Buying property in the UK is not as straightforward as some countries can be, and there are additional things to consider as an expat. The process being discussed here applies to England, Wales and Northern Ireland, as Scotland operates a little differently. Only the initial aspects of the process differ whether you have or don’t have a mortgage.
Without a Mortgage:
- Do the maths: Ensure your savings will cover not only the deposit and cost of the property, but also the stamp duty and solicitor fees.
- Consider the deposit required: if you are overseas or a foreign national, you may have to have a deposit of up to 40% in some cases. Ensure you are prepared for this eventuality. The process without a mortgage is far more straightforward – skip to the General Process below to see what comes next.
With a Mortgage:
- Do the maths: How much you can borrow will determine your buying power, so it pays to investigate just how much you can borrow on your chosen property. Take into account mortgage fees (which can be costly, especially as an expat), and Stamp Duty and solicitor fees. For a buy to let mortgage you normally have to show an income equivalent to £25,000.
- Choose carefully: there are many ways to find a mortgage, but it’s important to consider the overall costs and value to you as you seek to buy. Consider hiring a mortgage broker to navigate the paperwork and find deals that you cannot apply for directly yourself. Mortgage brokers are often able to secure deals you can’t get directly from the bank.
- Check your credit report: make sure you know and understand your credit score. There are lots of ways to check this online, but ensure you know what lenders will see when deciding on your application. Some lenders will want to see your credit rating for your local country and other will expect to see a UK credit report.
- Engage a broker or apply online: You will have to answer a series of questions here, judging your eligibility more on this process will be discussed in an upcoming post. In all, your mortgage process is only finalised once you find a property and undertake a valuation survey – more on this below!
The General Process:
- Set a budget: this should correspond directly you the steps already taken, whether you have a mortgage or not. Once you are clear on this, deduct a percentage from your maximum price – this is what you will tell your agent your budget is!
- Investigate potential properties: whether you do this yourself or find an agent, the search begins by setting out your criteria. This should be informed by your budget – what is reasonable to achieve within this budget? Where should the property be located? What size and what features do you require in your investment property? Having local eyes and ears is essential here, as you don’t want to be duped by what sounds like the perfect location, but isn’t – notoriously in the UK, the wrong end of the same street can really affect property value. Expats buying in popular areas may find it hard to negotiate, as vendors are often offered above-value prices, especially in London. Do your research, and read our tips on finding a good estate agent to assist you.
- Make an offer: if you’ve found something you like, make an offer. This is usually done through the estate agent. There should not be fees when you are purchasing through an agent. An offer to exchange can take 2 to 6 weeks to process.
- Get a solicitor and surveyor on board: Your solicitor/conveyance must secure the legal work around the property. See our post on the property team you need for more information on finding a good solicitor. Meanwhile, the surveyor will check any physical issues with the building. This can impact the long term value, as well as upfront cost of the property. A condition report, homebuyer report or building/structural survey comes at a cost but is essential for ensuring that you aren’t surprised with upfront repairs once you complete the purcgase. The Royal Institute of Chartered Surveyors is the best place to commission these reports from.
- Obtain a valuation survey: This step just for those with a mortgage in place. Your lender will want to ensure your property is worth what you are paying for it, and is required before the mortgage is approved. This comes with a fee, of course, though depending on your mortgage type this may not be charged for.
- Finalise the offer: Once surveyed, you may wish to renegotiate the offer. This tends to be the most difficult stage, and can be particularly complicated by a rejected mortgage application. Keep the lines of communication open and clear. Here is your last opportunity to change your mind before contracts are exchanged! Think carefully.
- Exchange contracts: here is where you receive the contract to sign and complete your sale. You pay your deposit and complete the sale, which can take almost no time at all – or up to 4 weeks and above. The solicitor will check all details at this stage, and once this is complete, you are then committed to the sale. Once completed, consider obtaining building insurance to protect your new purchase.
- Completion: close out all fees for your property purchasing team, and/or mortgage account fees. Ensure the solicitor registers the sale with the Land Registry or equivalent in Scotland and Northern Ireland. You now have 30 days from the completion date to pay your Stamp Duty on homes costing over £125,000. Since 1st April 2016, an extra 3% applies for buy-to-let properties on all property prices. Once this is done, you’ve done it! A property is yours, and the process is complete. Congratulations!