As part of our Mortgage Basics series we take a look at what to do when you want to make an offer on a home – including advice on how to make the best offer possible and what happens next in the mortgage process.
Estate agents will need to verify your identification as part of their Money Laundering Regulations, so you will need to provide your identification to the estate agent selling the home you want to purchase – this will probably be in the form of a passport/photo driving licence and a utility bill, but be prepared and make sure you have relevant identification ready. You may also need to provide proof of funds for the home purchase (see below).
Mortgage Offer – a Decision in Principal (DIP)
Before you put in an offer on a home you need to consider getting a Decision in Principle (DIP) in place. Estate agents may not accept an offer without confirmation that the prospective buyer has the finances in place to buy, so a DIP is a great idea and provides this confirmation.
In order to get a DIP you will need to speak to a mortgage lender who will carry out an initial assessment and ask you questions about your income and outgoings including household bills, credit commitments and dependent children. If you meet all the requirements then (hopefully) you will be issued with a DIP. This is an initial offer from a mortgage provider confirming how much they could lend (subject to a full assessment). For more information on getting a DIP, click here.
Keep an eye on the market
Before you put in an offer on your chosen property it’s a good idea to make sure that you have done your homework and have some knowledge of the property market. For example it’s good to know what similar properties in the area are selling for and how quickly properties are selling (or how slowly).
You can use websites such as Rightmove.co.uk to monitor houses for sale in your area as well as to check the prices of ‘sold for’ properties to see whether properties are selling for prices close to the asking price. This will help you decide what kind of offer to make when you find a property you are interested in.
Make your position desirable
If possible, highlight the benefits of your buying position. First-time buyers and buyers who are not in a chain are attractive to sellers as housing chains can add time and complications onto the home buying process (if there are lots of house purchases and sales in one chain, there is an increased chance of questions or issues arising during the process).
Similarly, if you can show that you can act quickly then you are also a favourable buyer as many sellers and estate agents are looking for a quick sale. If you have all your finances in place with a DIP and deposit all ready to go, you will be more attractive to the seller than another buyer who has no finances in place.
Sellers and estate agents are usually looking for a quick turnaround and some properties can receive offers very quickly. If you like a property then do your research, view quickly and book in a second viewing promptly. Being proactive is one way to show the seller that you’re a serious contender.
Negotiate on price
Negotiating the price of a house can seem daunting, especially if it’s your dream home and you really want to secure it as your own. However, you need to keep in mind that the seller is also probably very keen to sell. If circumstances are in your favour (e.g. the house has been on the market for a long time or you are not in a chain and you have all finances in place) then it is possible that the seller will accept a bid lower than the asking price. If you offer a lower amount and the seller refuses, you can up the amount to meet an agreed price.
Offer accepted – what happens next?
Once your offer has been accepted by the seller you should contact the mortgage lender who offered you a DIP and speak to a mortgage advisor to apply for a mortgage. You will need to provide evidence of the income and outgoings you declared in your initial assessment – read more about the mortgage assessment and application process here. You will also need to have an appointed solicitor to deal with the house purchase and all the paperwork involved.
Once all the relevant checks have been made you will be moving towards exchange of contracts – read more about the final process here.
If you would like to apply for a mortgage, contact our friendly team on 0800 378 669 or contact us online here.
You can also request a copy of our Mortgage Guide, which is packed with useful information on the full mortgage process – here.
Read all the other article in our ‘Mortgage Basics’ series:
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.