Buying a house in the UK
Most people buy houses on mortgage in the UK. This means that they pay a certain percentage of the total value of the house as the initial payment (known as down payment) and then pay monthly installments to a bank/building society which loans them the full amount to pay for the house. This may seem slightly complicated so I will re-phrase this:
If a house costs 200,000 GBP, you will go to your bank and ask it to loan that amount to you. The bank might ask for 10 to 20% of the value of the house as down payment ( which is 20 to 40,000 GBP) and then ask you to pay 600 to 1,000 GBP for a certain period of time.
The bank will buy the house for you but you will be legal owner as long as you pay the monthly installments on time.
In order for the bank to lease this huge amount of money to you, they want to make sure that you will be able to pay you monthly installments on time. This is known as your credit rating.
These are the few things banks look for:
1. The person is well settled in the UK with a reasonable pay. All doctors have a reasonable pay however the longer they are in the UK for, the more likely they are to get a mortgage.
Any time above 3 to 4 years in the UK should be reasonable (some who have lived in the UK for a shorter duration may get a mortgage too - it is best to talk to your bank about this).
2. Whether they are registered to vote. The bank uses this information to confirm your name, address and where you’ve lived before.
http://www.experian.co.uk/blogs/consumer-advice/register-to-vote/
3. Using your credit card regularly and paying your credit card bills on time.
4. Getting a phone on contract - This shows that you can manage installments (even though these installments are significantly less than what your monthly installments for a mortgage is).
This is not necessary though.
5. Whether you have been rejected for any sort of credit check before. Which is why it is important not to check your credit ratings yourself- There are loads of websites which allow you to do this by entering your personal information (Plus this may not be safe). Let the banker explain everything to you and guide you on what to do.
Here are a few more tips:
https://moneyfacts.co.uk/guides/debt/9-steps-to-score-on-your-credit-rating/
Here are some frequently asked questions:
What is the best time to buy a house?
I would suggest that you should consider buying a house when you know that you will be settled in a particular area for a long duration - for example, if you are working in medicine the best time would be when you are working in a specialty training post (ie from ST3 to ST7) as you will be working in the same area (ie deanery) and rotating in different hospitals within an hours drive radius during these 5 years.
What are the other advantages of getting a house so late?
By then you would have a reasonable credit rating and will also understand how a lot of things work in the UK.
You will be more mature and understand what the different terms means. You will sign a contract when you have actually gone through it and know what to look for.
By that time you may be settled with a family and will know what sort of house to look for.
Plus as mentioned before you will be working in that region therefore you will be able to live in that house and enjoy it rather than renting it out and living somewhere near your work place.
You will also be able to use Google to its maximum potential and will be able to get most of the information by searching yourself on reliable websites and forums.
What should I do before that?
Make a good credit rating by following the things I have mentioned above and save for your down payment. You should aim to save 30,000 GBP. Make a separate sub account along with your main account and add a certain amount to it every month. That is your account which you should never use.
PS: This does not mean you add all of your income to it and then live like a pauper. Enjoy life as well.
Decide where you want to do your specialty training and start getting an idea of what the best town would be and what you need to look for - This will help you when you have been accepted in a particular deanery and you will know what to do. These "practice" sessions will help you.
So what should I do when the time comes?
Once you know you are going to work in a particular area, look for nice places to live. The internet is full of guidelines on the safety of every area in every town in the UK and which places are the best to live in.
As a rule, the more South you go in the UK, the more expensive the houses get. However there are some expensive areas even in the North.
Choose an area on the basis of:
1. Proximity to schools if you have a family - Such houses have very high value as they are in high demand. It is important see which state schools are good in that city/town and aim to get a house near these.
2. Proximity to the city center if your spouse does not drive
3. Safety
4. Cleanliness
Avoid areas in valleys next to river banks where there is a high chance of flooding.
This link might help:
https://friendsoftheearth.uk/climate-change/flood-map-england-and-wales-areas-risk-flooding
What are the other additional costs?
There is a long list here:
https://www.moneysavingexpert.com/mortgages/house-buying-guide
So overall how much would I need?
10 to 20 % of the total value of the house. The longer you have stayed in the UK, the lower the deposit will be.
Plus 5,000 GBP as extra fees as mentioned in the website above.
10 to 20% is a significant amount especially when you are thinking about a house valued at around 200,000 GBP.
Yes it is, but this is the figure most banks quote. They may say that it is hard to give you an exact down payment percentage but you can talk to your bank and ask what they have to offer. Remember that you can also get a mortgage from another bank too.
This might help:
https://www.hsbc.co.uk/1/2/mortgages/first-time-buyers
Will this mortgage have an interest?
Most mortgages have a certain amount of interest.
