Home Buying Guide

Income Multiples

Most lenders will offer you between 3.5 and 4.5 times your annual gross income. If you're buying with a partner, they'll usually consider your combined income.

Example: If you earn £30,000 per year, you might be able to borrow between £105,000 and £135,000.

Affordability Assessment

Lenders are now required to carry out detailed affordability assessments. They'll look at:

• Your income and employment status
• Your regular outgoings (bills, loan repayments, childcare costs, etc.)
• Your credit history and credit score
• Whether you could still afford the mortgage if interest rates rise
• Your spending habits and lifestyle costs

Loan-to-Value (LTV) Ratio

The size of your deposit affects the Loan-to-Value ratio and the interest rate you'll pay. A larger deposit (lower LTV) usually means better mortgage rates.

Example: If you're buying a £200,000 property with a £20,000 deposit (10%), you'll need a 90% LTV mortgage. If you have a £40,000 deposit (20%), you'll need an 80% LTV mortgage, which will typically have a lower interest rate.

Stamp Duty Land Tax (SDLT)

Stamp Duty is a tax you pay when you buy a property. The amount you pay depends on the purchase price and whether you're a first-time buyer.

*First-time buyers pay no stamp duty on properties up to £425,000 (or £625,000 in some cases)

Size and Layout

• Number of bedrooms and bathrooms
• Living space and room sizes
• Storage space
• Garden size and aspect (north/south facing)
• Parking/garage

Property Type

Each type of property has its advantages and disadvantages:

• Detached: No shared walls, more privacy, but typically more expensive and higher maintenance costs.
• Semi-detached: Shares one wall with a neighbour. Good compromise between space and price.
• Terraced: Shares walls on both sides. More affordable, but less privacy. Often found in city centres.
• Flat/Apartment: Can be very affordable, but you'll usually pay service charges and ground rent. May have restrictions on pets or modifications.
• Bungalow: Single-storey living, ideal for those with mobility issues. Can be more expensive per square foot.

Condition

Consider whether you want:

• Move-in ready: More expensive but you can move straight in.
• Needs cosmetic work: Cheaper but requires redecorating. Usually straightforward.
• Needs renovation: Much cheaper but may require significant work and investment. Make sure you factor in renovation costs.
• New build: Modern specifications, often with warranties, but can be more expensive and may have snagging issues.

Registered Property

The vast majority of properties are now registered. The Land Registry holds details of who owns the property, including:

• The property boundaries
• The current owners
• The price paid (for sales since 2000)
• Any mortgages or charges on the property

This makes buying much more straightforward, as ownership is clearly documented.

Unregistered Property

Some older properties have never been registered. Ownership is proved through title deeds (physical documents showing the chain of ownership).

Buying an unregistered property is more complex and your solicitor will need to carry out additional checks. The property must be registered with the Land Registry when you buy it.

How Auctions Work

1. Research properties: View the auction catalogue and arrange viewings. Properties are usually available for viewing before the auction.
2. Do your homework: Get a survey done and have your solicitor review the legal pack before bidding. Arrange your financing in advance.
3. Set your limit: Decide your maximum bid and stick to it. Don't get carried away in the heat of the moment.
4. Register to bid: You'll need to register on the day and provide ID and proof of funds.
5. Bid: If you win, you must pay a deposit (usually 10%) immediately.
6. Complete: You must complete the purchase within 28 days (sometimes shorter).

Advantages

• Can get properties below market value
• Quick process (completion in 28 days)
• No gazumping risk – the sale is legally binding
• Wide variety of properties available

How Much Should You Offer?

Research is key. Consider:

• How much similar properties have sold for recently in the area
• How long the property has been on the market
• The condition of the property
• Whether it's a buyer's or seller's market
• Your survey results (if you've had one done)
• The asking price compared to recent sales

Cost: £250-£400 (usually included in mortgage arrangement fee)

This is the minimum survey required by your mortgage lender. A surveyor will carry out a brief inspection to confirm the property is worth what you're paying for it. However:

• It's done for the lender's benefit, not yours
• It's very basic – they won't move furniture or lift carpets
• It won't identify many potential problems
• You don't get a detailed report

Recommended for: New build properties in good condition with a warranty.

Cost: £400-£900

This is a more detailed survey that covers:

• Condition of the property
• Any urgent defects or potential problems
• Advice on repairs and maintenance
• Issues that may affect the value
• Risks of not addressing problems

The surveyor will inspect all accessible parts of the property and provide a clear, easy-to-read report with a traffic light rating system (red = urgent, amber = needs attention, green = acceptable).

