A Step-by-Step Guide to Buying a Home in the UK

Deciding on buying a home is an exciting time, but it can be riddled with uncertainties, making the process time-consuming and complex. The UK’s average timeline for purchasing a property is about six months [link to: https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/how-long-does-it-take-to-buy-or-sell-home/], and based on different factors; this can vary. Still, things like your financial situation, the type of property you’re investing in, and the seller’s circumstances can all impact your timeline. 

We’ve broken the process down into steps to help provide a picture of what you can expect along the way. 

Step 1: 24 hours – Application for a Decision in Principle

A Decision in Principle is your initial step in the home-buying process. It estimates how much you could borrow, giving you a clear idea of the budget for your property search. Most lenders offer the convenience of applying online, with many providing instant decisions, typically within 24 hours. This crucial step ensures that you start clearly understanding your financial boundaries.

Step 2: Varies – Search and make an offer on a home

The time it takes to find your ideal property can vary significantly, ranging from a few weeks to several months. It’s important to take your time during this phase, researching your preferred area thoroughly to make an informed decision. Once you’ve found a property, the following steps may differ between regions.

In England, Northern Ireland, and Wales, making an offer is typically done through an estate agent, who should provide information on the response time.

In Scotland, you’ll need to engage a solicitor to help you prepare a bid. Since a successful bid in Scotland can legally commit you to the purchase, it’s crucial to have a Decision in Principle and be ready to proceed with a mortgage application.

Step 3: Up to 2 weeks – formally applying for a mortgage

Once your offer is accepted, you can apply for a formal mortgage offer. We recommend your mortgage application is submitted as soon as possible, although there may be exceptions based on specific circumstances. Processing and receiving a formal mortgage offer can take approximately 4-6 weeks. To expedite this phase, ensure you have all the necessary documents ready for review. The application includes thorough checks of your finances and a mortgage valuation of the property you intend to buy carried out by the lender. 

What is the time between the mortgage offer and completion?

Typically, you can expect the completion process to take around 12 weeks once your mortgage offer has been accepted. However, it’s important to note that each property transaction is unique, and the timeline may vary. Your journey to homeownership may take less or more time than the standard 12 weeks.

Step 4: 6 to 12 weeks – conveyancing

Appointing a solicitor or a licensed conveyancer is essential for handling the legal aspects of your property purchase. The conveyancing process may range from approximately six weeks to a few months, particularly if you become part of a property “chain”. A chain forms when multiple transactions need to happen and involve other buyers and sellers in the process.

Step 5: 2 to 3 weeks – property survey

Conducting a property survey is advisable to identify potential issues with the property. Surveyors provide a report within a couple of weeks of conducting their inspection, which generally takes a few hours. This survey differs from the mortgage valuation, which is typically for the lender’s use.

Sellers in Scotland would provide a Home Report containing an energy performance certificate, a survey and a property questionnaire, which a solicitor would then review.

Step 6: 1 to 4 weeks – contracts exchange to completion

Once you have your mortgage offer and your solicitor or licensed conveyancer is satisfied with the property’s search results, enquiries, and legal title, you’re all set to exchange contracts (the specific process differs in Scotland).

If you’re part of a property chain, all buyers and sellers involved must be prepared, which could cause delays. 

You’ll provide your deposit upon exchanging contracts, and the agreement becomes legally binding. At this point, you’ll need to have buildings insurance in place. The completion date is agreed upon during this phase, often set approximately two weeks after the exchange, but it can be adjusted as needed. You’ll usually receive the keys to your new home on the completion date.

Moving forward with Choice Mortgages

At Choice Mortgages, we provide independent, professional guidance and advice tailored to specific requirements. Feel free to use our no-cost and no-obligation consultation by phone or in person at the office. Our team of experienced and friendly advisors can handle all of your queries. Whether they’re straightforward or more complex, we’re on hand and ready to help. Remember, your home may be repossessed if you do not keep up repayments on your mortgage. 

When is the Ideal Time to Buy a House?

