Buying a house can be a long and complicated process house hunting, dealing with estate agents, surveyors and solicitors, mortgage suppliers and worrying about your deal falling through.
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 an average of 12 weeks.
To give you a good understanding of the process as it will help you avoid some of the most common hazards of home-buying we have put together a quick guide.
You will need to find out how much you can borrow, and find out how much deposit you can raise. There are a various different financial institutions which offer loans to people buying a property and various different Mortgages.
Before finally deciding how much to spend on a property, you need to be sure you will have enough money to pay for all the additional costs. These include:-
There are a number of ways in which you could find a property to buy:-
If you view a property and decide you would like to buy the property you can try and negotiate on the asking price. You can offer less if, for example, you think there are repairs to be done which will cost money.
If the property is being sold through an estate agent, you should tell the estate agent you would like to make an offer. The estate agent will then put this offer to the owners.
If the owners do not accept your first offer you can increase your offer. There is no limit on the number of times you can make offers on a property. If you make a written offer it will be subject to contract. This means that you are not committed to the purchase. If you make an oral offer this is never legally binding.
Some Estate Agents ask for a small deposit to show you are serious about the purchased. This is normally paid back if the sale goes through.
You should start to arranging your mortgage now. It should take about three weeks from the application for the mortgage to the formal offer being made by the lender, but depending on your circumstances it could take longer.
The property lender will expect a valuation of the property. The valuation will be done by a surveyor on behalf of the lender but you will have to pay for this valuation. The fee will be payable in advance.
If the amount of money to be borrowed is more than a certain percentage of the valuation of the property (usually 75-80%), your lender usually makes it a condition of the loan that you take out extra insurance to cover the extra amount. You pay a single premium to your lender which is usually added to the loan. This is known as a higher lending charge (or mortgage indemnity guarantee).
The valuation which is done for mortgage lender is a valuation not a survey. You should consider whether or not to have an independent survey carried out in addition to the valuation. The survey would not only consider the value of the property but would also examine the structure of the property and should identify any existing or potential problems.
There are two levels of survey that you can choose between:-
It is possible for you to use the same surveyor who does the valuation to carry out the survey and this may be cheaper
If the surveyor reports that there are some problems with the property, you should consider whether if you still want to go ahead with the purchase or if you want to negotiate further with the seller about the price. The surveyor will usually advise you as to how any problems they have identified should be dealt with and the likely costs of this.
The legal process of transferring the ownership of a property from the seller to the buyer is known as conveyancing.. You could do it yourself although this can be complicated or you can use a solicitor or licensed conveyancer.
Most solicitors offer a conveyancing service. Although all solicitors can legally do conveyancing, it is advisable to choose a solicitor who is experienced in this field.
It is important to contact more than one solicitor or licensed conveyancer as there is no set scale of fees for conveyancing. You should:-
Although it is impossible to give a precise idea of how long the legal work involved in buying a property takes, it is possible to offer guidelines. From having an offer accepted to exchange of contracts can take up to seven weeks and from exchange of contracts to completion can take up to four weeks. However, if there are any problems the time taken may be longer.
Once you have instructed the solicitor or, in England and Wales, a conveyancer, the seller's solicitor or the licensed conveyancer draws up a contract which will eventually be signed by you and the seller. However, before the contract can be signed, your solicitor or licensed conveyancer must make sure that there are no problems with the ownership of the property, rights of way, access, or future developments in the area that might affect the property. This is called making enquiries and searches. The solicitor or licensed conveyancer makes the enquiries and searches as follows:-
Local searches
These are enquiries made to the local authority (or in Northern Ireland, the appropriate government department) about any matters which affect the property which involve the local authority, such as whether there is a compulsory purchase order on the property. Local searches also include questions about any proposed changes or development in the area that might affect the property such as roads, housing, shops. During the local search, the local Land Charges Register (Registry of Deeds in Northern Ireland) is also checked. This gives information about any matter which affects the property such as tree preservation orders, if it is a listed building or in a conservation area. Enquiries made to the seller by the solicitor or, in England and Wales, a licensed conveyancer. These are a set of standard questions about the property, boundaries, neighbour disputes and fixtures and fittings that will remain in the property. There may also be additional questions that the solicitor or licensed conveyancer thinks are necessary, such as the transferability of guarantees for any work done on the house, for example, a damp proof course; and From the Land Registry.
Whilst the solicitor or conveyancer is making the enquiries, you should sort out how you will pay the deposit that has to be made when the contracts are exchanged.
You should make sure that buildings insurance is arranged from the date of exchange, because once contracts have been exchanged you are responsible for the property.
You may be able to get information on buildings insurance from your mortgage lender, solicitor or, in England and Wales, a licensed conveyancer.
The final contract between you and the seller is prepared when:-
You and the seller each have a copy of the final contract which you must sign. These signed contracts are then exchanged. At exchange of contracts both you and the seller are legally bound by the contract and the sale of the house has to go ahead. If you drop out, you will lose your deposit.
You should make arrangements for the supply of gas, electricity and telephone service and make sure that the seller is arranging for final meter readings to be made.
Completion of the purchase usually takes place about four weeks after exchange of contracts, although it can be earlier. On the day agreed for completion:-
The solicitor or licensed conveyancer (in England and Wales only) will usually send their account to you on, or soon after, the completion date.