Help when buying a home
Buying a new home is very exciting but also has the potential to be very stressful. It is likely to be one of your biggest financial commitments, and the whole process can be daunting. So, here is our ‘buying a home’ checklist...
- If you’re buying together with a partner or friends, agree up front how you’ll make financial decisions about the property.
- Review what you can afford:
- from your savings for the upfront costs of a home – a deposit, moving costs and furnishings etc.
- from your income for mortgage repayments and other outgoings such as council tax, insurances etc.
- Find out what you can borrow and how much it might cost. Talk to one of our expert mortgage specialists for a borrowing assessment
- Don’t forget to include Stamp Duty in your calculations – a Government tax on property purchases above a specified amount. The amount of tax is based on a percentage of the total purchase price and increases in price bands, as shown in the table below.
- If the transaction involves the purchase of a new lease with a substantial rent, there may be an additional Stamp Duty Land Tax charge to that shown below, based on the rent.
Residential land or property Stamp Duty Land Tax rates and thresholds...
|Purchase price/ lease premium or transfer||Stamp duty land tax rates|
|Up to £125,000||Zero|
|Over £125,001 to £250,000 Over||2%|
|£250,001 to £925.000 Over||5%|
|£925,001 to £1,5000,000||10%|
A 3% surcharge applies to additional residential properties worth £40,000 or more.
Eligible first time buyers pay 0% SDLT on first £300,000 of purchase price and 5% on £301,000 to £500,000. Normal rates apply to properties worth more than £500,000.
SDLT is charged at 15% on properties worth over £500,000 purchased corporate envelopes.
Research the market...
- Look at different areas you might be interested in, work out the sort of property you might be able to afford there. There are resources on the web to help you such as www.zoopla.co.uk
- Register with several estate agents to increase the chances of finding your ideal home. Look online at various property finders that aggregate properties from different agencies, such as www.primelocation.com or www.rightmove.co.uk
- Choose a mortgage. Talk to our highly experienced and skilled mortgage specialists who will take the time to get to know your circumstances, objectives and preferences. Being independent, they really do research the entire market, using sophisticated I.T. systems, to find the most appropriate mortgage for you. They will also discuss your insurance and protection requirements and source the best deals for you from the market.
- Get a mortgage ‘agreed in principle’ – We can help you with this. The mortgage lender will need some information to assess whether they are happy to lend you the money. You don’t need to have a specific property in mind at this stage. This will make buying your home a lot quicker.
- Make a formal offer – ‘Subject to contract’ – once you have found the property you want.
- Complete a full mortgage application – an official application for a mortgage to purchase your chosen property with the lender you have selected.
- Receive the mortgage offer – the lender will confirm agreement of the loan in an “offer of advance” letter to you.
- The lender will require a ‘valuation report’ on the property, which is prepared by a surveyor, and confirms how much the property is worth. The lender will use this report in deciding whether to make the mortgage offer to you, or if any conditions should apply. You may also want to have a more comprehensive survey carried out at your expense, to ensure that the property is in sound condition. The same surveyor can normally carry out both surveys on the same visit.
- Examine the valuation report when the lender sends it to you. This will tell you about the property and if any work will be needed in the future. Through your solicitor you might negotiate to get the seller to pay for this work or to reduce the asking price. If not, but you still wish to proceed, get quotes for the work and appoint one firm. The surveyor will usually carry out a further inspection to ensure that the work has been done.
- The solicitor you choose should be acceptable to your lender, as he or she will also act for the lender. The solicitor’s main task is to handle the conveyance, which is drawing up the contracts and making legal enquiries, for example ensuring that there are no building plans affecting the property. The cost of land registry charges and local search fees will be passed to you. Ensure you ask your solicitor for an estimate of charges before they start work.
- Your solicitor searches and completes all of the legal checks and will draw up the Contract.
- Contracts are exchanged between you and the seller. You will now sign the Contract and pay the deposit. Signing the Contract legally commits you to buying the property. From there you agree a completion date.