Recommended for: Most conventional properties in reasonable condition built after 1900.

Cost: £600-£1,500+

This is the most comprehensive survey. The surveyor will:

• Carry out a thorough inspection of the property
• Assess the construction and condition of all accessible parts
• Identify structural issues and defects
• Provide detailed advice on repairs and maintenance
• Outline estimated costs for any necessary work

You'll receive a detailed written report (which can be 50+ pages). This survey is more expensive but can save you thousands in the long run if it identifies serious issues.

Recommended for: Older properties (pre-1900), properties in poor condition, unusual construction, or if you're planning major renovations.

Once both parties are ready, the solicitors will exchange contracts. This is the point where:

• The sale becomes legally binding – neither party can pull out without financial penalty
• Your deposit (usually 10% of the purchase price) is transferred to the seller's solicitor
• A completion date is agreed (usually 1-4 weeks later, but can be on the same day)
• Your buildings insurance must be in place

If you withdraw after exchange, you'll lose your deposit and may be liable for the seller's costs. The seller could also sue you for breach of contract.

Completion is the day you become the legal owner and can move in. Here's what happens:

1. Transfer of funds: Your solicitor receives the mortgage money from your lender and sends the full purchase price to the seller's solicitor.
2. Confirmation: Once the seller's solicitor confirms they've received the funds, completion has occurred.
3. Keys: The estate agent releases the keys to you (usually after 1pm on completion day).
4. Registration: Your solicitor registers you as the new owner with the Land Registry (this can take several weeks).
5. Stamp Duty: Your solicitor pays Stamp Duty Land Tax to HMRC on your behalf (due within 14 days).

Mandatory – Your mortgage lender will insist on this.

Buildings insurance covers the structure of your property against damage from:

• Fire, smoke, explosion
• Storm, flood, or earthquake
• Theft or vandalism
• Falling trees or aircraft
• Water damage (e.g., burst pipes)
• Subsidence

The insurance must be in place from exchange of contracts. Make sure you're covered for the full rebuild cost (not just the market value).

Optional but recommended

Contents insurance covers your belongings (furniture, appliances, electronics, clothing, etc.) against:

• Theft or attempted theft
• Fire or flood damage
• Vandalism
• Accidental damage (optional extra)

Consider the total value of everything you own when deciding on your coverage level. You can often get a discount by taking buildings and contents insurance together.

Optional

MPPI covers your mortgage payments if you can't work due to:

• Accident or sickness
• Unemployment
• Critical illness (depending on policy)

This can provide peace of mind, but policies can be expensive and have exclusions. Consider:

• Do you have savings to cover 3-6 months of mortgage payments?
• Does your employer provide sick pay?
• What are the policy exclusions and waiting periods?
• Shop around – don't just accept the lender's policy

Strongly recommended if you have dependents

Life insurance pays out a lump sum if you die during the policy term. This can:

• Pay off your mortgage
• Provide financial security for your family
• Cover funeral costs

There are two main types:

• Decreasing term life insurance: The payout decreases over time (matching your mortgage balance). This is the cheapest option for mortgage protection.
• Level term life insurance: The payout stays the same. More expensive but provides more comprehensive cover.

Gazumping

Gazumping is when the seller accepts your offer but then accepts a higher offer from someone else before contracts are exchanged. This is legal but frustrating and costly (you'll lose survey and legal fees).

To reduce the risk:

• Move quickly – get your survey and searches done fast
• Stay in regular contact with the seller and estate agent
• Ask for the property to be taken off the market
• Consider a lock-out agreement (where the seller agrees not to negotiate with others for a set period)

Gazundering

This is the opposite – where you (the buyer) reduce your offer at the last minute, just before exchange. While legal, it's considered unethical and can collapse the sale. Only do this if your survey reveals significant problems.

Most property transactions are part of a "chain" – where your purchase depends on the seller buying another property, which depends on their seller buying another property, and so on.

Problems with chains:

• Delays: The chain moves at the pace of the slowest link
• Collapse risk: If one sale falls through, the entire chain collapses
• Stress: You're dependent on strangers' decisions and timelines

How to minimise chain problems:

• Ask about the chain before making an offer
• Prefer properties with short chains or where the seller has already found a buyer
• Be flexible and communicate regularly
• Have a contingency plan if the chain breaks

A contract race is when a seller invites multiple buyers to compete to exchange contracts first. The first to exchange gets the property. This is legal but risky and expensive if you don't win.

Only agree to a contract race if you're prepared to lose your survey and legal fees. Make sure you have a survey done quickly and your finances ready so you can move fast.