Buying a home in the UK can be a lengthy and complex process, taking between 3-6 months, or longer, to complete and it is a good idea to seek independent legal and financial advice before you do so. There are significant costs on top of the purchase price of the property.
Mortgages and joint equity schemes
If you are affiliated with a college, you may be able to take advantage of joint-equity purchase schemes run by some, but not all, colleges. Your college bursar will be able to give you more information.
If you plan to buy a home with a commercial mortgage, you will want to know how much money you will be allowed to borrow. The UK Government's Money Advice Service has a useful online mortgage calculator that will give you an idea of what to expect. A common rule of thumb is that you will be allowed to borrow 3 times your gross annual salary (or 2.5 times combined salary for a joint application), but your monthly outgoing expenses will also be taken into account to check you could afford the repayments.
You will generally be required to pay a deposit with your mortgage lender of between 5-25% of the value of your home. Please note that non-EEA citizens who do not have Indefinite Right to Remain in the UK may be required by their mortgage lenders to make a larger deposit. The higher the deposit you are able to make, the lower your loan-to value ratio (LVR, expressed as a percentage) will be, and usually the lower the interest rate you will have to pay.
A credit check will be carried out as part of your mortgage application. You must have an established credit history in the UK of at least 3 months (non-EEA citizens are often required to have a 12 month UK credit history). This is best done by opening a bank account as soon as possible on your arrival and, if you are eligible, registering on the UK Electoral Roll. For more information, please see Voting and Benefits. You can learn more about how to establish a credit history in the UK by visiting the Money Advice Service's pages on how to get credit for the first time in the UK.
Mortgages can be arranged through your bank, however, they will only be able to offer you their own products. Independent mortgage brokers will be able to see all mortgage products offered on the market by banks, building societies and other financial institutions - please note they may charge for this advice. It is best to compare mortages either through a broker or using online comparison sites to ensure you are getting the best deal, taking into account the monthly repayment amount and any arrangement fee that may be payable up-front.
Home purchase fees
Other costs related to home purchase to consider in your budget:
- Solicitor's fees
- Solicitor's search fees
- Property valuation survey - not always required by mortgage lenders, but dependent on property size
- Property survey
- Stamp duty - a progressive tax levied on all property transactions over a certain value - please see the Money Advice Service's Stamp Duty calculator for specific guidance
If you are looking to purchase a home, please note that it is not standard practice in the UK for estate agents (realtors) to help buyers find homes to purchase across the whole of the market; they will only call you when and if their estate agency are representing a property that meets your requirements on their own estate listings.
Unlike in other countries, such as the US, where you must pay your estate agent a percentage of the value of the home you eventually buy, you will not need to pay a finder's fee in the UK. On the other hand, you will have to search through online listings and speak directly with estate agents in order to find your home. You will also need to negotiate the price and terms of the purchase yourself.
Please note that some properties never make it to online listings, as they are bought before they are ooficially advertised. It is recommended that you register your details with each estate agent so that they can alert you by email or phone to any of these opportunities.
Some estate agents cover property throughout Oxford, others specialise in a specific part of Oxford, neighbouring villages and towns or a particular price bracket. Reviewing the property pages in the Oxford Mail, OntheMarket.co.uk, Rightmove.co.uk or Zoopla.co.uk will help you familiarise yourself with the various agents.
Disclaimer: Please note that the University does not endorse any of the external websites listed above, or elsewhere in this guidance.