A step-by-step guide on buying a house in the UK

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How to buy a house in the UK

Buying a house is a major task, regardless of what country you are in. Countless hours, research, reviewing, and comparing have to be done before you can feel relaxed, satisfied, and confident about buying a house in the UK.

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It may be that you have just been in the UK for a few weeks and are looking to settle in a house for the sake of your family, or just a year or two and know you won’t be moving around a lot. Perhaps you’ve been here for some time and you think it makes more sense to pay a mortgage than pay rent. Whatever your situation, we’ve outlined the necessary steps to buying a house in the UK.

Your Checklist for Buying a House in the UK

The following is just from our experience and the things we think are important to go over beforehand. Everyone’s experience is different so make sure you take all of your needs into consideration before you purchase a property.

Location

  • Is it near where I work?
  • If it’s not near, is driving/public transport convenient?
  • How are the surroundings/neighbourhood?
  • Are there supermarkets/shops nearby?
  • Are there daycares/schools nearby?
  • Would I be able to rent this place in the future?
  • Is there a good resale potential of the property?

Cost

  • How much is the total cost?
  • How much can I afford to put down as a deposit?
  • What would be my monthly mortgage payment?
  • Is there any extra cost (lawyers, etc)?
  • Is the purchase price fair for the area?
  • Can I sustainably afford the mortgage on my salary?

Mortgage agreement

  • What is the duration of payment mentioned in my mortgage?
  • Is there any fee if I pay off my mortgage early?
  • Is it a fixed rate, variable rate, or both a fixed and a variable rate mortgage?
  • Is there a valuation fee?

How can I estimate if I can pay the mortgage?

When it comes to buying, a lot of things have to be taken into consideration before you commit yourself. We often think that if we are making x amount of money per month, and the mortgage is considerably less than that, then we should have no problem at all. It, unfortunately, is a little more complex than that. So let’s break down what all needs to be understood beforehand:

  • What is the cost for utilities?
  • How much is the council tax?
  • Are there any service charges?
  • Will you have to put in a phone line?
  • Will you be keeping a TV license?
  • Are there any other recurring costs such as broadband/insurance/satellite?

After you’ve looked at these costs and compiled an estimate, there is another chunk of data you need to keep ready- your day to day costs.

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  • How much are you spending on cell phone/mobile plans?
  • How often are you eating out/cost for food/shopping?
  • Any other recurring monthly fees (ex: gym)?
  • Any debts that need repaying?
  • Any car mortgages/fees/insurance costs?

Remember that you will need to give a lump sum initially as a deposit, so make sure you are taking that into consideration. If you’re finding this overwhelming or don’t know where to start, check out our article on how to make a budget.

How to Choose a Mortgage

A mortgage is the negociated fee that you pay back to the lender. It is the cost of property/car/etc minus the down payment/deposit plus the interest rate.

  1. Which mortgage is right for me?

    We want to keep this as basic as possible so for the sake of brevity we will talk about fixed rate and variable rate mortgages.

    A fixed rate mortgage means that there is a set period of time (5 years, 10 years, etc) during which your mortage will stay at a fixed stable interest rate for repayment. For example, if you agree to a 10 year mortgage to pay off £180,000 with a fixed interest rate of 2.3%, you’d be looking at paying about £1,680 per month if you were to pay off the full amount within the 10 years. This means you’d essentially end up paying back about £201,664 (about £21,664 of interest).

    A variable rate mortgage is the standard rate of interest taken as per the Bank of England and some other external factors. As the name says, it is variable and can go up or down as per the basic set by the Bank of England.

  2. How much can I borrow?

    What you need to see here is the amount you can put down as a deposit on the house. Whatever is leftover will then need to be paid back to the bank. Depending on your visa status and/or how long you’ve been in the UK for, a bank may want a substantial deposit put down to lessen the amount you borrow from them.

