Buying a property

Mortgage market view

Since the end of 2021, the Bank of England’s monetary policy committee (MPC) has been steadily increasing the Bank of England’s base rate. The rate now is now at its highest level since 2009 and the MPC indicated that further rate rises this year are likely. Liam Boardman, Barclays Wealth Mortgage Specialist, says that as a result, many Wealth clients are looking to review their current mortgage agreements, whether held by Barclays or held externally.

“The rate rises are having a direct impact on clients who hold tracker mortgages, that is, those that are linked to the base rate,” says Boardman. “As such, the regular question we get asked is: ‘Am I better to go for a fixed rate mortgage?’. The answer of course depends on each individual’s circumstances, but there is merit in reviewing your options, especially in these uncertain times.”

Boardman notes that while clients are understandably concerned about the pace of the rate rises, he has found clients are still looking to move, purchase secondary holiday homes, or invest in buy-to-let properties.

Boardman adds: “The key is to speak with a Wealth mortgage specialist early in the process, so you can review monthly payments and budget accordingly.”

Last month we focused on getting to know Buy-to-let mortgages and if this is right for you.

This month, we look at the process for purchasing a property, giving you an overview of what you need to consider and how to prepare for it. We hope that this proves useful for first-time buyers, those looking to move, and those who are looking to help loved ones who are thinking of entering the property market.

Making sure you can afford it

Before you start looking for your dream property, you should know your budget and this begins with determining how much you can afford.

The first step to knowing your budget is first working out how much of a deposit you are able to provide. The deposit is the amount of cash you can put towards the cost of the property. As a first time buyer the minimum deposit you will likely need is at least 10% the property’s cost, though this may be higher if you’ll be buying a second property or a buy-to-let.

Knowing the size of your deposit will help determine the mortgages most suitable for you.

Once you have secured a deposit, you’ll need to work out how much you could afford to borrow and what your monthly mortgage payments could be. A mortgage calculator can give you an idea of this.

“When you know how much you can put down to buy a property, we suggest your next step is to reach out to your Wealth manager who can organise a meeting with a mortgage specialist,” says Boardman. “The mortgage specialist will be able to determine the borrowing limits and mortgage options available to you, subject to a full application. In today’s active market, this aims to provide some comfort by giving you the time to pose any questions you may have.”

Boardman adds that speaking to a specialist is also an opportunity to understand any additional expenses you may encounter during the process. “Many buyers can neglect to factor in the other costs associated with buying a home, such as application, valuation and legal fees, as well as Stamp Duty, when working out what they can afford.”

Finding the right home

Once you have determined your budget, you can start looking for your home in earnest. Register with local estate agents, property finding apps and websites, and sign up for their alerts so you can act quickly on homes that catch your eye. Alternatively, you can hire a property finding agent who can usually source properties both on and off the market.

Boardman says,“A lot of our clients hire property-finding or buying agents. An agent often allows clients to review properties that currently may not be on the market. With demand for properties still outstripping the supply, clients report that using a buying agent can take away some of the hassle associated with searching for the right property.”

A good idea is to narrow down the areas where you want to buy – and do your research, both online and in person. You should visit at different times of the day and night, during the week and at weekends to get a real feel for the area.

“Remember to think about the practicalities: how easy is it to get to work and the local supermarket? What about the local schools?” suggests Boardman. “Since this may be the biggest single purchase you’re likely to make, you should think carefully about what’s most important to you in a home, in the area you want to live, and what you’d be willing to do without.”

How to make an offer

When you are ready to make an offer, buyers usually inform the estate agent managing the sale. Buyers should bear in mind that the sales agent represents the seller’s interests and so they want the property to sell for as much as they can get – so try to resist being pressured into making an offer you can’t afford.

If you are a first-time buyer, you’re an attractive option to sellers because you don’t come with the time-consuming hassle of having another place to sell.

Find the right mortgage

When deciding which mortgage is right for you, here are some of the main things you need to consider.

• What type of loan is right for you –  you will need to consider whether you want a repayment mortgage (where you pay part of the balance and interest each month), interest-only mortgage (where you only pay the interest on the loan and repay the outstanding balance just before or at maturity) or a mixture of both
• What type of mortgage do you prefer – for example, you may be able to choose among fixed-rate, tracker, or schemes designed to help first-time buyers
• What is the mortgage rate – it’s important to look beyond the initial interest rate offered on Fixed and Tracker rates and consider what the rate will be after your mortgage initial product term ends
• Are there any mortgage fees – mortgage fees can be considerable, particularly if you change your mortgage before your mortgage term ends, so make sure you check what fees apply to the mortgage you’re considering

“An experienced mortgage specialist has the skills and experience to help you find the right mortgage,” says Boardman. “Our Wealth mortgage specialists are here help you match the right Barclays mortgage that suits your individual needs.”

Applying for a mortgage

Once your offer has been accepted, it is time to complete your mortgage application. When you apply, your mortgage adviser will have detailed questions regarding your income and outgoings and your personal circumstances.

“The earlier you can secure a mortgage, the better chance you have of seeing through with the purchase of the property,” says Boardman. “Mortgage advisers require a number of documents to verify the information you provide. This is why our Wealth mortgage specialists begin the process with your initial call, requesting all the necessary documentation as soon as possible so we can be ready to move quickly when needed.”

Do you need a solicitor or a conveyancer?

A solicitor or conveyancer manages the legal aspect of buying a property. You may want to appoint a solicitor if you need advice beyond property issues.

Conducting valuations and surveys

Your mortgage adviser will arrange for a valuation of your property to determine how much it’s worth.

You should also consider appointing a property surveyor to carry out an in-depth inspection of the property to ensure there aren’t any structural problems. Your solicitor, estate agent or mortgage lender can usually recommend a local surveyor.

Exchanging contracts

Once you’ve approved the valuation and surveys, your solicitor will agree the purchase details in writing with the seller’s solicitor.

You and the seller will need to sign this agreement. This is called ‘exchanging contracts’. The agreement legally binds both buyer and seller to follow through with the sale. At this point, you’ll also need to have your deposit ready to give to your solicitor.

Completion

You’ll need to agree a date of sale with the seller, your mortgage adviser and solicitor/conveyancer. On that day, your mortgage adviser will transfer the mortgage amount to your solicitor and they’ll complete the purchase. Then you can pick up the keys from your estate agent and move into your first home.

It is worth expecting your first payment to be slightly higher than your ongoing monthly payments. This is because it'll include interest from the date funds were released, up to the end of that month, plus your payment for the following month.

Boardman concludes: “In summary, if you have any questions relating to the process or are interested in looking for a property, then please contact your Wealth manager and ask to meet with a Wealth mortgage specialist.”

Things to consider

Subject to application, financial circumstances & borrowing history. Terms and conditions apply.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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