Our Homebuyer Guide aims to give you an insight into each of the key steps when buying your home. Every home purchase situation is different, so our guide is designed to give you key information to help guide you through the process of purchasing your home with a Home Purchase Plan or Buy-to-Let Purchase Plan. More information about the key differences between Shariah-compliant and conventional property finance can be found here.

This step-by-step guide outlines the process in England and Wales where Gatehouse Bank operate.

This guide covers the following steps to buying your home:

Step 1: Get organised and plan ahead

We all start thinking of buying a home or property by looking at what is available on the market. Is it that dream property you saw at the end of the street or an apartment offering a good rental return? While these ideas are a great starting point, our online calculators (Home Finance or Buy-to-Let) can help you to get an idea of what you can afford and what your monthly payments may be.

At this stage you can get what is called a Decision in Principle (DIP). You can find out how much finance we could provide in around 10 minutes by completing an online DIP (subject to eligibility). We will provide you with a personalised indication without impacting your credit score. A DIP is not a formal offer of finance, so you will still need to make a full application to see if we can provide the finance you require. The DIP is valid for 30 days and can easily be refreshed if your house search goes on longer. Some estate agents may ask to see a Decision in Principle before they let you view any properties. You can get a Decision in Principle here: Homebuyers DIP or Buy-to-Let DIP.

It’s worth talking to us as early as possible, so we can discuss your finance needs, what you can afford and what the contractual monthly payments look like. You should start to think about a realistic budget and how much finance you may be eligible for. You also need to consider what deposit you have. The deposit is important as where it comes from can affect your offer of finance. Is it money you have saved yourself or is it a gift from family? When first discussing your requirements with us, it is a good idea to have a clear picture of where and how much deposit you have available to put towards your finance.

Step 2: Consider all costs when buying a property

Another important thing to consider are the other costs associated with buying a property. Some of the major costs are outlined below:

  • Stamp Duty: Stamp Duty Land Tax is a tax on buying a property. The UK Government website has a useful calculator to help you. Your solicitor will confirm the exact amount of Stamp Duty you will need to pay.
  • Conveyancing: the costs involved in hiring a solicitor to complete the legal work. Remember to check all legal costs thoroughly with your chosen solicitor, before you instruct them to do the work. It is important to use a solicitor that is experienced in Shariah Finance. Gatehouse Bank don’t recommend a particular firm, but we can provide a list of solicitors that we know are experienced in Home Finance conveyancing.
  • Conveyancing searches and other legal costs: you may need to pay for additional searches the solicitor has to carry out over and above the standard searches they typically quote for. The additional searches required depend on the property, but typical examples include environmental searches, water searches, mining reports and Title Indemnity Insurance. It would be a good idea to budget for these.
  • Bank property valuation: this is a valuation done by an independent valuer on the Bank’s behalf to check they are happy with the price being paid for the property. It is for finance purposes only, so is not an extensive property survey and may not identify any faults or problems with the property. The cost for the Valuation Fee will be detailed in your Key Fact Illustration document provided by the Bank.
  • Property Survey: you may want to get a more in-depth survey on the property to help you identify if any hidden problems exist. The Royal Institute of Chartered Surveyors (RICS) offer three different types of reports. If you wish to have a more detailed survey, you will need to organise this independently of the Bank. More information can be found here.
  • Finance Fees: any fees payable (including any Broker fees) associated with the finance product will be illustrated within your Key Fact Illustration document. Any additional charges or fees we may charge are set out in our Tariff of Charges here.
  • If your property is leasehold, rather than freehold, Ground Rent will be payable and Service Charges may also apply.
    • Ground Rent is a separate charge which you'll pay to the landowner (usually annually) to cover the cost of the land your home is built on.
    • Service Charges: the lease will set out the way the service charge is organised, typically this covers things like the maintenance and upkeep of the property, in particular the communal areas.
    • Normally, the selling agent will be able to confirm the Ground Rent and Service Charges that apply and your solicitor would also advise you of this.
  • Moving Costs: whether moving into your first home or moving to another property, you need to budget for the cost of moving your possessions and possibly costs associated with relocating to another part of the country.
  • Letting agent fees: if you are purchasing a Buy-to-Let property, you may decide to instruct an agent to find a tenant and/or manage the property on your behalf. Any fees associated with finding a tenant or managing the property would be confirmed by the agent.

Step 3: Find a property and make an offer!

