Barclays Wealth

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Step-by-step guide to buying a house

There’s a lot to think about when you buy a house. Here’s a short step-by-step guide to help you through the process.

Step 1

Work out how much you can afford to borrow

• Decide whether you want to live on your own or with someone else- and whether your mortgage will be in joint names
• Get a rough idea of how much you can borrow – our Mortgage Advisers will be happy to help.
• Find out how much it is likely to cost each month.

Step 2

Decide which type of mortgage is best for you

• Choose a capital repayment or interest-only mortgage – or even a mixture of the two
• Pick the type of interest rate you prefer: fixed, variable or tracker. You can combine different types if you prefer.
• Ask about any special rates, discounts or cashbacks.

Step 3

Find the right property

• Think carefully about the property’s location.
• Decide on the right type property for you: detached, semi-detached, terrace or flat; old or new; garden or not.
• Work out which kind of property you can afford to buy and maintain.
• Ask your family and friends to help you find the right place.
• Think about using a property search company.

Step 4

Make an offer

• Find a property you like
• Decide how much you are prepared to pay for it. Don’t offer more than you feel comfortable with.
• Make your offer.
• If your offer is accepted, appoint an advocate.
• You should take independent tax advice before buying a property.

Step 5

Finalise your mortgage application

• Tell us exactly how much you need to borrow.
• Make sure you have enough money available to pay your deposit and cover other costs.
• Give us details of the property.
• Give us your advocate’s details.
• Complete the mortgage application.

Step 6

Ask us to arrange a valuation or survey

• We will always arrange for a valuation to help us decide how much we can lend you.
• Once we have the valuation report we can make you a formal mortgage offer.
• You should also consider getting a more detailed report or survey on the property, so you can identify any problems before you commit to buy.

Step 7

Protect your interests

• Buildings insurance – it is a condition of our mortgage that sufficient buildings cover is in place when you exchange contracts.
• Contents and possessions – we recommend that you consider insuring your contents and possessions at home.
• You and your family – it’s worth considering other financial protection, based on your individual circumstances. For example, you may want to think about life insurance and/or critical illness cover. Our Mortgage Advisers will be happy to discuss this with you.

Step 8

Exchange contracts and pay your deposit*

• Exchanging contracts is sometimes called ‘the point of no return’. If you or the seller pull out now, you could lose your deposit and face possible legal action.
• If you’re happy with the survey and there are no legal problems with the purchase, your advocate will exchange contracts.
• Pay the deposit at the exchange of contracts.
• Agree a completion date.
• Arrange buildings insurance and bring into force any life insurance or payment protection.

Step 9

Get ready to move

• Get estimates from removal companies.
• Ask your utility providers to read the meters.
• Check that your home and contents insurance policy covers items during the move.
• Give friends, family and other contacts your new address.
• Arrange with Royal Mail to have your post redirected.

Step 10

Complete and move in

• ‘Completion’ is when your advocate pays the balance of the purchase price and the property legally becomes yours.
• Arrange to pick up your keys.
• Your mortgage will start on the day of completion.

* There is no exchange of contracts in Jersey. If you are buying property in Jersey, move straight from Step 7 to Step 9, but remember to agree a completion date with your advocate well before you prepare to move.

Glossary of terms

APR

Stands for annual percentage rate, which helps you compare the cost of different mortgage deals. It takes into account the amount of interest you’ll pay, the term of the mortgage, and other charges such as application fees.

Application fee

Lenders sometimes charge a fee to cover the work involved in setting up your mortgage or to secure certain mortgage rates.

Assignment

The legal transfer of rights from one person to another.

Barclays Bank Base Rate

Barclays Bank Base Rate (BBBR) typically follows the Bank of England Base Rate but it is not guaranteed to do so. The Bank of England Base Rate can go up or down and is announced by the Bank of England’s Monetary Policy Committee every month.

Charge

Technical word for the security a lender relies on when lending money on property. A ‘charge’ also means ‘fees’ which may be incurred during the term of your mortgage. For example an ‘early repayment charge’ is payable if you pay off your mortgage before the end of the term.

