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How to buy a house in the UK in 2023?

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In today’s article, we will explain to you step by step how to buy a house in the UK. There have been a few changes in recent months and it’s worth knowing about them, as they may have made owning your own property achievable for you 🙂

How to buy a house in the UK? Extend Finance
How to buy a house in the UK?

How to buy a house in the UK? A few tips

Check your credit score

The vast majority of houses and flats in the UK are financed with a mortgage. No wonder – property prices are high and the cost of living is rising. It is for this reason that we are first concerned with checking the creditworthiness of our clients. If it is low, the bank will not offer you an attractive mortgage and, consequently, the purchase costs will be high.

If you’re planning to buy a house in the UK but have struggled to repay previous debts, it’s worth reading our article on how to improve your credit score and putting our advice into practice. Building your credit score isn’t instant, but you’ll see results even within a few weeks. Another source of information that we can confidently recommend is the article Tips to improve credit score.

How can I check my current credit score?

The easiest solution is checkmyfile.com. The service is free for the first 30 days, but after that, a subscription costs £15 a month. This is still a much smaller expense than applying for a mortgage, so in my opinion, it’s worth using checkmyfile. If you use the link provided above, I will receive a small affiliate fee which will allow me to continue creating valuable content for the blog.

Build up an adequate deposit

If your credit score is at the right level, it is time to build up adequate savings. In addition to making a deposit, you will have to pay additional costs, for example stamp duty land tax, broker’s commission or property insurance.

At the moment, no bank will give you a mortgage for a house in the UK if you have not built up a deposit. The deposit itself is a minimum of 5% of the value of the property, but you should raise a little more cash because of the additional fees. Remember also that a mortgage with a 10% deposit will usually have a lower interest rate than one with a 5% deposit. A smaller amount borrowed also means a lower monthly instalment, so you will find it easier to repay the commitment.

How to calculate and build up a deposit?

  • determine how much a suitable house or flat in the area you are interested in costs
  • determine how much is 5% of this amount (you can divide the value of the house by 20)
  • add a reserve of £2,000-3,000 to this amount
  • start saving money

The first points are very easy to make. Just search for a suitable property online on RightMove and Zoopla and check house prices. Compare several offers or choose the one that suits you best.

Once you have found a property you would like to buy, calculate the minimum deposit and add around £2,000-£3,000 to this amount. This is the reserve for the additional costs of the purchase. Of course, this is an estimate, as every house in the UK has slightly different characteristics and some specific issues will arise during each transaction.

What are the additional costs of purchase?

  • services of a solicitor
  • the services of a credit broker, for example Extend Finance
  • building surveyor services
  • stamp duty land tax
  • application fee
  • valuation fee
  • property insurance
  • moving costs

Once you know the amount required, try to accumulate it as quickly as possible. Optimise your financial situation: try to increase your earnings, reduce your expenses, for example by getting rid of unnecessary subscriptions, cutting down on going out to restaurants, choosing cheaper holidays or spending time with friends in a cheaper way than before. If you’re determined, you’ll raise the required amount of money quite quickly, and as a result, you’ll soon be getting the keys to your own property!

Find a mortgage broker

Whether you’re planning to buy a house in the UK, renovate your bathroom, fix your car or repair your computer, you can tackle it yourself or get help from an industry professional. The first solution means seemingly saving money, but also wasting time and energy and risking problems. By outsourcing to a specialist, you gain much more confidence in the quality of the end result, especially when it comes to your finances. As a legitimate credit broker, we are inspected by the Financial Conduct Authority (FCA), which enforces professionalism and ensures that our clients are served to the highest standards.

Whether you choose to use Extend Finance or another company, hiring a mortgage broker is definitely a good decision and a sensible expense. As well as saving you time, you gain confidence that the financial product (mortgage, insurance) selected for you will be tailored to your needs and as cheap as possible.

A mortgage broker is also an adviser: they will explain key terms to you, help you gather all the necessary documentation, check your financial situation, recommend a good solicitor and monitor the whole buying process. If he handles the whole UK market, he will also help you to choose the cheapest possible deal, which is not at all as obvious as you might think.

As I mentioned, you can buy a house in the UK independently, whether you have British citizenship or not. However, consider whether this is worthwhile for you, as searching for offers, reading the regulations and filling in all the paperwork yourself is simply time-consuming and complicated.

Find the right house and make an offer

If you’ve got the previous three points behind you, it’s high time to make a final decision on the property. I assume that your creditworthiness is high, you have a suitable deposit and you are working with Extend Finance or another mortgage broker. It’s time to choose a specific listing, make an offer to purchase and get approval from the current property owner.

Invariably, I encourage you to use multiple sources of information and offers. Use websites, for example Zoopla and Rightmove, estate agents and ask your friends as there may be someone planning to sell their home. Try to be flexible and make compromises. Maybe it is better to buy a slightly smaller house but in a better location? Or maybe it’s worth paying a little extra and getting a house in a higher standard and with a new bathroom in return?

Once you have chosen an offer and accepted the offer, you will have to deal with the mortgage. It’s quite a tedious process, involving a lot of paperwork to fill in and several meetings with your broker, but if you choose the services of a good company, the whole thing will go fairly quickly and smoothly. By the time you get to submitting your mortgage application, you will most likely have bought your house in the UK, although of course it all depends on the bank.

So basically, why is it worth buying a house in the UK?

The steps above can seem quite tedious and the procedures complicated. So why is it worth buying a house in the UK? Just like anywhere else, you gain virtually nothing by renting a property. If you decide to buy, your net worth will increase with each instalment you pay. Any renovations, upgrades to the house or extensions will depend primarily on you, not the landlord. In addition, almost every house in the UK gains in value over time and unless this trend changes, buying can be a very worthwhile investment.

Of course, a mortgage is also a risk. Interest rates can rise, as they did in 2022. When this happens, instalments will also rise, although rents on rental properties are also likely to rise.

Personally, I think it is worth buying your own house in the UK if you plan to live here for a long time or for the rest of your life. Like any investment, buying a property comes with risks, but if your living situation is fairly stable and you want to raise your independence, such risks may be justified.

Planning to buy a house in the UK but want to find out more before you make a decision? Read our articles:

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Think carefully about securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services and some forms of Buy to Let mortgages are not regulated by the Financial Conduct Authority.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts
secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services are not regulated by the Financial Conduct Authority.

Extend Finance nor The Right Mortgage Limited can’t provide advice regarding Personal Pensions, Pension planning or investment planning advice. You must seek independent financial advice from a suitably qualified professional financial adviser who may charge you for advice.

Wills, Will writing, Trusts and Trust planning are not regulated by the Financial Conduct Authority.

* We will receive a small fee from CheckMyFile for any referrals.

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