Mortgages: Read More

Finding a Property

Even for the most experienced homeowners, buying a house is a huge undertaking. There’s a lot to organise when you buy a house. You need to find the right property, apply for a mortgage, make an offer, instruct a solicitor, get a valuation, exchange contracts and more. A lot of the different stages are carried out by either your mortgage broker, solicitor or lender – but it’s the biggest purchase you’ll probably make, so it’s important you understand what’s going on. The following outlines some common aspects:

Once you’ve decided on potential areas and chosen your property type, contact as many local estate agents and register as a potential buyer. You can ask them to send you regular details of suitable properties on their books. It’s also worth calling your estate agent weekly to ensure you get an early look at properties that have only just been placed on the market.
It’s also useful to carry out at some independent online research if you’re looking in a competitive area. Looking at several properties can be useful but may equally add additional anxiety – so try to be clear on what you are looking for and think about the good/bad points.

Some pointers to consider:

What’s the area like?
 
The property you choose is important but so is the neighbourhood – what’s nearby, local shops/amenities, schools, public transport.
 
Which Council Tax band is the area in?
 
You pay Council Tax whether you own or rent a property. How much you’ll have to pay will give you a good idea of the long-term costs. You can find out how much Council Tax you’ll pay by checking your band then visiting the website of your local council.
 
When can you move into the property?
 

Maybe you’re moving for a new job, or your tenancy is coming to the end. Whatever the case, you should ask your estate agent about move in dates early on; you don’t want to lose out because of an unforeseen timing conflict.  

How long has the property been on the market?
 
If a property is new to the market, it will attract more attention from potential buyers, which means you’ll face greater competition. On the other hand, if a property has been on the market for a long time, you should find out the reasons why – there may be an issue you’re unaware of.
 
How old is the property?
 
This information can easily be found via The Land Registry or save time and ask your estate agent.
 
Is the house north or south-facing?
 

This might seem trivial, but it can have a huge impact on its temperature throughout the year.  

Finding a Solicitor

You need to hire a reliable solicitor or conveyancer when you start looking for properties. They carry out certain, necessary tasks when buying a home.
 
Your solicitor or conveyancer will:
 
  • Obtain the deeds which prove the property legally belongs to the person you’re buying it from
  • Research where the property’s legal boundaries lie
  • Prepare an inventory that makes it clear which fixtures and fittings are included in the purchase price. This form will also ask the vendor whether they’re aware of any material, structural or other defects to the property that you should know about
  • Advise you on a draft contract for sale that’s prepared by the seller’s solicitor and sets out the terms of your purchase
  • Carry out a search of local planning information to uncover details of any upcoming developments, like a new road, which could affect the property’s value – often known as local authority searches
  • Obtain an environmental search which will show locations where chemicals are stored or heavy industrial commerce is based
  • Agree a date for completion which suits both you and the property’s seller
  • Manage the exchange of contracts and subsequent completion stages of the purchase
 

Your choice of solicitor isn’t normally an issue for most lenders, but it’s beneficial to check whether your solicitor is registered and recognised by one of the following agencies before you hire them.  Lenders almost always require legal firms to have at least 2 partners, as one partner must act on your behalf and the other partner must act for the lender.

Making an Offer
 
Once you’ve chosen your property, you make an offer to the seller through their estate agent. Most sellers allow a certain amount of leeway, so it’s typical to initially offer below the asking price. Your first offer might be up to 10% less. It’s then up to the seller to either accept that price or try to negotiate a higher one. If there are several potential buyers interested in the property, the seller may have enough bargaining power to insist that you meet their full asking price.
 

Assuming everything goes smoothly – the seller will accept your offer. It’s better if you already have a DIP (Decision in Principle) from a mortgage lender as this shows the seller you’re prepared and demonstrates that you can afford the property. The estate agent will confirm the seller’s acceptance in writing, called the Memorandum of Sale. The acceptance of your offer is not legally binding until you and the seller exchange contracts.

Conducting a survey
 
Before a mortgage application can be accepted, your lender will instruct a surveyor to carry out a valuation. A standard valuation for lending purposes is required by all lenders, but there are other types of survey. All valuations are carried out with the mortgage application, before an offer is made.
 