If you decide to buy a house, it is a huge investment and requires careful consideration, especially, when interest rates are on the rise

From finding the perfect property to choosing which mortgage is right for you and the application process, not to mention increasing inflation and the cost of living, you might be wondering if there’s ever going to be the right time to make such an important purchase. 

According to the season

Our calendar year plays a significant role in the property market. According to an article in Ideal Home, spring and autumn are typically the most active times of the year. Spring, in particular, sees a surge in activity as people hope to complete their home purchases in time to move in when the weather conditions are altogether more agreeable and schools are closed for the holidays.

On the other hand, the height of summer tends to be quieter to start the process, as a lot of people tend to use this time to go away and take a break from their day-to-day lives. And, if you’re looking for less competition and maybe better deals, waiting until November or December could be worthwhile, as there are typically fewer active buyers towards the end of the calendar year. 

Reflecting on the market

Understanding what the market looks like is going to be a big help in making your timely decision to purchase. During the pandemic, the UK housing market experienced a boom as a result of various factors, including stamp duty cuts, reduced interest rates and the rise in demand for more spacious homes. 

However, since 2021, the Bank of England has raised the base interest rate from 0.25% to 5.25% in an effort to stave off rising inflation. Lenders responded by withdrawing some of their loan products and increasing interest rates to protect themselves from potential losses. 
Consequently, according to Moneyfacts, the average two-year fixed-rate mortgage exceeded 6% in June, and five-year deals have followed suit. This could mean a decline in house prices when rate hikes and rising living costs are taken into account hand-in-hand, which is something worth thinking about.

Should you wait or buy?

As with most things in life, there are pros and cons. It may be tempting to wait, especially if you’re anticipating a significant drop in property prices. But, this could be a risky tactic because if you plan on selling your property to buy, and the value of your home falls below the amount you owe on your mortgage, you could end up with negative equity, which is far from ideal. Additionally, there’s no guarantee that house prices will drop, and there’s the possibility that mortgage interest rates continue to rise. 

Overall, if you feel confident that you can afford your mortgage repayments and plan to live or rent the property, buying now could make sense, especially if you have the funds to move quickly.

Negotiation tips

Assuming you’ve decided to take the plunge and go for it, remembering these negotiating tips could be useful:

  • Be prepared by engaging a solicitor and getting your finances in order.
  • Respond promptly to messages and be polite to the seller and estate agents.
  • Gather information about the property, including why the vendor is selling and any offers they’ve received.
  • Determine what the property is worth to you and set a realistic budget for negotiations.

In conclusion, there isn’t one specific answer for the ideal time to buy a property. Unique circumstances and market conditions vary from person to person and from year to year. While rising interest rates may deter some buyers, others may find opportunities in the current market, and keeping focus on the bigger picture is key. 

Ultimately, having the support of an experienced mortgage and insurance broker can help you decide when and how to proceed. 

Choice Mortgages provides independent, professional guidance and advice tailored to specific requirements. Take advantage of their free, no-obligation consultation by phone or in person at the office. The team of experienced and friendly advisors can handle all of your queries. Whether they’re straightforward or more complex, they’re on hand and ready to help. 

Choosing a Fixed-Rate or Tracker Mortgage: Which One’s Right For You?

It’s downright dizzying in these complex times, even when making relatively small choices like where to plan your next weekend trip or even important ones like making time to update your insurance provider. Never mind the mammoth task of deciding which mortgage is right for you. 

You might be a first-time buyer scouting the market for the step onto the property ladder, moving or relocating to a new region, or someone who’s reviewing their mortgage. Chances are, the prospect is daunting, as this is one of the most significant life decisions ever made. 

We’re here to shed some light and guide you on what is arguably the foundation of your property investment: the fixed-rate versus tracker mortgage decision. To indicate how volatile the climate is, there have been 14 interest rate hikes since December 2021, when the cost of borrowing was at an all-time low of 0.1%, compared to the current level of 5.25%, simply adding to uncertain times. 

What is a fixed-rate mortgage?

A fixed-rate mortgage typically has these four characteristics.

