Our First-Time Home Buyer Quiz: How Well Do You Know the UK Home Buying Process?

Our First-Time Home Buyer Quiz: How Well Do You Know the UK Home Buying Process?  

Thinking about buying a home? Navigating the housing market can be a little daunting, especially for first-time buyers. There are several things to consider, such as the ideal location, type of property, budgeting, securing a mortgage, understanding the legal aspects involved, and ensuring that your chosen property meets your current and future needs. Test your knowledge and get ready to navigate your house-buying journey with confidence with our fun and informative quiz; see how well you really understand the house-buying process and identify your strengths and gaps. (Answers are published below). 

 

Quiz Questions:

1. What is the first step in the home buying process? 

a) Finding a real estate agent 

b) Getting pre-approved for a home loan

c) Searching for homes online 

d) Arranging a viewing 
 

2. What is the minimum deposit typically required to buy a home in the UK? 

a) 5%   

b) 10%   

c) 15%   

d) 20%   
 

3. Which of the following insurance is necessary to have when getting a mortgage? 

a) Home Insurance  

b) Content Insurance

c) Building Insurance 

d) Income Protection Insurance 
 

4. True or False: You can secure a mortgage in principle before you start looking at properties. 

a) True 

b) False 
 

5. True or False: You must pay Stamp Duty Land Tax on all property purchases in the UK. 

a) True 

b) False 
 

6. How long is the typical mortgage term in the UK? 

a) 10-15 years   

b) 20-25 years   

c) 25-30 years   

d) 30-35 years   
 

7. True or False: A survey is mandatory when buying a home in the UK. 

a) True 

b) False 
 

8. What happens during the ‘exchange of contracts’ in the home buying process? 

a) The buyer secures a mortgage   

b) The final legal transfer of ownership   

c) Both parties legally commit to the sale and set a completion date   

d) The buyer pays Stamp Duty   
 

9. True or False: Your credit score has no impact on your ability to get a mortgage. 

a) True 

b) False 
 

10. What does the loan-to-value (LTV) Ratio measure? 

a) The interest rate on a mortgage 

b) The amount of money a borrower has in savings 

c) The ratio of a loan amount to the value of the property 

d) The total cost of owning a home 

 

Want to learn more? Explore our comprehensive Buyers Guide for valuable tips and insights to help you navigate buying your dream home!
 

Quiz Answers:

1. Answer: b) Getting pre-approved for a home loan!
One of the first questions your agent will ask is your price range. By getting pre-approved, you'll know exactly how much you can afford. That's a useful piece of information to have before going to open houses or browsing online!!
 

2. Answer: a) 5%
The minimum deposit required for most mortgages in the UK is 5% of the property’s value. This is often the case with government-backed schemes like the Mortgage Guarantee Scheme, which allows buyers to get on the property ladder with a smaller deposit. However, putting down a larger deposit (such as 10% or more) can often secure better mortgage rates and make your application more attractive to lenders.
 

3.  Answer: c) Building Insurance.
Although it’s not a legal requirement, It's essential to get building insurance as many lenders require and will insist that you have building insurance in place at the point of exchanging contracts. This is crucial because, one you exchange contracts, you officially own the property and assume responsibility for the building's protection.
 

4. Answer: a) True!
A mortgage in principle (MIP) is an agreement from a lender stating how much they are willing to lend you based on an initial assessment of your financial situation. Obtaining a MIP before you start viewing properties can be beneficial because it gives you a clear idea of your budget and shows sellers that you are a serious buyer, which can make your offers more appealing.
 

5. Answer: b) False!
First-time buyers in England and Northern Ireland may be exempt from paying Stamp Duty Land Tax (SDLT) on properties valued up to £425,000 (as of the latest regulations) and a discounted rate on property purchases up to £625,000. However, the standard rates apply if the property is above £625,000. Different rules apply in Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax).
 

6. Answer: b) 20-25 years
The most common mortgage term in the UK is between 20 and 25 years. This length is standard as it balances manageable monthly payments with the interest paid over the life of the loan. However, terms can be shorter or longer depending on the buyer’s preferences and financial circumstances. Longer terms may reduce monthly payments but increase the total amount of interest paid.
 

7. Answer: b) False!
A survey is not mandatory when buying a home, but it is highly recommended. Surveys help identify potential issues with the property that might not be obvious during a viewing. While it’s an additional cost, a survey can save you money in the long run by uncovering serious problems before you commit to the purchase. Lenders typically conduct a basic valuation survey to ensure the property is worth the loan amount, but this is not as comprehensive as a buyer's survey.
 

8. Answer: c) Both parties legally commit to the sale and set a completion date.
The exchange of contracts is a critical point in the home buying process, where both the buyer and seller sign the contract and legally commit to the sale. At this stage, a deposit is paid, and a completion date is set. Once contracts are exchanged, the sale is legally binding, and if either party pulls out, they may face significant penalties.
 

9. Answer: False!
Your credit score plays a significant role in your ability to obtain a mortgage. Lenders use your credit score to assess your financial reliability and determine the risk of lending to you. A higher credit score generally improves your chances of securing a mortgage at a favourable interest rate, while a lower score may result in higher rates or difficulties in getting approved for a mortgage.
 

10. Answer: a) The ratio of a loan amount to the value of the property
The Loan-to-Value (LTV) Ratio is the percentage of the property value you’ve been loaned as a mortgage. In other words, it’s the percentage that you’re borrowing. It is calculated by subtracting your deposit as a percentage of the property purchase price from 100%. For example, if a home is valued at £200,000, and the borrower has a deposit of 50,000 and is seeking a loan of £150,000, the LTV ratio will be 75%
 

Buying a home for the first time is a big step, so remember to take your time, do your research and don't hesitate to seek expert advice along the way. Our friendly estate agents are dedicated to guiding you every step of the way.