You have decided to buy a home - but what next? The maze of legal work, negotiations, dealing with surveyors and solicitors, finding a good mortgage deal and worrying about your deal falling through, is enough to make anyone's hair stand on end. Then you've got to actually find the home of your dreams.
Buying a house is one of the biggest financial decisions you will make in your life. It is a lengthy and complicated business, which while exciting is often fraught with stress and worry. But luckily there is a lot of good advice around helping you to make your home-buying experience as easy and problem-free as possible.
After finding a home you like, which can take anything from a few days to many months, the process from having your offer accepted to completion of the sale takes about 12 weeks.
It is important to have a good understanding of the process as it will help you avoid some of the most common hazards of home-buying. We have prepared an introduction to the home-buying process to help you understand how it all works, how to plan it and what to watch out for. After reading this you should have a better idea of what to expect and how to set out to buy a home feeling prepared and ready to go!
Step 1 - find out how much you are able to borrow We always recommend you understand how much you can borrow before you start looking for a property. This will help you set a realistic budget. Factors that will affect how much you can borrow, will be your employment, your income, the amount you have available for a deposit, and your monthly expenses.
At Stirling Mortgages we offer mortgages from a list of over 8,500 different mortgages. An initial discussion with one of our consultants will provide you with an idea of how much money you can borrow and the likely monthly repayments. Should you wish to take your enquiry further we will complete a client financial review. This review will enable us to provide you with our full advice and recommendation to you on a particular mortgage which best suits your needs. This review will include taking details of your employment, income, deposit available and income/expenditure details.
If you are in the HM Forces may qualify for a payment of 8500 L.S.A.P, to help with the deposit on your new home. This is a long service advance of pay and your pay office will be able to provide you full details of the scheme and if you qualify for the payment.
Once you are happy with our recommendation we can then arrange for an agreement in principle from the lender. This provides you with a certificate stating that subject to the information you have provided being correct and the survey of the property being acceptable the lender will provide you with a mortgage.
Step 2 - You are now ready to start your house hunting. Now that you know your budget you are in a good position to start hunting for the best home for you. Think about what you are looking for in a home and prioritise the most important elements for you:
- The location. Do you need to be close to school, work, family, friends, or public transport.
- Number of bedrooms and bathrooms
- Size of key rooms e.g. kitchen, sitting room
- Do you want a garden? Or are you happy with no outside space.
When you have made a list of all the most important aspects for you, you are ready to go and see the estate agents. They should be able to give you a good idea of whether you will be able to get what you are looking for with the budget you have available. If you know the most important things for you, then the estate agent should be able to advise you on a good compromise.
When the agent knows what you are looking for they should be able to give you a list of properties and arrange viewings. You'll probably want to see a few properties and then create a shortlist.
We recommend you see a number of agents as they will all have different properties on their books and you'll get a better idea of prices in the area.
When you have seen a number of properties and have your shortlist, it is worth going into more detail, before making your offer.
Check that the house is worth the asking price. Do this by getting details of as many similar properties in the same area that are either on sale (what are their asking prices?) or have been sold recently (what price did they sell for?). How do they compare with yours? This will be particularly easy to check if you are buying a property on an estate where there are lots of similar houses.
When making comparisons between houses, bear in mind that its value can be increased by factors such as extensions, loft conversions, fitted kitchens, being in a good location, or being a brand new house. Similarly, the value can decrease, for example, due to extensions that fill the whole garden or being in a bad location.
Step 3 - Making an offer Before making an offer, there are a few things you should check:
- Check whether the property is freehold or leasehold.
- Agree what fixtures and fittings will be included. Draw up a list of all items with the seller as this will avoid later confusion.
- You can also check things like planning permission, whether there are plans for new developments nearby (roads, new houses etc), and covenants, though these should be looked at by your solicitor later on during conveyancing.
Decide whether you want to offer the asking price or if you think the property is worth less, then reduce your offer accordingly. Some negotiation might be needed to get to a price that both you and the seller are happy with. Always remember that it is in the estate agents interest to get the best price for the seller, not the buyer!
Once your offer has been accepted we will then complete the rest of your mortgage application with you. At this stage you will normally be asked to pay a survey fee to the lender. The fee will depend on which type of survey you require and we will explain the options to you.
We will also recommend a firm of solicitors to act on your behalf with regard to purchasing the property. The solicitors carry out a full conveyance of the property and complete all necessary searches on your behalf.
A mortgage offer is issued to you by the lender with a copy coming to our office. We will then contact you to make sure you are happy with the offer and its conditions. With the offer accepted and the solicitor happy with all legal matters he will then arrange to exchange contracts.
You hand over a deposit which is non-refundable if you pull out of the sale. This is normally 10% per cent of the purchase price, but it is usually negotiable. If you do not have the money for the deposit at hand immediately, you can arrange for a bridging loan from your bank. Once you and your solicitor are satisfied that everything is in order, the contracts can be exchanged. You sign a copy of the contract which is passed to the seller, and the seller signs a copy of the same contract which you receive. Once contracts have been exchanged (normally by the two solicitors) both parties are legally bound to follow through with the transaction. You can no longer change your mind - if you pull out it is likely that you will lose your deposit, and you could be sued for breach of contract.
Your solicitor draws up a transfer document and sends it to the seller's solicitor
Once contracts have been exchanged your solicitor prepares the draft transfer document (if the land is not registered it will require a special kind of transfer or 'conveyance'). This documents transfers the title of the property from the seller to the buyer. Once both parties have agreed on the draft, it is signed by the buyer and the seller. Your solicitor arranges finalisation and signing of your mortgage documents. Your solicitor will also deal with the finalisation and signing of documentation relating to your mortgage, and will arrange for the money to be available on completion of the sale.
Your solicitor carries out final searches and enquiries Land Registry checks are carried out by your solicitor, to make sure that nothing is registered against the seller (or at the Land Charges Registry if the property is not registered). Problems such as undisclosed mortgages or disputes could be uncovered at this stage.
There will be various matters for you to deal with in the run-up to completion. There will be some documents to be signed and payments to be made: you must pay Land Registry fees and stamp duty. Before completion you need to make sure that all the terms of the contract have been fulfilled, such as any repairs.
You also need to be arranging all the practical matters related to moving house.
You move in!
At last! On the day of completion you receive the keys and the seller is obliged to move out.
On the day of completion you also have to pay the balance of the price on the house (the agreed price minus the deposit which you have already paid), usually through your solicitor or conveyancer.
You will receive the transfer document and the title deeds. The seller's deeds are now handed over to you, and arrangements are made for any outstanding mortgages on the property to be paid off.
After completion After completion the solicitor still has various details to tie up. Your solicitor will:
- where relevant, inform your mortgage lender, life insurance company, and the freeholder that the sale has been completed
- register the transfer of ownership at the Land Registry. They will then send the deeds to your mortgage lender who will keep them until you either sell the property or pay off your mortgage and pay the stamp duty
- send you a statement of completion, including a summary of the financial transactions. If you have not already paid their fees, they will ask for these now.
Martyn Barberry Striling Mortgages
http://www.stirlingmortgages.com
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