  1. The interest rate will not change for a specific product period. So whether it’s over two, three, five or 10 years, the amount due each month will remain the same. 
  2. Each monthly repayment is predictable. This can be of great help, especially with budgeting and the current rate of inflation and interest rate hikes. 
  3. The borrower is protected against rate rises within the period.  
  4. Overall, when compared to other loans, the total cost of the loan could be higher depending on other options available and subject to an early repayment fee should you opt to move to a different loan. 

Whilst a fixed-rate mortgage may feel like more of a commitment, its certainty makes it an attractive option for those wanting peace of mind. 

What is a tracker mortgage?

Unlike a fixed-rate mortgage, these types of loans feature a moving interest rate. 

Typically, a tracker mortgage will follow the Bank of England’s (BoE) base rate, which is the interest rate at which high-street banks borrow money. So, if the BoE sets a rate that goes up or down, your tracker rate will reflect that change, plus or minus the percentage rate specified. The Monetary Policy Committee sets the rate and typically meet eight times each year (about every six weeks). 

For example, you might be presented with a base rate plus 1.5%. This means that if, at that time, the base rate is 5.5%, your monthly repayment will be 7%.

To summarise tracker mortgages:

  1. If the interest rate changes, the repayment amount will also change.
  2. The borrower assumes this risk if interest rates increase. 
  3. Unlike a variable mortgage, a tracker mortgage is bound to an external rate, which your lender must follow – this may mean that a tracker mortgage is more affordable than a variable mortgage.

The base rate is at a 15-year high currently. However, should rates fall, you might not benefit if your tracker has a “collar” of “floor” option. 

Why you should choose a mortgage broker to help

Mortgage brokers are professionals who help find and organise the best loans to purchase residential properties. Unlike loan processors who represent banks and other lending institutions, brokers work on behalf of the borrower. Brokers are problem-solvers and look out for the consumer’s best interests, not those of the lenders. 

At Choice Mortgages, we’ll help you find the perfect mortgage. We won’t:

  • Charge you for a consultation.
  • Insist on face-to-face meetings.
  • Have a limited choice of lenders or work from a panel.
  • Leave you hanging for answers, updates or appointments.

But we will give you a free, no-obligation consultation over the phone or in person at our office. We will also respond to any queries via email. As an independent mortgage (and insurance) broker, we have access to any lender, which means we’ll find the best product for you. And because our team of advisors are highly experienced, we can handle complex arrangements and straightforward queries. 

Contact us today – we can typically arrange a same-day consultation and answer queries immediately. Because we use the latest technology, we can easily keep you in the loop with your query so you always know where you stand.

The Mortgage Charter Explained: What it Means and Which Lenders Are Onboard

In an effort to quell concerns over rising inflation and anxiety over high-interest rates, there is a new commitment in place to support borrowers and their households. The Mortgage Charter is the outcome of meetings led by Chancellor Jeremy Hunt, together with the primary lenders and the Financial Conduct Authority (FCA). The charter is aimed at relieving financial strain on families and businesses, and reducing rising inflation within the economy.

So, as a mortgage borrower, what does the charter mean for you? Let’s take a closer look at some of the principles and which lenders (so far) have signed on the dotted line. 

Key principles you need to know

Repossession isn’t something anyone wants to experience, least of all homeowners. With this in mind, lenders have an in-depth set of criteria for customers experiencing financial difficulties. Lenders will continue to use those sets of measures along with new criteria, as set out in the charter. It’s worth noting that these commitments do not apply to Buy-to-Let mortgages. 

All lenders have agreed upon the following. 

Help and guidance 

Anyone concerned about their repayments is encouraged to reach out to their lender for advice and, in doing so, will not experience a negative impact on their credit file.

The current deal is coming to an end

Support will be available to those up-to-date with their payments and switching to a new mortgage deal at the end of their existing product contract without incurring an affordability check. This applies to 97% of the mortgage market, where customers are not only up-to-date on their payments but also not seeking to increase their loan amount or change their repayment type or term.

Timely advice

Lenders will be responsible for providing information to borrowers that will help them take decisive action as their current rate deal is due to expire and within ample time. 

Customer service 

Whether looking to extend their term to reduce the repayment amount, offering a switch to interest only, or applying a temporary solution – such as payment deferral or interest-part payment, experienced staff will be available to help borrowers with their specific challenges.