    Keep in mind that if you put down a hefty deposit then your loan to value ratio (LTV) will decrease, and more mortgages with better rate will become available to you. For example, if you have a £150,000 house that you are putting down a 10% deposit for, your LTV is 90% (with your having deposited £15,000). If you, however, aim for a LTV less than that, you may see you are getting lower interest rates.

    The bank will look into if you have any other pending mortgages, loans, and costs that can potentially have an effect on your ability to pay them back, which can show in the types of mortgages offered to you.

  3. Am I allowed to overpay?

    Fixed rate mortgages tend to offer you the right to overpay upto 10% of the yearly balance, which in turn can help you pay off the loan faster (equalling less interest paid!). The drawback is that you may face early repayment charges, but if you calculate that you’d still save more money paying back faster despite the repayment charge, you may very well opt for it.

  4. Am I eligible for any government schemes?

    There are UK government schemes that you may qualify for that can help you buying a house. You are not obligated to partake in a scheme, but it’s not a bad idea to look into them if you think you may need help. The most common scheme is Help to Buy, of which there are two types, shared ownership and equity loan. Check out what works best for your siuation at the Help to Buy website.

    Carefully weigh the pros and cons of help to buy before committing to it and make sure you understand everything that is being asked of you before you sign any papers. Buying a house in the UK can be made easier with government schemes, but you need to be mindful of what it entails.

If you’re still unsure about what mortgage works best for you, being a BMA member will help in that you can access the services of Chase de Vere Medical for financial advice for free. They work with L&C mortgages to explain what mortgage would be ideal.

Perks for First-Time Buyers

If this is the first time you’ve EVER bought property, be it in the UK or abroad, you are eligible for some nifty perks. For instance, there is a stamp duty that needs to be paid ontop of the cost of the property. If you’re a first time buyer, this fee is waived on the first £300,000 for properties worth up to £500,000.

What Lenders are looking for

You will need to provide proof of income, proof of deposit, details regarding your work contract, visa duration, and at least a 3 month bank statement. If you have a P60 form, it’s ideal to provide that as well. You’ll also need to mention any financial obligations that you have (ex: utilities, insurance, etc).

Lenders also want to make sure that you are responsible. You need to prove through other payments you’ve made that you pay in a timely manner and have not defaulted on a loan in the past. Try and avoid taking out any other mortgages (ex: car) or long term commitments before presenting yourself to a bank.

Having a good credit score is also an important point. Check out our article on understanding your credit score to see if you’re doing all that you can in order to have a solid credit rating.

credit score to buy a house in the UK

Other Fees to Consider when buying a house in the UK

While the stamp duty may be waived, there are additional costs you should keep in mind going into your purchase. These include broker fees, holding deposits, moving costs, snagging costs, and any other costs that may crop up. Don’t put all of your eggs in a basket thinking that you’ll put down a large deposit and leave little to nothing in your bank account; you should always keep at least one month’s salary handy.

What is Snagging?

A snag is a check of a property for any defects or issues. This is something that should ideally be done for new and old properties. A new build may come with its own snag done by the building company, but that doesn’t mean you cannot opt to have your own snag done. Typically, if you purchase a new build, a ‘walk-through’ will be done with the building company/realtors where you all literally walk through the property and you have the opportunity to point out any issues that catch your eye (ex: chipped paint, door doesn’t close properly, etc).

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For older properties in the UK, it is highly recommended to hire a snagging company to thoroughly check every nook and cranny to ensure that you are buying a solid house that will not eventually become a money pit.

via GIPHY

What Type of Property or House to purchase

So we’ve already talked a little bit about new and old builds by way of what you can expect when it comes to snagging, but let’s really delve into what would be best for you by way of buying a house in the UK.

Newer builds come with the advantage that they are, well, new. Something shiny and fresh that you can claim as your own. These can be in newer communities/sub divisions that have cropped up in created residential areas that may be a little bit out of the way from the main city center, but might have other amenities such as being closer to schools, supermarkets, etc. Some complain that the newer houses aren’t ‘built to last’ like the older (50+ houses are), but it’s subjective. Newer homes also typically come with a warranty.