Conditions of sale/contract

Agreement between buyer and seller, which binds both to complete the purchase/sale of the property. One copy is signed by each party and the two are exchanged.

Completion

The day on which a property legally becomes yours.

Conveyancer

A legal expert handling all documentation for the sale and/or purchase of a property. This will be a licensed conveyancer or advocate.

Daily interest

With this method of calculating mortgage interest, interest is charged on the amount of the mortgage outstanding from day to day. This means lenders take into account any changes in the amount you owe on a day-to-day basis.

Disbursements

All the various costs itemised on your conveyancer’s invoice for carrying out the legal work associated with your property purchase.

Discharge fee

You have to pay this to some lenders for releasing their hold over a property once you have paid off your loan.

Early Repayment Charge

A fee applicable if you pay off all or some of your mortgage, or change your mortgage, during a specified period.

Excess

The amount deducted from your claim under a buildings or contents insurance policy.

Equity

The difference between the amount you owe on your mortgage and the current value of your property.

Exchange of contracts

The swapping of contracts between a buyer’s conveyancer and a seller’s conveyancer. Once you have exchanged contracts, both parties are legally bound to the transaction.

Final Repayment Charge

Sometimes called an ‘exit fee’, this charge is applied when the mortgage is repaid in full.

Freehold

Technical word for the ownership of a property and/or the land on which it stands, where both belong to their owner indefinitely.

Further advance or equity release

A further mortgage granted by your existing mortgage lender in addition to your current mortgage.

Leasehold

This means you own a property for a set number of years. When the lease expires, the property returns to the freeholder. Flats are commonly sold as leasehold. As a leaseholder, you may be able to acquire the freehold or extend the term of the lease.

Local authority search

Part of the conveyancing process when you buy a property, carried out by your conveyancer. It gives details of any matters which, from the local council’s point of view, affect the property. It reveals any proposed changes to the local area, such as road improvements, and details any planning permission given for the property.

LTV

This means ‘loan-to-value’ and is the proportion of the value or price of the property (whichever is the lower), that you borrow on a mortgage. For example, a £162,000 mortgage on a house valued at £180,000 would give an LTV of 90 per cent.

Mortgage

A mortgage is the transfer of an interest in property to a lender as security for a debt, known commonly as a mortgage loan, which you repay by way of regular repayments to us.

Mortgagee

A lender such as a bank or building society, who lends money against the security of a ‘charge’ over the property purchased.

Mortgagor

A person who borrows money, usually to buy a house, and ‘charges’ the property to the lender as a security for the mortgage.

Mortgage deed

A legal document establishing a mortgage on a property, which is registered with the land registry.

Mortgage term

The length of time over which you agree to pay back your mortgage, generally up to a maximum of 35 years for sterling mortgages.

Negative equity

This is when the amount you owe on your mortgage is greater than the value of your property. It particularly becomes a problem if you want to move house.

Portability

The ability to take your mortgage with you if you move to a new home.

Premium

Amount you pay on a regular basis for a service, such as life or buildings insurance.

Remortgaging

When you arrange a new mortgage and use the new mortgage to pay off the old one.

Retention

Holding back part of a mortgage loan until repairs to the property are satisfactorily completed.

Standard Variable Rate

A variable interest rate that fluctuates in line with general interest rates and market conditions. Set by the lender, it tends to follow changes to the Bank of England Base Rate.

Structural engineer’s report

A specialist report from a structural engineer on the condition of a property.

Survey

A report on the structural condition of the property you are planning to buy. Typically there are two levels of survey: a homebuyer’s survey and valuation, best suited to smaller or relatively modern properties; and a building survey which provides more detail and is better suited to older or more complex properties.

Valuation

An assessment of the value of the property you are hoping to buy, normally requested by your lender to ensure that the value of the property is greater than the amount you wish to borrow.

This glossary gives an example of some of the most commonly used terms. It is not an exhaustive list and different terms may be used locally. Please ask one of our Mortgage Advisers for more information.