Purchasing a home can be a very daunting task, especially if it’s your first time trying to own one. With the current Covid-19 pandemic, this task is even more challenging. Having a rough sketch of how this process works will make this task less stressful. This post is a comprehensive guide on the several steps of buying a home and the possible timescales.
What period will it take you to buy a house?
The basic timeline for purchasing a house will always vary, this is depending on the purchaser and the seller’s circumstances, including the conveyancing issues and delays that may arise.
1. 6 weeks-8 months
- Finding a property: Do some research on the area, look out for estate agents and search on several websites.
- Submit an offer: Approach the seller and tell them what your budget is and if there are any conditions you want met.
2. 4-12 weeks
- If you offer is accepted: Get in touch with a surveyor to check on the property’s condition. Get a conveyancing quote and instruct the chosen
- Conveyancer or solicitor who will also check on any legal issues.
- Exchange: You will make a deposit and once you do so, you will not back out of it without a high cost.
3. Instantly-4 weeks
- Completion: You will need to pay the balance in exchange for the keys and deeds to the property. Legally, the property is now yours.
- Note that: Nobody has the legal authority to see the deal to completion until they exchange contracts.
Affordability of the property you want
It will be a waste of time getting excited about your dream property if you don’t even know if you can afford it. It will be best to avoid unnecessary disappointment by sitting down and assessing if:
- You have the necessary funds to buy the property
- You can borrow any additional cash that you will need,
- Mortgage Affordability Calculator
An AIP refers to a mini-application that involves the lender checking on your information and credit file to decide the amount of money they might be willing to loan you. These are not binding offers since the lender can change their minds. For instance:
- The lender might be unimpressed with the property that you are willing to buy.
- You may fail to present the requested necessary evidence. This evidence is such as payslips or p60.
An AIP is also be known as a ‘mortgage in principle’; thus, you need to be keen.
Finding your dream home
By now, you should be ready to go on a house hunt. This should help you find your dream home.
Make good offers
Consult with experts in the field of house buying, selling and renting to give you clues on the offers you can give when buying property. Do not spend amounts more than what your pockets can afford since you will also have to pay additional costs. Make sure you ask the seller to include a list of all the fixtures and fittings in the purchase. This will enable you to avoid being given the keys to an empty house.
This is just a small milestone in the process of owning your new property. But remember that at this point, remember that nobody has any contractual obligations.
Be keen on gazumping and gazanging
It is important to keep in mind that you and the seller have no legal obligations to see the purchase to completion until the exchange of contracts’ level is arrived at (Engalnd and Wales Only). Before you reach the level of exchanging contracts, you will always face the risk of gazumping and gazanging.
- Gazamping: This is when another buyer makes an offer that comes with more money and your seller decides to put a hold on the deal. Therefore, you could add a condition to your offer that asks them to take the property off the market. This will reduce the possibility of them welcoming another buyer.
- Gazanging: This is when the seller makes a choice to cancel; thus, staying put. This usually happens when the prices are skyrocketing and they can make a lot more money if they are patient for a few more months.
There is very little that a buyer can do to avoid these situations since they are interlinked to what the seller chooses to do and this could end up costing you lose of a lot of cash. This is especially if it happens prior you exchanging the contracts and possibly your solicitor has already done a great deal of work.
Therefore, the best thing to do to avoid this situation is to be as fast as possible in the process of accepting your offer and exchanging contracts. You can do this by getting your solicitor and the mortgage lender to fasten things.
Find Your desirable mortgage
An agreement in principle is usually valid for a period of between thirty to ninety days; this is depending on the lender. Therefore, if the search took long, then this period might have expired. The mortgage products on offer might vary daily. Therefore, it will prove worth it to do a snap check of the market to ascertain if there are other better deals out there.
Don’t be quick to go direct to the bank
There are so many lenders out there and only a few will have an ideal deal for you. Maybe your bank will be able to give you a good deal. Having a good credit score will grant you a lender that will want to offer you a deal. You can go an extra mile and get a personalized mortgage illustration that will have detailed mortgage features.
Choose a good conveyancing entity
Conveyancing is a process that involves transferring property from one owner to the other by following a legal procedure. Conveyancers who have a license are also specialist property lawyers. They handle all the legal paperwork, carry out the local council searches and also the land registry, develop a draft contract and take care the whole process of exchanging of cash.
