Before buying property, you need to take a good look at your finances, carefully research the market, and investigate the range of mortgages on offer.
Have a good think about where you want to buy and get a feel for the area to better understand what life would be like living there. When viewing properties, don’t allow yourself to get swept away by the excitement — always remember to keep an eye out for potential problems.
Finally, once you’ve found a property you want to buy and the seller has provisionally accepted your offer, you should contact a solicitor to begin the legal process of buying the place.
This article provides an overview of this process and addresses a host of common concerns raised by buyers.
Financing the deposit
Many sellers ask for a deposit equal to 10% of the purchase price. If you’re worried about funding this, remember that if you’re selling a property as well as buying one, your solicitor can apply the money received for the deposit on the property you’re selling to fund the deposit for the property you’re buying.
Finding a solicitor
Legal costs can range from about 200 to 1,500, depending on the work involved and the value of the property. Given the expense, it’s important to understand up front how a solicitor will charge you. The law firm should provide a breakdown of costs and an estimate of their fee.
It’s also important that you have a good personal relationship with your solicitor. Only hire one that you trust and feel you can work well with. If in your initial meeting you feel the solicitor is unhelpful or dismissive, consider carefully whether you really want him or her to represent you.
Getting a survey
The point of a survey is to inform you of all of the possible work that needs doing on the house, so you can budget time and finances, as well as decide whether you still want to purchase the property.
The three main surveys commissioned by buyers are as follows:
Mortgage valuation report : If you need a mortgage, your lender will ask you for this to confirm that the property is worth the amount that you have asked to borrow. You cannot rely on this report, however, because it involves only a limited inspection of the property and it will only identify obvious defects that materially affect the value of the property. The cost of this report is about 100-300.
Homebuyer’s report : This survey costs about 300-600, depending on the price of the house. It’s less comprehensive than a full structural survey (see below), but usually adequate for a conventional property — namely, one constructed using standard materials and with few alterations or extensions — which is still under 75 years old.
Full structural survey : For properties above 75 years old, or those that are otherwise ”unconventional”, a full structural survey is widely recommended. It is a lot more detailed, however, than a homebuyer’s report and often costs twice as much.
Most buyers ask their mortgage lender to arrange for the surveyor who completes the mortgage valuation report to do the homebuyer’s report or full structural survey at the same time. This is generally the easiest and cheapest way to commission a report.
Preparing for exchange of contracts
Shortly after you appoint a solicitor to represent you, he or she will contact the seller’s solicitor to request the title deeds to the property. Your solicitor will also request certain searches be undertaken on the property to ensure there are no problems.
Solicitors usually recommend five or six searches solicitors, but you may need more depending on the property and area you’re buying in. The main searches are as follows:
Local authority search : this will show the planning history for the property (including any planning breaches), proposals for new roads or traffic schemes, tree preservation orders, conservation areas, etc.
Drainage search : among other things, this will show whether or not the surface and/or foul water drains run into a public or private sewer.
Land Registry search : this is carried out just before completion to find out if there are new mortgages registered against the property that were not previously disclosed.
Land charges search : this search shows charges (e.g., mortgages, covenants, etc) on unregistered land and provides data on bankruptcy proceedings.
Bankruptcy search : if you need a mortgage, the lender will ask your solicitor to carry out a search to show you’re not bankrupt.
Environmental search : this tells you if there are any landfill or waste disposal sites in the area, or risks from contaminated land, toxic emissions, flooding, or subsidence, etc.
If you’re buying the property with someone else, your solicitor will also provide advice on the different ways to structure ownership (e.g., as joint tenants or tenants in common).
Provided the searches and survey do not reveal any major problems, your solicitor will then draw up and finalise the contract to purchase the property with the seller’s solicitor and schedule a date to ”exchange” contracts.
Exchange of contracts
Upon exchange of contracts, the purchase and sale of the property become legally binding. In addition, your solicitor will pay your deposit to the seller’s solicitor and agree a completion date. If you withdraw from the purchase after exchange, you will lose your deposit and probably incur other financial penalties. Note also that the risk of loss in the property passes to you after completion – therefore, you should arrange building insurance well ahead to cover against this risk.
Preparing for completion
Your solicitor will communicate with your mortgage lender to ensure the mortgage is available for the completion date. He or she will also carry out final checks with the Land Registry to make sure there are no problems and prepare the property transfer deed.
On the day of completion your lender transfers your mortgage capital into your solicitor’s account. Once this is received your solicitor will wire it on to an account nominated by the seller’s solicitor. Your solicitor will then call the seller’s solicitor to confirm receipt of the payment. The seller’s solicitor will then mail to your solicitor the transfer deed and Land Registry certificate and the sale will be complete. You are then free to pick up your keys and move in to your new home!
Your solicitor will pay off your mortgage (if you are also selling a property), pay any stamp duty due and register the property in your name at the Land Registry. He or she will then pass the ”stamped” transfer deed to your mortgage lender, which will stand as security for the loan you received. If you didn’t require a mortgage, however, your solicitor will give the deeds to you instead. Your solicitor will then send you a bill for legal services rendered and the costs he or she incurred during the transaction.
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