Once you have found a property and have a Decision in Principle, you can put an offer in, usually through an estate agent. It is important to know the Energy Performance Certificate (EPC) rating of the property as you may qualify for one of our ‘Green’ products, which offer customers the opportunity to access reduced monthly payments and offset the carbon emissions of their home.

Your Finance Adviser or Broker will request all supporting documents that you are required to submit with your application. It is important to start collating these so you have them ready to send over to us. When you apply for finance with us, we will ask to see documents to support your application such as Bank Statements, Payslips (Employed), SA302 (Self-employed) and evidence of your deposit.

Step 4: Apply for the Finance and instruct a Solicitor

Once you have an offer accepted, you should provide all requested supporting documentation so that we can complete your finance application. Once your application is submitted, our underwriters will assess it along with the supporting documentation. If they feel that additional information is required, they will request this via your Finance Adviser.

You will then pay your Valuation Fee. A surveyor will visit the property to complete a valuation on behalf of the Bank.

You should now be instructing your solicitor to start the legal work to enable you to buy the property. Remember to check all legal costs thoroughly, before you instruct them to do the work. At Gatehouse Bank, your solicitor will work alongside the Bank’s solicitor to progress your case - this is known as dual representation. Unlike conventional property finance, Gatehouse Bank pays for its own legal representation.

Step 5: Valuation and Finance Offer

Once the valuation is returned to the Bank, this will be assessed to check that the property is suitable security for the Bank. If the property has been down valued (where a surveyor assesses a property and says it's worth less than the purchase price agreed), you may wish to discuss with the selling agents to see if you can re-negotiate the price. You may also need to seek advice from your solicitor and Finance Adviser/Broker to see if it has any impact on your application.

Once everything has been satisfactorily assessed, a finance Offer will be issued. It is important that you read this carefully and understand it. If you are satisfied with the Offer, you will sign a copy electronically.

Even at this stage, if you decide not to buy you can pull out and cancel your Finance application before you have exchanged contracts, but you are likely to lose some of your money depending on how far you are in the process. For example, our Valuation Fee and Application Fee are non-refundable.

Step 6: Legals

Your solicitor will draft the contracts and instruct any necessary searches that haven’t already been obtained. It is good practise to advise your solicitor of an intended completion date to work towards and to keep in regular contact with them. They will liaise with the Bank’s solicitor regularly to ensure that both parties’ requirements are satisfied.

Step 7: Exchange Contracts

Once your solicitor has satisfied all outstanding requirements, you should receive the contract to sign. Before signing the contract, go through it carefully with your solicitor to check that all the details are correct. You should also ensure you are happy with what the sellers have agreed to leave in the property and that all your queries have been answered.

Once you have signed the contract and returned this to your solicitor, you and the seller are committed to the purchase/sale and you will pay your deposit to your solicitor.

You will also need Buildings Insurance in place that starts from when you exchange contracts to cover the structure of the property as you are now legally committed to buying it.

It is important that you take out the correct type of Buildings Insurance. If you are buying the property to live in but the property is going to be unoccupied for long periods of time, you may need to consider specialist buildings insurance. If you are buying the property to rent it out, you would need Landlords Buildings Insurance.

Step 8: Completion

This is when the remaining funds are transferred from your solicitor to the seller’s solicitor. It is when you take possession of the property and can arrange to collect the keys and move into your new property.

Step 9: Your first payment to Gatehouse Bank

Once legal completion has taken place, we will write to you to confirm when your first payment is due to be made and how much this will be. The first payment will be higher than the regular monthly payment, as it will include rent charged from the date we released the funds, up to the end of the month you complete, plus your regular monthly payment for the following month.

Next steps

We have a team of experienced and qualified advisers on hand to help you every step of the way. To find out more information or get a Decision in Principle, for Home Purchase click here, and for Buy-to-Let click here. To help our customers we also have a handy one-page Homebuyer Checklist which provides a summary of the key stages at a glance.

YOUR HOME MAY BE AT RISK IF YOU DO NOT KEEP UP THE PAYMENTS ON YOUR HOME PURCHASE PLAN.

YOUR RENTAL PROPERTY MAY BE AT RISK IF YOU DO NOT KEEP UP THE PAYMENTS ON YOUR BUY-TO-LET PURCHASE PLAN. Buy-to-Let products fall outside the scope of regulation by the Financial Conduct Authority.