My BRB Mortgage › Buying a home

Buying a home, step by step

A purchase is a chain of conditions. Each stage removes one uncertainty and creates the next, and until the last of them is removed the agreement remains provisional. Setting the sequence out plainly makes it obvious why delays cluster where they do.

Before looking: the borrowing envelope

The first useful step is not a viewing but an arithmetic exercise. A lender will lend against two limits: a share of the property's value, and a share of income once other debts are counted. The smaller of those two numbers, plus the cash available for a deposit and costs, is the envelope.

Costs beyond the deposit are routinely underestimated because they arrive in small pieces: lender fees, valuation, legal work, recording and transfer charges, inspections, insurance premiums paid in advance, and the sums placed in escrow at closing. They are not optional and they are paid in cash.

Pre-approval and what it is worth

A pre-approval is a lender's conditional statement about how much it would lend to a household on stated information. It is not a loan and it is not binding on either side, but it does two useful things: it forces the arithmetic to be done against real underwriting rules, and it tells a seller the offer is not speculative.

Its conditions matter more than its headline. A pre-approval assumes the stated income, the stated debts and a property that values and insures normally. Every one of those assumptions is tested later.

The offer and the agreement

An offer is a price plus a set of terms: the deposit accompanying it, the intended closing date, what fixtures are included, and the conditions on which the buyer may withdraw. In competitive conditions the terms often decide the outcome, because a seller is choosing between probabilities of completion as much as between numbers.

Once accepted, the agreement binds both parties subject to its conditions. The conditions are the whole substance of the protection: typically finance, inspection, title and, where the buyer must sell first, the sale of the existing home. A condition that has expired no longer protects anyone.

Underwriting and valuation

Underwriting is the lender verifying that the household is the one described and that the property is adequate security. Income and employment are documented, debts are pulled, and large or irregular deposits are queried.

The valuation is the other half. If the property values below the agreed price, the lender lends against the lower figure, and the difference becomes a cash gap that must be closed by renegotiation, by additional deposit, or not at all. This is the single most common point at which agreed sales fail.

Inspection and title

The inspection establishes the physical condition of the building; the title work establishes who owns it and on what terms. They are separate exercises with separate specialists, and both are covered in more detail on the surveys and searches page.

Findings from either can lead to renegotiation, to repairs before closing, to a price adjustment, or to withdrawal where a condition still permits it.

Closing

At closing, funds move, documents are signed and recorded, and the security interest is created. The buyer normally receives a statement itemising every charge; reading it against earlier estimates is worth the time it takes, because it is the first document that shows the whole cost in one place.

Possession usually follows immediately, but not always, and the gap between closing and possession is a matter of agreement rather than of custom.