We have some exciting news for you: we bought our first house in London. In this post, I wanted to share a little bit about our plans for the future, the reason we bought a house in London and share with you how long does it take to buy a house in England in 2020, especially if you’re new on the housing market and just like us, never owned a property before!
Why did we buy a house in 2020 (before a huge crisis, as some say)?
Many people have asked us why did we buy a house in 2020, just after the lockdown. Some experts predict a huge crisis and many buyers are waiting for the prices to fall. Well, it’s tough to say what’s going to happen in the future. House prices can drop a lot, or they can also rise a lot, as people are looking to invest their savings into long-term assets (just like houses). Actually, it was challenging to find a house in a nice neighbourhood for our budget, and we noticed that the house prices had increased a lot. There is a huge demand for homes with gardens, so we were fortunate to get one.
If we started looking now, we wouldn’t be able to find one in our budget in the areas we considered in London. The process of buying a house in London in 2020 took three months, and we actually kept looking during all these three months (as transactions can sometimes fall through and we just wanted to have a back-up version in case that happens). Well, guess what? We haven’t seen a single house in our budget!
Moreover, we are planning to stay in London for the next five years and buying a house just made sense, as the mortgage payments in our case were identical to the rent payments we had. We’ve been renting for 3+ years (Pepe for five years) and decided to pay our own mortgage instead of someone else’s.
How much money do you need to buy your first house? (As a deposit + other fees)
If you’re wondering, how much money do you need to buy your first house, well, first, you need a deposit. Banks recently changed their rules (bad news), so you definitely need AT LEAST 15% of your house price as a deposit. That means if you’re buying something for £100,000, you need to provide 15K as a deposit. In London, to be realistic, you can buy a small one-bedroom flat for £350-450,000 depending on the area (and more in the city centre), so make sure to have 50-70K as a deposit.
However, depending on your desired location and if you’re happy to move a bit further away from the city centre, you might be able to find a 2-bedroom house for £480,000 – £600,000. Ours was closer to the lower band.
Also, until March 2021, you don’t need to pay stamp duty if you’re buying something for less than 500,000 (and the discounted rent after that), so you’ll be saving quite a bit of money which you can later spend on house renovations.
If you’re buying a Help to Buy property, then you need less money as a deposit, as you can provide at least 5% deposit with this scheme, making it much easier to buy your first home.
Other home-buying costs you need to consider:
- Legal fees – we paid around £1,500 for our solicitors (Juno) and can definitely recommend them.
- Surveyor to check the condition of the property – we paid £600
- Mortgage cost (yes, you need to pay to get a mortgage)… – around £1,000
- Moving costs – depends on how many belongings do you have and how far do you need to move, but we paid around £270 as we had a lot of stairs and a lot of furniture as well (even though the new house was just 15 minutes away by car)
What’s the process of buying your first home (for dummies)
When we were buying our first home, I had no clue about the process! I was researching so much, and there was nothing written in the understandable language, so I hope this mini-guide for dummies (like us) helps!
Step 1: Calculate the budget.
The general rule is that you need a 15% deposit for your property (or 5% if it’s a new build eligible for the Help to Buy scheme. If you need to pay any stamp duty, make sure to budget it as well. You can calculate the amount you need to pay for Stamp Duty here! You need to pay the stamp duty fee almost right away after buying your property, so it’s crucial to know and budget for.
Step 2: Obtain a mortgage agreement in principle from the bank.
The next step you should do is to obtain a mortgage agreement in principle that some of the agents will ask you for during the viewings.
Step 3: Start looking for your dream property.
The most exciting step is to start looking for your dream property! Keep in mind that the market in London and many other cities in the UK is really fast. On many occasions, you need to submit an offer right away. If there is more than one offer, you’ll probably have to submit your best offer and compete with other buyers. In our case, we were outbid for a couple of properties. That’s something that can happen a lot and can be a disappointment.
Step 4: Make an offer subject to the surveyor.
Once you found your dream property and your offer has been accepted, make a final offer subject to the survey results. That’s a very important step because sometimes surveyors can find things that can affect the value of the property (and not in a good way). If there’s any problem with the property and it’s quite a significant one, you can either ask the current owners to fix it or renegotiate the price of the property.
Step 5: Find a good solicitor.
Buying a property is always a very uncertain process. We almost bought a flat one year ago, but in the end, it didn’t work out. We still had to pay our solicitors £1500, which was a huge disappointment, because it was just the beginning of the process and they haven’t done much. This time, we wanted to find a solicitor, who has a more relaxed cancellation policy – you need to pay a £400 deposit, but if you change your mind (or the seller changes their mind), you can just transfer their services to another property in a few months, and you don’t need to pay extra, and you don’t lose any money. We used Juno and were overall very satisfied with their service and their digital platform!
On this step, you also need to confirm your identity and submit your proof of address and bank statements.
Step 6: Apply for a mortgage.
The next step in buying a house would be applying for a mortgage (if you need one, of course). You can either use a mortgage broker or just apply yourself via a bank. We used a mortgage broker provided by our agency (KFH) – we were pleased with them, and they found us a great mortgage product.
How long does getting a mortgage take in 2020?
If you’re wondering how long does getting a mortgage offer take in 2020, in our case, it took around three weeks. However, every situation is different, but typically, you’d hear back from the back in 2 to 5 weeks.
Step 6: Find a surveyor.
You can also do this step before securing a mortgage, but it’s generally recommended to do it afterwards. On this step, you need to find a surveyor to check your new home and find any potential issues with it. As I mentioned before, if there are any structural issues and any hazards, you can either reduce the sale price or ask the current owners to fix it. Or if it’s too bad, you can probably pull out from the deal.
Step 7: Finalise everything.
On step 7, you just need to wait for all the information your solicitor needs about the house (all the checks, titles and any other information). You will also be clearing all the question with the owner.
Step 8: Agree on a completion date.
On this step, you will need to agree on the completion date – target date for exchanging the contracts. This is probably one of the most exciting steps in this step-by-step process of buying a house in London!
Step 9: Exchange contracts and move in
Finally, on the day of completion, you can exchange contracts and move in (or start refurbishing your property right away while living there or somewhere else)
So how long does it take to buy a house in England in 2020?
So well, to sum it up (and if you’re wondering how long does it take to buy a house in England in 2020), if you need to apply for a mortgage, it would take around 2-3.5 months from the first offer date to the completion. If you don’t need to get a mortgage to buy a house, then it would be a much faster process – perhaps 1.5 months or so or even faster!
We bought our first home in England: what does it mean for this blog?
Given that we are doing house renovations, we will travel much less (however, with the Covid-19 pandemic still active, I don’t think it will be very noticeable). We will also diversify our content and post much more about our house renovations and interior, as it’s something we’re actively doing at the moment and I think it will be very useful and helpful for some of my readers who are in the exact same situation.
Finally, we also started a new Instagram, just for our house renovations, you can find it at @ourlondoncottage!