Some banks offer interest free mortgage:
https://www.alrayanbank.co.uk/home-finance/home-purchase-plan/
If I am on a tier 2 work visa, will I be able to rent out this house?
This may cause issues as legally on a TIER 2 work visa, you are only allowed to have one source of income (ie from your trust) as mentioned here:
https://www.gov.uk/tier-2-general/second-job
It is advisable to buy a house on a mortgage and live in it. If you want to rent it out, then only do so once you are a British Citizen (otherwise you may have problems getting your ILR).
What are the PROS and CONS?
This seems very complicated.
If a house costs 200,000 GBP, you will go to your bank and ask it to loan that amount to you. The bank might ask for 10 to 20% of the value of the house as down payment ( which is 20 to 40,000 GBP) and then ask you to pay 600 to 1,000 GBP for a certain period of time.
The bank will buy the house for you but you will be legal owner as long as you pay the monthly installments on time.
In order for the bank to lease this huge amount of money to you, they want to make sure that you will be able to pay you monthly installments on time. This is known as your credit rating.
These are the few things banks look for:
1. The person is well settled in the UK with a reasonable pay. All doctors have a reasonable pay however the longer they are in the UK for, the more likely they are to get a mortgage.
Any time above 3 to 4 years in the UK should be reasonable (some who have lived in the UK for a shorter duration may get a mortgage too - it is best to talk to your bank about this).
2. Whether they are registered to vote. The bank uses this information to confirm your name, address and where you’ve lived before.
http://www.experian.co.uk/blogs/consumer-advice/register-to-vote/
It is a very easy process:
https://www.gov.uk/register-to-vote
https://www.gov.uk/register-to-vote
3. Using your credit card regularly and paying your credit card bills on time.
4. Getting a phone on contract - This shows that you can manage installments (even though these installments are significantly less than what your monthly installments for a mortgage is).
This is not necessary though.
5. Whether you have been rejected for any sort of credit check before. Which is why it is important not to check your credit ratings yourself- There are loads of websites which allow you to do this by entering your personal information (Plus this may not be safe). Let the banker explain everything to you and guide you on what to do.
Here are a few more tips:
https://moneyfacts.co.uk/guides/debt/9-steps-to-score-on-your-credit-rating/
Here are some frequently asked questions:
What is the best time to buy a house?
I would suggest that you should consider buying a house when you know that you will be settled in a particular area for a long duration - for example, if you are working in medicine the best time would be when you are working in a specialty training post (ie from ST3 to ST7) as you will be working in the same area (ie deanery) and rotating in different hospitals within an hours drive radius during these 5 years.
What are the other advantages of getting a house so late?
By then you would have a reasonable credit rating and will also understand how a lot of things work in the UK.
You will be more mature and understand what the different terms means. You will sign a contract when you have actually gone through it and know what to look for.
By that time you may be settled with a family and will know what sort of house to look for.
Plus as mentioned before you will be working in that region therefore you will be able to live in that house and enjoy it rather than renting it out and living somewhere near your work place.
You will also be able to use Google to its maximum potential and will be able to get most of the information by searching yourself on reliable websites and forums.
What should I do before that?
Make a good credit rating by following the things I have mentioned above and save for your down payment. You should aim to save 30,000 GBP. Make a separate sub account along with your main account and add a certain amount to it every month. That is your account which you should never use.
PS: This does not mean you add all of your income to it and then live like a pauper. Enjoy life as well.
Decide where you want to do your specialty training and start getting an idea of what the best town would be and what you need to look for - This will help you when you have been accepted in a particular deanery and you will know what to do. These "practice" sessions will help you.
So what should I do when the time comes?
Once you know you are going to work in a particular area, look for nice places to live. The internet is full of guidelines on the safety of every area in every town in the UK and which places are the best to live in.
As a rule, the more South you go in the UK, the more expensive the houses get. However there are some expensive areas even in the North.
Choose an area on the basis of:
1. Proximity to schools if you have a family - Such houses have very high value as they are in high demand. It is important see which state schools are good in that city/town and aim to get a house near these.
2. Proximity to the city center if your spouse does not drive
3. Safety
4. Cleanliness
Avoid areas in valleys next to river banks where there is a high chance of flooding.
This link might help:
https://friendsoftheearth.uk/climate-change/flood-map-england-and-wales-areas-risk-flooding
What are the other additional costs?
There is a long list here:
https://www.moneysavingexpert.com/mortgages/house-buying-guide
So overall how much would I need?
10 to 20 % of the total value of the house. The longer you have stayed in the UK, the lower the deposit will be.
Plus 5,000 GBP as extra fees as mentioned in the website above.
10 to 20% is a significant amount especially when you are thinking about a house valued at around 200,000 GBP.
