HOUSE BUYING GUIDE
When an offer on
a property has been accepted, the sellers estate agent will need your solicitors
details. Your solicitor handles all legal aspects of purchasing a property, this
is known as conveyancing. You have to pay all solicitors costs so it is
quite in order to obtain quotes from a number of solicitors to decide which firm
you wish to use.
Finalising Mortgage Arrangements
Once your offer on the purchase has been accepted you need to finalise your mortgage
arrangements. The lender will usually want to see evidence of your earnings (recent
pay slips), P60 and bank statements. Most lenders will also carry out a valuation
on the property to determine whether the property is suitable as their security.
You can pay for a more detailed survey that may point out any defects with the
property. A homebuyers survey and valuation provides a report on the general
state of repair of the property. A full structural survey is more expensive as
the surveyor covers all accessible parts of the property. The lender will only
use a surveyor to obtain a valuation survey. It will not cover the purchaser in
the event of any structural or other faults. If you have any doubt as to the state
of the property it is incumbent on you to obtain a survey of your own, which you
have to pay for.
Once your solicitor has carried out all necessary searches and the contract terms
have been agreed, the contracts can be exchanged. Once each party has signed the
contracts and they have been exchanged, they are binding. The contracts will include
a completion date, which is the date that the property becomes yours. At exchange
of contracts any deposit required has to be paid. At exchange of contracts you
need to arrange buildings insurance so that the property is insured from that
day. Usually, if you have one, your present insurer will cover this new property
free of increased premium until the completion date.
This is the day when your solicitor will have completed the purchase on your behalf
and the property is vacant for possession. The Transfer Deed, the document confirming
you as the owner, will then be sent to the relevant registry for an update to
the title showing you as the new freeholder.
The property is now yours and you can move in. You may need to arrange for a firm
of professional movers to help you. Once you are in your new home you have a legal
responsibility to advise the local authority (rates), the statutory utility suppliers,
the Inland Revenue and you will need to tell others as necessary (telephone, other
suppliers, any outstanding creditors, relatives, friends etc).
What are the costs involved?
are exchanged a deposit is usually required and paid through your solicitor. This
is a percentage of the purchase price arranged with agent and vendor usually
between 5% and 10%.
Valuation / Surveys
To ensure that the property is an acceptable security for a loan, the mortgage
lenders surveyor will need to inspect and value the property. The cost,
if any, of this valuation depends upon which lender you choose.
Usually a solicitor or licensed conveyancer needs to be appointed to deal with
the legal aspects of purchasing a property. This will incur costs. You can ask
for an estimate of these costs before you instruct the legal expert.
Your legal adviser will carry out a local authority search to discover if there
are any plans for future developments that could affect the value and purchase
of your chosen property.
This verifies legal ownership of the property and registers the owner at that
This is a government tax based on the propertys purchase price and is calculated
Up to £60K Nil, £60K - £250K 1%, £250K -
£500K 3%, £500K+ 4%.
Most lenders charge an arrangement or application fee for a mortgage. Some lenders
will allow you to add this to the mortgage and the fee varies depending on the
lender chosen and the mortgage offer.
Mortgage Indemnity Guarantee - (Also known as Mortgage
Indemnity Premium or High Lending Fee).
This is an insurance policy designed to protect the lender against losses incurred
if the property needs to be taken into possession because of arrears. This insurance
is commonly used for high loan to value mortgages, where the value of the property
is not much more than the requested amount of the loan. This charge is usually
passed on to the borrower but it is important to remember that this is insurance
for the lender, not the borrower, but paid for by you.
Lenders insist that the property is adequately insured with a suitable buildings
insurance policy, covering against the usual risks. In addition to this you will
need contents insurance to cover theft, fire, damage etc.
Another form of insurance is a mortgage payment protection plan that is designed
to offer income protection against unemployment, sickness and redundancy.
Most lenders require Life Assurance to be taken out to cover the value of the
loan if you die.
One of the following is usually necessary.
is the cheapest and simplest form of life cover, providing life assurance for
a fixed term only. The sum assured is payable only if the life assured dies within
that period. There is no investment value to the policy at any time.
Level Term Assurance
the sum assured does not change during the term of the policy. Such policies are
generally used to repay a loan on the death of the borrower (the life assured).
Level Term Assurance is most suitable when the loan has a fixed capital value
that remains unchanged throughout its term. Policies can be written on a single
life or on a joint life basis.
Assurance policies are ones where the sum assured decreases over the term of the
policy in step with the reducing balance of the loan. This type of policy is commonly
used to protect a capital & interest repayment mortgage, where the outstanding
balance reduces each year.
People to notify once you have moved
Once you have
moved into your new home there are a number of people you need to notify of your
change of address. These include the following:
Bank / Building society
Credit Card Company
Cable / Satellite Company
Mobile Telephone Company
Council Tax Office
Clubs and Societies