Most buyers use online portals and will register with many agents. This can be quite overwhelming as all of a sudden you are bombarded with endless emails of properties that may or may not suit your criteria as agents work for sellers and just need to get their stock sold. If you want to avoid that and work with someone who has your back and will guide you through the entire buying process including finding and choosing the right home, then consider working with a Buying Agent or Property Finder-like myself. If you want to know more about working with a Buying Agent, then check out my video “Using a Buying Agent in London”.
As you consider properties, beyond budget and amenities, you’ll also need to consider leasehold versus freehold properties, service charges and ground rent, neighbours, etc.
#7 Make an Offer and Get it Accepted
When you find that right property and make an offer there may be negotiations and you then have the offer accepted. The irony here in this country is that if you’re not working with a buying agent, you have no one representing you and you will have to negotiate directly with the estate agent who is trained and works on behalf of the seller.
#8 Arrange a Mortgage
Once your offer is accepted, the estate agent will want you to provide details of your solicitor and start working on getting your mortgage. So now that you have a property identified, you can circle back with the lender who provided the mortgage in principle and begin the process of obtaining the mortgage. Depending on how much time has lapsed since the Mortgage in Principle, you may want to double check with other lenders to make sure you’re getting the best rates.
#9 Hire a Solicitor or Conveyancer
A lot of people won’t give this role much thought, but it is so important. As agents, we know that time kills deals and you want a proactive solicitor. I prefer to work with smaller firms and not those conveyance factories so that you have a direct point of contact who is invested in getting your deal and knows how to deal with issues as they arise.
#10 Decide or Book a Survey
If you have a mortgage advisor, they will likely book in for a valuation survey. But there are several other types of surveys including a home buyers report, structural survey or home condition report. I’ll be doing a separate video on the different types of surveys so that you make sure you get the one that’s for you.
#11 Exchange Contract
Once all the title and conveyance queries have been resolved and your mortgage has been approved, you are now ready to exchange contracts which is the point where you are legally bound to purchase the property. It’s likely that several weeks or even months have gone by since your offer was accepted, which is why a good agent is needed to make sure that both sides are proceeding as quickly and efficiently as possible. At the exchange, you’ll also need to be prepared to send to your solicitor the deposit, which is typically 10% of the purchase price.
#12 Completion
As the final step is completed when you pay for the property and take full ownership. Money and title are transferred between each side’s conveyancer or solicitor.
It’s important to note that between Exchange and Completion, the most critical that happens is that your mortgage is finalised and that the solicitor is liaising with the mortgage company to make sure funds will be ready on the completion date. It’s an opportunity for you as a buyer to arrange movers and also setting up utilities as the of the completion date.
So, I hope this article has given you a great sense of confidence as to the steps associated with buying a home in London. Don’t forget to download our free Buying Guide which includes all these steps as well as a few more things to consider.