Plus, the signatories of the charter have agreed upon these extra principles. 

  • As of 26th June, there will be no forced evictions without consent [unless in exceptional circumstances], where the first missed payment is less than a year [no further action will be taken if a Possession Order is granted from June 26th 2023].
  • As of 10th July, borrowers nearing the end of their fixed-rate deal can engage in a new deal up to six months ahead. Additionally, they can request a like-for-like deal up to the new deal start date, should one be available [new rates must be confirmed at least two weeks before the new term start date].
  • A new deal option between lenders, the FCA and the government allows customers whose payments are up-to-date to either:
    • Convert to interest-only repayments for six months.
    • Extend their mortgage term to reduce monthly repayments and give a choice to revert to their original term within six months by contacting their lender. 

In addition, the government’s commitment is to ensure customers can easily access Support for Mortgage Interest. Even if you’re on Universal Credit, you can now receive help with the interest repayments on your mortgage after three months.

Who are The Mortgage Charter signatories?

The lenders who have signed the charter represent roughly 85% of the mortgage market. They are as follows:

  • Bank of Ireland UK
  • Barclays
  • Bath Building Society
  • Buckinghamshire Building Society
  • The Co-operative Bank, including Platform and Britannia
  • Coventry Building Society
  • Darlington Building Society
  • Earl Shilton Building Society
  • Ecology Building Society
  • Family Building Society
  • Furness Building Society
  • Glasgow Credit Union
  • Hinkley & Rugby Building Society
  • HSBC, including First Direct
  • Leeds Building Society
  • Leek Building Society
  • Lloyds, including Halifax and Scottish Widows
  • Loughborough Building Society
  • Melton Mowbray Building Society
  • Nationwide Building Society
  • Natwest, including RBS and Ulster Bank
  • Newcastle Building Society
  • Nottingham Building Society
  • Principality Building Society
  • Progressive Building Society
  • Santander
  • Scottish Building Society
  • Skipton Building Society
  • Suffolk Building Society
  • Tipton & Coseley Building Society
  • TSB
  • The Vernon Building Society
  • United Trust Bank Limited
  • Virgin Money, including Clydesdale Bank and Yorkshire Bank
  • West Bromwich Building Society
  • Yorkshire Building Society

Borrowers can expect increased communications regarding their mortgages as UK Finance launches campaigns in the coming months. You can access the file here for more information on HM Treasury’s Mortgage Charter.

Whether you’re an existing borrower whose mortgage deal is coming to an end in the near future, or you’re keen to get on the property ladder and would like to keep up to date on current affairs, we can provide you with independent mortgage and insurance advice. We’re open six days a week, and our friendly, professional and expert advisers have decades of experience to help you navigate with ease. No matter how complex, we at Choice Mortgages are here and ready to help in person, by phone or by email. 

The benefits of buying a home over renting

For many people in the UK, the decision to take the plunge and invest in owning property versus renting marks a significant milestone in their lives. Embarking on this journey can be complex and riddled with questions. However, with a little due diligence and the right help, it is possible to forge forwards confidently and mitigate some uncertainty along the way. 

So, without further delay, let’s take a closer look at how even though renting may afford some flexibility and lower upfront costs, purchasing a home can provide many benefits that present this option as a wise, long-term investment.

The subject of equity?

One of the most compelling advantages of owning a home is that, over time, there is the potential to build equity. But what is equity – what does it mean exactly? Equity represents the difference between the current market value of a property and the remaining mortgage balance. 

Through consistent mortgage payments and taking advantage of any property value appreciation, homeowners can steadily increase their equity position. Not only can this provide a valuable source of financial security for future years to come, but it may also establish a foundation for other investments, such as home improvements, saving for a child’s education, or even a second or third property investment at home or abroad.

Overall saving

In addition to building equity, owning a home can provide long-term cost savings. Although the initial costs of buying a property may be higher than renting, taking into account a deposit, and other expenses, homeownership can still be the more economical choice. Take fixed-rate mortgages, for example. This type of mortgage means that payments remain stable over time, unlike rent payments, which are likely to escalate annually.