Older builds tend to come with a bit of history. In the UK, you can easily find homes that are more than 100 years old (just to put it into context!). There is a chance that you’d need to invest a little more by way of fixing up a thing or two, and potentially even refurbishing some parts. These houses may also be more centrally located.

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If you are fixed on a location and fiscally comfortable enough to consider purchasing a forever home, an older property may not be a bad idea, especially since it gives you the chance to add and modify a good part of the house. If you’re still relatively green behind the ears, and may be in an area for some time but you are unsure if you’d consider a long term settlement, a new buy may work best. At the end of the day, just weigh your options after taking everything into consideration.

Renting vs Mortgaging

This is honestly the main question you need to ask yourself before you proceed. Does it make more sense, fiscally or otherwise, to rent or to buy? Again we’d like to emphasize the importance of making your own pros and cons list to really know what would be the most sensible option for you.

If you have the option to avail hospital accommodation which otherwise is reasonably priced and comes with many of the day-to-day necessities, then buying (in our opinion) shouldn’t necessarily be a top priority given that you’d likely be able to save more staying closer to the hospital and paying less to get more.

Check out this rent vs mortgage calculator for a cost analysis to help you get a better picture.

mortgaging to buy a house in the UK

Where do I look for properties?

You can find listings on websites such as Zoopla, where you can also filter information to fit what you need, i.e. minimum number of bedrooms/bathrooms. If you feel overwhelmed with the prospect of sifting through hundreds of listings, you can always contact realtors/agencies and explain to them what you’d like to see, and they can send them to you by email. Remember that buying a house will always be a stressful endeavor, no matter if you are in the UK or back home, so take it in stride.

Frequently Asked Questions

Do I have to take the first mortgage offered to me?

No. You have every right to sift through as many mortgages as you see fit in order to find the one that makes the most sense. Don’t just settle on a mortgage as a result of perceived pressure from third parties. At the end of the day it is your money and your loan.

What if I want to change mortgages after already starting to pay one?

You can do that. It’s called remortgaging. Occasionally people like to remortgage if they are on a fixed rate that may soon switch to the standard variable rate and they’d like to see if they can get a better deal. It may even be that the current monthly mortgage is too much and you’d like to remortgage to lessen this cost. Keep in mind that remortgaging comes with its own fees.

What is a guarantor?

If you are struggling to put down a solid deposit or are not finding good mortgage offers because of a poor credit score, you may want to see if you can land a guarantor mortgage wherein someone (typically a parent or older relative) signs onto the mortgage saying they will help in payments in case the main mortgage holder is unable to do so. The guarantor would have no claim to the property. Not every bank offers this, and there are a lot of checks the guarantor must go through in order to be approved, but it is an option if you need it.

Can I get any help putting down a deposit?

Yes. Putting more money down in a deposit allows you the opportunity to get better rates, and also reduce the amount of time needed to pay back. While many lenders will settle for 5-10% down, if you are able to put together more than that without breaking the bank and with the help of a parent/grandparent, it can be easier for you in the long run. Essentially what would need to happen is that your parents/grandparents (rarely other relatives are approved) would gift you a portion of money to help you add on to your deposit.

This gift is heavily vetted; you cannot just plop down a stack of cash and expect the mortgage lender to be happy. The individuals offering to gift any sum will need to provide things such as their bank statements, proof of identity and address, proof of income/savings, proof of source of money, etc. It also must be made abundantly clear that this gift is not a loan and that the persons providing the gift money have no interest in the property.

How prepared do you feel?

We hope that we have completely explained the entire process of buying a house in the UK. It can definitely be something that will give you gray hair, and you may even feel scared about the whole process, but keep in mind that once you’ve done it, you’ll be able to relax. So weigh your pros and cons and go about this confidently. Congrats on your new home!

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About us

About Ibreez and Ibrahim

Hey there!

Dr Ibreez and Dr Ibrahim are two International Medical Graduates who are currently working as internal medicine trainees in the NHS. They love to travel, take photos and write about all things related to IMGs in the UK!

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