So, you have decided to buy a home- What do you need to be aware of?
It has been said that moving or selling a home can be regarded as one of the most stressful situations one can find ones self in, we hope to alleviate some of the fears and worries by providing you with some sound and practical advice and guidance to help your transaction run smoothly.
The maze of legal work can be confusing; finding the best mortgage deal, worrying about the deal falling through can have you running around in all directions, the process can be as hard or as easy as you wish to make it..!
As with most situations, planning is paramount and a carefully prepared plan from the outset can save countless stressful hours trying to find the answers if things start going pear shaped.
Buying a house is one of the biggest financial commitments you are likely to make in your life; it can be exciting as well as upsetting, exhilarating as well as demoralising. It can happen instantly or it may also drag on which can seem like an eternity, the good news is that there is literally multitude of free advice (especially on the internet) available to make the experience as problem free as possible.
So what do you do next..???
Decide your Price Limit
The first thing you need to decide upon, is a price limit based upon what you have available to you in funds and what you may be able to borrow. There are a number of different financial institutions willing to offer loans to property purchasers, for example, Building Societies and Banks, Mortgage Brokers or direct from a Mortgage Company.
- Survey Fees
- Valuation Fees
- Stamp Duty Land Tax.
You pay Stamp Duty Land Tax on property like houses, flats, other buildings and land. If the purchase price is £125,000 or less you don't pay any Stamp Duty Land Tax at all. If it's more than £125,000, you pay between one and five per cent of the whole purchase price, on a sliding scale (see table below).
|Residential property -purchase price||Rate of Stamp Duty Land Tax|
|up to £125,000||Zero|
|The next £125,000 (the portion from £125,001 to £250,000)||2%|
|The next £675,000 (the portion from £250,001 to £925,000)||5%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||10%|
|The remaining amount (the portion above £1.5 million)||12%|
Putting in an offer
Attempting to negotiate a deal is always worth considering, however, if you find your ideal home and it seems to be priced correctly, consider offering the full asking price or very close to it. The Vendor will certainly take you seriously, there won't be any time-wasting and it will lessen your chances of being gazumped.
- Offer the full asking price or very close to it, this will be taken seriously by the vendor, putting in too low an offer can have a negative effect.
- Request that the property is removed from the market as soon as your offer is accepted.
- Be flexible with the vendor.
- Try not to debate and quibble over minor points
- Be as flexible as possible to complete when the vendor wants to.
- Try to build a rapport with the vendor; it can work in your favour.
After finding a home you are interested in purchasing, which can take only days, and quite often many months, the process from having your offer accepted to final completion of the sale (when you finally own the property) generally will take between 8-12 weeks. This is about twice as long as many other countries, the British don't like rushing, try to be a little patient.
Also, take note, that should a solicitor start the conveyance process for you and if a survey or valuation has been done and your proposed purchase falls through, you will still be liable for any fee's due in respect of any works carried out up to that point.
All offers should be made with the stipulation of taking the property off the market. Getting a 'Sold' board outside is a good way to dissuade others from looking. You might also want to ensure that all internet adverts for the property have been removed, to prevent any further interest.
Approximately one in three property chains fall apart. This can be for a number of reasons, from major problems uncovered by a survey, to problems with raising funds, or a sale further down the chain falling apart, be prepared, this can happen.
The best way to ensure a chain progresses smoothly is through good communication. Stay in regular contact with your Solicitor and estate agent to make sure everything possible is being done to speed things along.
Gazumping – being outbid by another party at the last minute - is the nightmare of any property deal; estate agents are powerless to stop (even if they wanted to!) and by law under the Estate Agency Act, have to pass any offers they receive. Scotland has much better and more defined laws to protect the buyer.
Your hands are tied when it comes to preventing a determined bidder, but there are ways to lower the odds of it happening, or at least reduce the impact if it does: (see above–Putting in an offer)
Exchange of Contracts
The exchange of contracts marks the stage in the transaction at which a binding contract is formed and neither party can withdraw without incurring the financial liabilities stated within the terms of the contract. Normally a 5%-10% deposit is paid to the seller's solicitors, which is retained by them until completion. The deposit serves as a good faith statement that the buyer intends to proceed to purchase the property under the terms of the contract.
If the buyer withdraws from the purchase, the seller can forfeit the deposit and retain the money. There is no requirement in law for any deposit to be paid by the buyer at an earlier stage than exchange of contracts, although some estate agents may ask a buyer to lodge a nominal deposit with them pending formal exchange of contracts, generally in the region of £500. If the seller withdraws, the buyer's solicitor may apply to the court for an order forcing the seller to complete and bring court proceedings for breach of contract.
Generally there is a period of 14-28 days in between exchange and completion to allow the purchaser's solicitor sufficient time to obtain the necessary funds from the buyer and/or mortgage lender and for the seller's solicitor to obtain a redemption figure from the seller's lender.
You have finally made it; you never thought it was going to happen
On the day of completion, the buyer's solicitor will telegraphically transfer to the seller's solicitor the money required to complete the transaction. Once received, the seller's solicitor will notify the buyer's solicitor and estate agent to authorise the release of the keys to the buyer. The seller and buyer will then be notified that completion has taken place so they can make their respective moving out and moving in arrangements.
Completion usually takes place by early afternoon, however, be warned, more often than not the final hurdle drags and if for any reasons funds are delayed and the solicitor is unable to pass funds, you will not be able to take possession of your new home as you still do not own the property.
If the solicitor cannot conclude the transaction on Friday, then it will not take place until at least the coming Monday, solicitors do not work on weekends, so be prepared, have alternative accommodation already earmarked to stay in should the worst scenario happen.
If, on the other hand, as in most cases everything does go to plan, then a hearty congratulations, you now own your chosen property…..easy huh…..!!