Flexibility and stability

Another significant advantage of owning a home is the freedom it allows for changes and improvements to be made to the property. Unlike renters, who are generally restricted in their ability to alter their living space, homeowners have control over their property. They can make renovations, such as adding an extension, changing the flooring, or upgrading the kitchen, without seeking permission from a landlord. This degree of autonomy and control can be empowering and help homeowners establish a living space that truly reflects their personality and lifestyle. 

Homeownership also provides stability and permanence, which can be invaluable for many people. Unlike renters, who may have to move frequently due to expiring leases or changing circumstances, such as landlords deciding to sell, homeowners can reside in their property for as long as they wish. This can be especially crucial for families who want to provide a stable environment for their children or individuals who want to put down roots in a community.

Final thoughts

Enlisting the assistance of a reputable mortgage and insurance broker, such as Choice Mortgages UK, can help you to easily navigate the home-buying process and provide valuable guidance throughout the journey. Their team of experts can assist you in evaluating your options and locating the right mortgage and insurance products to suit your particular circumstances. 

This means that with their help, you can make informed decisions that provide long-term financial benefits to help you achieve your homeownership goals. Contact Choice Mortgages UK Limited or call 01780 480600 today for independent and trustworthy advice on your mortgage and insurance needs.

How Can You Get Financially Fit in 2023?

The last few years have been incredibly rocky, financial-wise, with pandemics, stock markets on the rise, and the cost of living crisis. So it is easy to imagine that many households don’t feel as financially fit going into 2023 as they might have felt in previous years. But that isn’t to say it is all gloom and dark clouds. There are some habits and tips everybody can do, whether you are looking to become financially healthier or if you are already economically healthy and looking to maintain it.

Do You Consider Yourself Financially Healthy?

There are usually three sectors on the financial fit scale. Some households are incredibly healthy or fit, others that are coping, and those who are struggling. The question is, where do you fall?

Are You Currently Fit?

Do you find that you are currently living within your means and that you easily get from one month to the next covering all expenses while still being able to save money and plan for retirement? In that case, you fall within this category. Households that are financially fit could look to make minor adjustments to increase or optimise their finances further. 

Sometimes minor suggestions might be to just re-evaluate all your expenses and check if there is anything that isn’t applicable anymore. For example, maybe you have a gym membership, but no one is going, or perhaps you are subscribed to software that you no longer use. A top tip includes making use of the ‘family shared’ options for accounts such as Amazon, PrimeTime, Spotify and Netflix.  Other changes might be if you find that you have substantial savings – maybe chat with a professional to see if there are benefits to paying off a mortgage or loan quicker.

Are you just making it?

If your expense amount is almost the same as your income amount, you might need to take a hard look at your budget. The issue with coping is that, occasionally, life throws a curveball at you, such as a car breaking down or the boiler must be replaced. To handle situations where a large sum might be required, you will need to alter your budget to allow for savings for these days.

Look to chat with a financial advisor who can provide some perspective on your financial situation. Set goals to allow you to start saving as soon as possible or to pay off any loans or mortgages quicker. Look at all your expenses and determine which are important and which are luxurious.

Has ‘struggling’ become your middle name?

If everything has gotten out of control, you first need to get hold of a professional that can work out a path for you. The worst thing you could do is continue to take out loans and borrow money, not knowing when you can pay anything off, just hoping for a miracle. The best thing you can do is get support from a professional in the industry who can assist you, provide advice and show you the path to getting out of debt.

This path will not be easy, and depending on your situation, it might take anything from a few months to a few years, but the point is that once you have that plan, stick to it. Reassess every few months, be smart about your choices and understand there is no quick fix. 

Being financially fit isn’t about a high-end job or getting an enormous inheritance. It’s about your habits and understanding your situation and what you want to be in. Chat with a professional who can provide tips and advice for your specific situation.

Everything you need to know about Critical Illness Cover

Hopefully, critical illness coverage, or catastrophic illness insurance, is something that you will never have to use. But unfortunately, the costs involved in a significant health emergency, such as cancer, heart attack, or a stroke, are too exorbitant for a regular health plan. As a result, people often include critical illness coverage in their budget to prevent financial strain and possibly ruin.