Yes it is, but this is the figure most banks quote. They may say that it is hard to give you an exact down payment percentage but you can talk to your bank and ask what they have to offer. Remember that you can also get a mortgage from another bank too.
This might help:
https://www.hsbc.co.uk/1/2/mortgages/first-time-buyers
Will this mortgage have an interest?
Most mortgages have a certain amount of interest.
Some banks offer interest free mortgage:
https://www.alrayanbank.co.uk/home-finance/home-purchase-plan/
If I am on a tier 2 work visa, will I be able to rent out this house?
This may cause issues as legally on a TIER 2 work visa, you are only allowed to have one source of income (ie from your trust) as mentioned here:
https://www.gov.uk/tier-2-general/second-job
It is advisable to buy a house on a mortgage and live in it. If you want to rent it out, then only do so once you are a British Citizen (otherwise you may have problems getting your ILR).
What are the PROS and CONS?
Like everything this has its pros and cons
PROS
1. Owning a house will give a sense of security
2. Not very expensive in the long run - depending on the net worth a typical mortgage costs between 500 to 1000 GBP per month.
3. You can always sell the house and remaining amount to the bank if in case you have to go back to your home country permanently.
4. It can be a constant source of income if you rent it out once you get your ILR (Avoid doing this on your TIER 2 work visa)
5. You can spend the same money you would spend on renting an accommodation on its mortgage and have ownership of the place as well. In the long run you save money - e.g. if your monthly rent costs 800 GBP, In 10 years you would have spent 96,000 on rent which goes to waste.
6. Bank mortgages have been very popular among people living here so most banks offer competitive rates and hassle free services.
PROS
1. Owning a house will give a sense of security
2. Not very expensive in the long run - depending on the net worth a typical mortgage costs between 500 to 1000 GBP per month.
3. You can always sell the house and remaining amount to the bank if in case you have to go back to your home country permanently.
4. It can be a constant source of income if you rent it out once you get your ILR (Avoid doing this on your TIER 2 work visa)
5. You can spend the same money you would spend on renting an accommodation on its mortgage and have ownership of the place as well. In the long run you save money - e.g. if your monthly rent costs 800 GBP, In 10 years you would have spent 96,000 on rent which goes to waste.
6. Bank mortgages have been very popular among people living here so most banks offer competitive rates and hassle free services.
CONS with solutions
1. It's a tedious process - hiring a lawyer, talking to bankers and ensuring there are no fine prints which we are missing can be difficult.
Usually lawyers play a role in this and help us understand these legalities to get us the best deal. Everyone does this and there are well reputed companies which help with this.For example first time buyers do not have to pay stamp duty:
https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note
2. If you don't live in it it and rent it out then it can be a hassle to ensure tenants are good and they don't ruin the accommodation.
For this the UK government has strict rules and estate agents can help in this case with a small fees.
https://www.gov.uk/renting-out-a-property
1. It's a tedious process - hiring a lawyer, talking to bankers and ensuring there are no fine prints which we are missing can be difficult.
Usually lawyers play a role in this and help us understand these legalities to get us the best deal. Everyone does this and there are well reputed companies which help with this.For example first time buyers do not have to pay stamp duty:
https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note
2. If you don't live in it it and rent it out then it can be a hassle to ensure tenants are good and they don't ruin the accommodation.
For this the UK government has strict rules and estate agents can help in this case with a small fees.
https://www.gov.uk/renting-out-a-property
3. You may not be able to live in it if you are working in a trust which is far away.
As mentioned above you can always rent this house out (provided you have an ILR) and rent an accommodation temporarily in the city of work.
4. Your house may lose value in time (unlikely but it can happen - if the area becomes rough or there is a new runway/noisy factory constructed near by). The government does have strict rules against this though but it does happen- Like in this news item:
https://www.thesun.co.uk/news/2043601/heathrow-third-runway-expansion-latest/
5. Saving up that initial amount for deposit can be hard.
Doing regular locums can help - I know a SHO who managed to save 20,000 GBP in one year by doing extra shifts. Please read these posts:
http://omarsguidelines.blogspot.co.uk/2016/07/a-success-story-everyone-can-relate-to.html
http://omarsguidelines.blogspot.co.uk/2017/06/expenses-in-uk.htmlAs mentioned above you can always rent this house out (provided you have an ILR) and rent an accommodation temporarily in the city of work.
4. Your house may lose value in time (unlikely but it can happen - if the area becomes rough or there is a new runway/noisy factory constructed near by). The government does have strict rules against this though but it does happen- Like in this news item:
https://www.thesun.co.uk/news/2043601/heathrow-third-runway-expansion-latest/
5. Saving up that initial amount for deposit can be hard.
Doing regular locums can help - I know a SHO who managed to save 20,000 GBP in one year by doing extra shifts. Please read these posts:
http://omarsguidelines.blogspot.co.uk/2016/07/a-success-story-everyone-can-relate-to.html
What if I do not plan to live in the UK in the long term?