If a survey reveals serious problems, such as subsidence or rot, you’re free to withdraw your offer as you haven’t exchanged contracts yet. In situations where the problems can be fixed, you’re sometimes able to negotiate a lower price to compensate you for any expenses involved or the vendor can get them fixed prior to completion – preferably prior to the exchange of contracts.

How much money will you get back?
 
There’s no guarantee of how your investment will perform. It’s likely to depend on a number of things. For example – in the case of company shares, it depends on the company’s performance and the economic outlook.
 

With funds, the chance of losing your money or making a big profit depends on the mix of different investments in the fund.

 

A way to spread your risks is to choose a range of different ‘Asset classes’.

For example, choosing a fund that invests in a mix of:

 
  • Cash
  • Bonds
  • Shares
  • Bonds and property, or
  • Investing in several funds
 
What about fees/charges?
 

Fees and charges can reduce your investment earnings. When you invest directly, you usually have to pay dealing charges.

Fees vary by fund, product and provider and won’t always be easy to spot.
 

Look at the Ongoing Charges Figure (OCF). This aims to allow a direct comparison of costs.

There are 3 levels of survey:

 
A Standard Valuation
 
Once you’ve submitted your application, the lender will require a survey to assess the property’s condition and value. This survey is usually carried out after your application has passed the first stage of underwriting. A valuation for lending purposes isn’t a detailed report. It helps the lender ensure that the property is worth what you’ve asked for and that there aren’t any significant problems that would make the property unsellable, e.g. there’s no working kitchen or bathroom. A valuation for lending purposes is completed by way of an internal inspection or a “desktop” (computerised) valuation.
 
A Homebuyer Report
 
A homebuyer report comments on the condition of the parts of the property which are easily accessible or visible. It’s the same as a valuation for lender purposes, except that the valuer will prepare a report for you identifying the need for any future work on the property, e.g. rewiring, signs of damp, refitting facilities, etc. You can have a homebuyers’ report completed independently or pay the lender to carry one out at the same time as a valuation for lender purposes.
 
A Full Structural Survey
 
A full structural survey involves a more extensive investigation than a homebuyer report. It’s where a structural surveyor looks at the structural integrity of the property. This type of survey is more expensive but contains greater detail on any work the property may need. Structural surveys are always optional but they’re advised if you’re buying a 200+ year old property or if you’re planning on doing significant work on the property, e.g. an extension, renovation, new roof etc. For a full structural survey, you would hire an independent structural surveyor; the lender won’t arrange one for you.

 

Exchanging contracts

 

After your survey is complete and your lender has approved your mortgage application, your solicitor should have a draft contract ready for you and the seller to sign. Once you sign, the solicitors will arrange a time to exchange contracts. You can’t pull out after you exchange contracts, so you need to make sure you’re committed to the purchase, well in advance of this stage.
 

You have to put down a deposit at the point of exchange. There are sometimes alternative arrangements if you’re selling your house and buying another, and all the deposit is coming from the equity in the property you’re selling. In this case, the solicitors will come to an arrangement where there is some consequence should a party pull out after exchange.

 

You also need to make sure that the building is insured, as you’re now legally obliged to buy it. Your solicitor will likely guide you through this part.

Before committing to the sale, you must check that:
 
  • Your solicitor has completed all the local searches
  • The surveyor’s report is complete and accepted by all concerned
  • You’ve received a formal mortgage offer in writing which you have read and understood, plus any conditions attached to the offer
  • You have the agreed deposit available
  • You’ve agreed a firm completion date for the sale and this date is noted in the contract
  • There are no outstanding issues remaining to be settled between you and the seller
 

Your solicitor will deliver your signed contract to the seller’s solicitor and you’ll receive a copy of the version that the seller has signed. From this point onward, both you and the seller are legally committed to the deal.

Moving In
 
We recommend following these steps after you exchange contracts with the seller:
 
  • If necessary, book a removal firm to transport your belongings on the day of completion
  • Pay the money needed to buy the property on the agreed date, minus any deposit already paid at exchange – your solicitor will probably take care of this for you if you need a mortgage
  • Collect the keys to your new home from the estate agent once payment is confirmed
  • Contact the companies that supply your gas, electricity, water and broadband services to let them know you’re moving out. You should also read the meters in your old home so you don’t end up paying for services once the next occupant moves in
  • Ask the Post Office to temporarily redirect your mail
  • Notify your local council that you’re moving so you’re not liable for Council Tax payments at your old address and so they can update your records on the electoral register

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