How does buying/mortgages work?

Itmustbeii

Apologies, I know this is a very basic question. All my family have council houses so mortgages are not something that were ever discussed.

I’m wondering if a person wanted to buy a house, what is the process, and how exactly do mortgages work? I know it has something to do with your salary and you have to have your own savings but a detailed answer explaining it would really help me.

Asking here as I’m a little embarrassed to ask anyone irl.

Franz Von Peppercorn

Call a bank or a broker. Try your own bank first perhaps. You can apply online.
They will expect some evidence of savings and regular income. Your own bank will have these details. For other banks you will have to print them out and send them in.
Someone will call you to determine some other facts. Time in employment, the nature and term of the loan. If you have the deposit. You’ll probably have to get a certification of employment from your employer.
If you pass the original checks they will issue you approval in principle. This means they will say in a document that you are good for a 300k loan (say) so you can bid on houses around that range (remember you will need at least a 10% deposit). This can last 6-12 months. In theory you shouldn’t change jobs during this time. This is the maximum you can spend, it should not be your aim.

Once you win a bid on a house you tell the bank the real price and get a solicitor and make a deposit on the house to the estate agent. The banks issue a document agreeing the exact loan subject to conditions: they will expect you to get mortgage insurance which can mean a medical check, and the solicitor will check the vendor deeds etc. You also need to pay for a survey on the house to confirm for the bank that the price is correct and you aren’t overpaying. You can also pay for a more detailed structural survey yourself.

There’s some to and fro here: you may get a snag list from your survey and ask your solicitor to talk to the vendors solicitor to fix those before continuing or negotiate some reduction. In my case I also had to join an insurance scheme for the apartment block I was buying in.

There’s generally another deposit when all contracts are agreed, from then you can’t withdraw without cause. You also around this stage need to pay stamp duty (via the solicitor) and pay him as well.

There’s a day called drawdown day. You will have sent the deposit to your solicitor before this, and the drawdown is to get the full mortgage with your deposit and stamp duty payment into the solicitor’s account who then transfers all to cost the vendors solicitor who transfers to the vendor, and pay the government the stamp duty. Then you get the keys.

You will also have to pay for the solicitor and registration of deeds if I recall.