Most people scouting for houses do this before making an offer even though it is not crucial. However, with the help of a good conveyancing solicitor, this process can be fast. You need to have a good solicitor who is confident with what they do, good at communicating and most importantly, reliable.
How to find a good solicitor
When you are trying to purchase a property, you must find the best solicitor to represent you. Appointing a conveyancing firm with a lot of experience will enable you to find a solicitor that will be beneficial to you. You can check out the best conveyancing firms by going through reviews, meeting with the solicitor will not be necessary. However, you can be able to arrange for face to face meetings.
These conveyancing solicitors carry out several duties such as:
- Understanding the requirements of the client and the timeframes.
- Preparing for the completion procedure.
- Represent the buyer in making inquiries to take care of issues that are pending.
- Checking for the house’s title and compiling a list of searches for the property.
- Understanding the terms of the mortgage and taking care of any special conditions
- Answering the client by providing important information and documents.
- Setting up dates for exchanging contracts and documents.
- Register ownership with the land registry.
- Handing over tax returns and transferring funds for the required stamp duty that is needed.
- Preparing a budget for the client to know the amount of money that the conveyancer will need to exchange and complete the deal.
Checking the property by the lender and if you are worth it
At the time when the agreement in principle is complete, the next procedure will be converting it to an entire application. The lender will make sure it is comfortable to:
- Lend to you: The lender will check whether the information you gave is accurate and they will ascertain by requesting for evidence like payslips and others.
- Lend on the property you intend to buy: The lender’s collateral for taking out a loan is the property. In case you don’t manage do update your mortgage payments, the lender will repossess the property. The next step will be to sell it for them to earn back their money. Your lender will want to ascertain that the property is qualified for this purpose. For this reason, is why the process of application makes use of an independent valuer. He will be responsible for assessing the property and give the lender a final report. What the buyer offers for the property may not be the actual value. The loan to value ratio of the mortgage deal will have to be scrutinized on the official valuation but not based on your offering. Lenders will have their own rules on the type of property they are willing to lend.
Does a lender have the power to not lend on your property?
A lender might have different reasons as to why they do not want to lend on your property. Some of these reasons may be:
- The lender may become wary of the properties that are higher than commercial premises or residential houses constructed using unusual materials.
- The application form needs to verify these issues so that the lender can see if it is a no go so that they do not waste the time of an application valuer. In case you find something that’s not adding up about the property, note it at the application stage so save time.The solicitor carries out searches on your behalf
While the lender is assessing your application for the mortgage, your solicitor will begin carrying out the required searches. Searches and prices will always be different depending on the location. Some of these searches are optional but it will be great to carry them out. Furthermore, the mortgage lender will persist on some. For example:
- Local authority searches: Check to see if you require to be aware of any issues related to building control, neighbouring road schemes and enforcement actions.
- Drainage searches: Check whether the property has any connections to the sewers.
- Environmental searches: Check to ensure that the land which the property sits on is not contaminated.
These searches usually cost certain amounts of cash and the solicitor will always charge you these fees at the early stage of the conveyancing process. So, you do not need to get it out of pocket again. There is no way of reducing these costs.
Solicitors mostly work depending on their schedule. Check on them frequently through phone calls to get the papers and documents processed faster since you have paid them to carry out these duties. Try and write to the senior partner if they do not meet your expectations.
Book a property survey if you need one
Once you are certain you have the chance to borrow the money you need, you will need to make sure that the entire property is in pristine condition. You should do this after the mortgage offer is complete but you might do it before the exchange.
1. Mortgage valuation isn’t a property survey
The mortgage lender performs basic valuations to guarantee that they are comfortable to lend on it. On a bad note, this does not guarantee any protection. If the property goes down just when you purchase it, it will just be tough luck on your side.
2. Having second thoughts on mortgage valuation?
At times, the property’s valuation is usually carried out by just a simple ‘drive by’. The valuer can simply drive past the property and inspect it to find out what they can see through the car window. Most of the time, they just do this to make sure that the property exists. If the property appears to have a problem, it will be best to revisit the estate agent and renegotiate the price. This might seem like a late move to engage in during the process but surveying means additional costs so it won’t be reasonable to pay up until you know you are getting the mortgage.