You should still consider this as a property in the UK will always be a source of steady income.
Can I get a house in 2 years of coming to the UK?
If you have the funds then you can talk to your bank. When I came to the UK, I was informed that I would never be able to get a car on a finance deal until I showed the dealerships finance team that I was stable (which people said could take up to 5 years). However I got a car on a personal contract plan in one year of coming here without any issues and got a good deal.
So it is important to talk to the relevant people rather than listening to hearsay. So talk to your bank. If you have the money, have done the appropriate research and know that you are going to live in it for the next few years then by all means go for it.
Can I get a house in 2 years of coming to the UK?
If you have the funds then you can talk to your bank. When I came to the UK, I was informed that I would never be able to get a car on a finance deal until I showed the dealerships finance team that I was stable (which people said could take up to 5 years). However I got a car on a personal contract plan in one year of coming here without any issues and got a good deal.
So it is important to talk to the relevant people rather than listening to hearsay. So talk to your bank. If you have the money, have done the appropriate research and know that you are going to live in it for the next few years then by all means go for it.
This seems very complicated.
No it is not. Provided you do all your research. There are loads of websites and forums to go through. You have plenty of time. Everything in the UK is online therefore you do not need to spend money on any agents at this point who will give the same information to you and then charge you for it.
People have advised me to live in this particular city. Why is that?
Every person has his/her own preferences. Here are common reasons:
1. My family lives in USA and travels to their home country on a regular basis and stops over in London therefore I have got a house near Heathrow ( South hall, Slough ) so that we can meet whenever they stop over in the UK.
2. My family lives in Birmingham therefore I have bought a house there.
3. I hate my family hence I want to stay as far away from them . Thats why I am living in Dunnet Head ( The nothern most point in the UK).
4. I love nature and do not mind the cold hence I am living in Scotland/Wales.
5. I love nightlife, want to live in a big city and don't mind expenses - London.
6. I am open to everything
https://www.independent.co.uk/life-style/best-city-to-live-work-in-uk-britain-edinburgh-london-a8257426.html
7. I have chosen Leeds because this is where I have got a training post.
8. I have chosen Hull because I was working here as a non trainee SHO, then as a core trainee and my child is well settled in the school here.
Whoever you talk to will have their own preferences. You will never know till you have lived in 2 or 3 more cities. Your preferences may not make sense to others and vice versa.
Here are a few useful websites which may help:
https://www.gov.uk/buy-sell-your-home
People have advised me to live in this particular city. Why is that?
Every person has his/her own preferences. Here are common reasons:
1. My family lives in USA and travels to their home country on a regular basis and stops over in London therefore I have got a house near Heathrow ( South hall, Slough ) so that we can meet whenever they stop over in the UK.
2. My family lives in Birmingham therefore I have bought a house there.
3. I hate my family hence I want to stay as far away from them . Thats why I am living in Dunnet Head ( The nothern most point in the UK).
4. I love nature and do not mind the cold hence I am living in Scotland/Wales.
5. I love nightlife, want to live in a big city and don't mind expenses - London.
6. I am open to everything
https://www.independent.co.uk/life-style/best-city-to-live-work-in-uk-britain-edinburgh-london-a8257426.html
7. I have chosen Leeds because this is where I have got a training post.
8. I have chosen Hull because I was working here as a non trainee SHO, then as a core trainee and my child is well settled in the school here.
Whoever you talk to will have their own preferences. You will never know till you have lived in 2 or 3 more cities. Your preferences may not make sense to others and vice versa.
Here are a few useful websites which may help:
https://www.gov.uk/buy-sell-your-home
https://www.google.co.uk
Some trusts also have a financial adviser for doctors - so you can also take advice from such people.
Do remember- everyone will give you suggestions. Listen to everyone, but come home, open your computer and do all the research yourself. Do not sign anything till you are personally sure that you are doing the right thing.
Some trusts also have a financial adviser for doctors - so you can also take advice from such people.
Do remember- everyone will give you suggestions. Listen to everyone, but come home, open your computer and do all the research yourself. Do not sign anything till you are personally sure that you are doing the right thing.
I have personally not bought a house yet - I have started saving and I am doing research on the stuff I have mentioned above. As International Medical Graduates who are in their first few months to years in the UK, we should all think about this.
I may have missed some points in this. Please comment on this post if you have any additional information or any tips.
I may have missed some points in this. Please comment on this post if you have any additional information or any tips.
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