What Exactly is Critical Illness Cover?

The average life expectancy increases with every generation. For example, in 1950, life expectancy for men was 66 years and 71 for women. By 2007, that had grown to almost 80 years for men and 84 for women. Part of the increase is also due to the medical field advancing. A heart attack, for example, that was guaranteed to be fatal fifty years ago, is now an event that most patients survive. 

But that does mean that costs have increased and can leave patients with large medical bills. Critical illness insurance covers specific conditions or injuries listed in the policy.

Although life insurance, health insurance, and critical illness coverage are all sold together, they are all very different. 

  • Life insurance is when a sum is paid out on the insured person’s death.
  • Health insurance is paid out for most (not all) medical and surgical expenses and preventative care costs to the insured person, usually at specific places.
  • Critical Illness insurance provides additional coverage that is specified in the policy.
  • Gap cover provides extra protection for those with medical aid. It covers the deficit between the medical aid scheme and the actual rates charged.

All policies usually have terms and conditions, and might require information about your family history and even a general medical exam. Each one covers different ailments, and it is best to chat about this with your insurer to understand all the additional items it covers and what it doesn’t.

Can Choice Mortgage Provide Critical Illness Advice?

Yes, we do. We provide advice and are happy to give you a consultation to answer any questions that you might have about the policies or any concerns you have. 

If you are interested in getting Critical Illness Insurance or would like to chat about the policy in general, give us a call at 01780 480 600 or drop us a message on our website.

How will the UK mortgage market turmoil impact your deal?

The highlight (or low light) from the UK’s most recent mini-budget was the announcement of huge tax cuts. As a result, interest rates have risen, while the pound has plummeted to record lows against the dollar. While the government has since taken a U-turn on this monumental decision, the mortgage market remains quite volatile. 

With the rise in interest rates, mortgage lenders are faced with the challenge of providing products that are both profitable and realistic for borrowers. The Guardian (link: https://www.theguardian.com/money/2022/sep/27/uk-mortgage-deals-pulled-pound-rate-rise) reports that some of the country’s most prominent lenders have withdrawn mortgage deals and removed mortgage products from their offering. 

The current volatility in the space highlights the need for would-be borrowers to consult with independent advisors in order to secure the right option under these circumstances. But in the meanwhile, let’s take a look at what this situation means for your mortgage deal.

The type of mortgage deal you’re on

The extent to which the mortgage turmoil affects you is largely determined by the type of deal you’re on. Fixed-rate mortgages, the most popular option, remain unaffected for now. The interest rate agreed upon from the outset applies throughout the product period agreed. 

Should you not need a new deal, or need to make any changes to your mortgage, you’re good. However, be prepared for significantly higher interest rates should you need to find a new deal. 

Borrowers with variable-rate mortgages, on the other hand, will feel the blow. With the interest rate here directly linked to the Bank base rate, or the lender’s standard variable rate, a variable rate mortgage fluctuates month-to-month. 

At the outset this seems like the more cost-effective (and therefore attractive) option, as the initial interest rate tends to be lower than the fixed rate. But the fickle nature of the markets makes it a very risky option, compounding the challenge of efficiently managing monthly household expenses.

How will this affect first-time buyers?

For one, first-time buyers should take heed of this crisis when evaluating what type of mortgage deal they sign up for. That said, unfortunately, the interest rate hike creates a further barrier to entry for would-be first-time buyers. Both budgets and expectations need to be lowered in order to account for the additional pounds on repayments. 

There’s no way to sugar-coat it; for now, the outlook is pretty bleak, but your best chance at making the most out of a bad situation is to consult with an independent mortgage advisor. You’re in better hands with someone who understands and can navigate these changes, while considering your unique profile and needs.

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Choice Mortgages have provided me with a fantastic consultative service for over 10 years. I've had absolute peace of mind that everything related to my mortgage, home insurance, life insurance and critical illness insurance has been in hand. Nicki and the team have always given me informed guidance and I've had every confidence in their recommendations and products. A first-class service that I wouldn't hesitate to recommend.

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