3. Types of surveys
There are three major types:
- Homebuyer’s report: This survey is best for conventional properties that are less than fifty years old. At times, you can settle your mortgage dues with your lender to carry out this survey simultaneously as the basic valuation of the home.
- The full structural survey: This survey is more relevant for older properties. Furthermore, they are more detailed and cover everything and most of the time they are usually worth the expense. This survey can give you a reason to re-negotiate the price of the property. While carrying out this survey, try to make sure they access the attic space among other things.
- Snagging survey: Buyers who intend to buy new buildings might also have to spend a little more cash. This survey points out any defects and bits that are unfinished so that you can push the developer ensure they get corrected before completion.
It will work out great for you if you befriend the surveyor. They are likely to tell you more than they will write in the report. If the surveyor finds any property issues, you will need to ask the builder for the costs of repair. You can request the vendor to fix it or reduce the total from the price.
Attainment of a mortgage offer
At this stage, you are close to owning your property. The only thing you need to do is get a formal offer that states your lender is willing to front you cash to purchase the property. Sit down and go through the mortgage offer and check out the following:
1. Find your mortgage illustration
Go through your new mortgage illustration, including the offer document sent from your lender with the illustration that you put away. In case there are any differences, you will have to go back to your lender.
2. The accuracy of the mortgage offer
All things listed on the mortgage offer document need to be accurate, especially in the case of your personal information and any vital figures. Therefore, if the information is not accurate, get in touch with your solicitor to get it corrected.
3. Mortgage conditions review
The mortgage offer you receive will outline the conditions to apply by before the lender hands over the cash. The solicitor will be responsible for making sure these conditions are adhered to.
Take care of your buildings insurance
You may not own a building, but you will be legally bound to buy it once you exchange contracts with the seller. Go through the valuation report of your mortgage to review the value of rebuilding that the surveyor estimated. The purchasing price may not be a factor but you will need to have enough cover rebuild if anything happened.
Hold talks for a date of completion
The solicitor will give you updates on the searches’ results. If it turns out all good, the next step will be to agree on the date of completion with the seller. The date of completion is the day you get the keys to the property. This will have to be a suitable date for all of you.
Surrender the cash deposit to your solicitor
At this stage, you are almost getting at the stage of exchanging contracts. This means you need to hand over your deposit money to your solicitor. Your solicitor will also involve you in a contract signing at this stage, this is also the time you commit to buying the property.
Exchange of contracts
At the time when the seller’s solicitor and your solicitor exchange copies of the contract, you go through a process termed as exchange of contracts. Therefore, these exchanged contracts are legally binding between the associated parties. You can’t back out from a sell once this happens. The same applies to the seller too. At this stage, a series of paperwork happens quickly.
Ask for a statement of completion from your solicitor
The solicitor will furnish you with a completion statement. This statement will clearly breakdown the amount of money you need to hand over to the seller’s solicitor. Furthermore, it will entail any outstanding deposits, solicitors’ stamp duty land tax among others. You will have to pay these fees before the completion date.
More searches carried out by the solicitor
Before completion, your solicitor will have to verify that the seller is still the owner of the property and at the same time you haven’t gone bankrupt since the mortgage offer.
Signing the transfer deed
The solicitor will get the transfer deed ready for you to sign and there needs to be a witness to this. This will be an assurance that you are ready to own the property. After signing, the seller’s solicitor will be sent this copy by your solicitor.
Your solicitor gets money from your lender
The mortgage money that you agreed with the lender will be requested by your solicitor from the lender so that payment time will have adequate time to clear in account of the solicitor. This is the point you can receive the mortgage funds you agreed upon with the lender.
The solicitor will send the payment in full to the solicitor of the seller and get their title deeds and proof of the seller’s mortgage being cleared.
At this point, you get the keys to the property handed over to you.
Stamp duty payment
This payment is made through your solicitor. You will have 14 days before the solicitor sends your transfer deed to the stamp office so that you pay stamp duty tax. However, they usually ask for money before the completion.
Register your ownership officially
You should leave it to your solicitor to register your details with the registry. The amount you pay can be large or small. It will all depend on the price of the property you are purchasing.
Get the tittle deed
It will be the responsibility of your solicitor to fetch the new title deed from the land registry. The next step will be to forward these documents to your mortgage lender. At times, they keep them in a file. This is in case you don’t put in a request for them.
You are now the proud owner of your new property so it is time to put your mark on it and make it your dream home.