Property Purchase Process
Buying a house is one of the biggest financial decisions that you will make in your life. It is a lengthy and complicated business, which while exciting is often fraught with stress and worry. But luckily there is a lot of good advice around helping you to make your home-buying experience as easy and problem-free as possible.
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 about 12 weeks. This is about twice as long as in many other countries – home-buying in Britain is a notoriously drawn-out business.
It is important to have a good understanding of the process as it will help you to avoid some of the most common hazards of home-buying. Home.co.uk has prepared an introduction to the home-buying process to help you to understand how it all works, how to plan it and what to watch out for. After reading this you should have a better idea of what to expect and how to set out to buy a home feeling prepared and ready to go!
The Buying Process:
- Work Out How Much You Can Afford
Four main things affect what your monthly mortgage repayment will be. These are:
- how much you borrow
- how long you borrow it for
- the type of mortgage you have (e.g. interest-only or repayment); and
- the interest-rate deal you choose.
All these factors can vary, so use a Mortgage Calculator to work out what your repayments might be. Simply enter the information it asks, and see what a particular mortgage will cost you each month. Always check the Annual Percentage Rate (APR) and use it to compare mortgages. You pay back more than just the interest on the amount you borrow – other things may also affect the overall cost of the mortgage, such as administration fees, survey fees and insurance charges. The time at which the credit and other charges have to be paid back affects the rate of the charges and the overall cost to you.
- Get a Mortgage Agreement in Principle
Once you have decided on the mortgage you require , it’s often worth obtaining a mortgage agreement in principle certificate. This is a certificate from a lender showing how much it is willing to lend you in principle. Mortgage certificates are often called different things, such as a mortgage promise or an agreement in principle but they mean the same thing.
The advantage of obtaining a mortgage certificate is that it demonstrates to a seller that you are a serious buyer and that a lender has agreed in principle to lend you enough money to purchase the property. It is worth noting that a mortgage certificate is not a guarantee that the lender will give you the money for the property you want to buy. Whether it agrees firmly to lend you the money will depend on the exact details of the property, the accuracy of the information you have supplied about yourself, and the outcome of credit checks.
- Choose Your Home
Surveys have found that people generally take longer choosing curtains than they do choosing a house to buy. Whilst hunting for a house to buy, set out a number of things that should be checked out before putting in an offer in.
First impressions of a housecan generally make people either love it, or hate it! However, first impressions can be very misleading. Never choose to buy a house based on one viewing.If you are interested in buying the house then arrange for a second viewing, and on the second occasion come prepared. Have a think about what you would like to do with each room, how each one would suit you, and then make a list of all the things that you should check, such as:
- The quality of the decoration
- Any obvious structural problems (cracks in walls etc)
- Actual size of each room (think about your furniture, not theirs)
- The quality of the kitchen units
- Check that all the taps etc work
- The list goes on!
Lots of little things can help gauge whether a house would be a nightmare to turn into what you envisaged it to be, and how much it would cost to maintain the house.
- Hire a Solicitor
If you need a solicitor you should choose one who has experience in the appropriate area of law. A local advice agency such as a law centre or Citizens Advice Bureau, should be able to recommend local solicitors who are experienced in the appropriate area of law or will be able to provide information on how to find a suitable solicitor. In some cases, a CAB can refer you to an organisation which can offer free legal help. You can also find details of solicitors on the Law Society website at www.solicitors-online.com, or go to the Community Legal Service Directory for details of solicitors and advice agencies throughout England and Wales.
- Make an Offer
Plan ahead before making an offer on a house.The agent acts for the seller. If you ask for guidance on what to offer, they’ll suggest a high figure. Rely on your own research.
Develop your negotiating techniqueAgents will ask questions which gives them the initiative. It’s a sales technique you can equally well turn to your advantage.Know house prices in your local market.Take time to gather information on both the market and the seller.
Be confident you know the market, review all your research. Understand the seller’s viewpoint and circumstances.Don’t miss out on a good buy. But don’t overpay. Agents will always ask for more. Be sure you know values. Identify genuine sellers who are keen to find a buyer.
Know your seller’s needs.It helps judge how tough you can be when negotiating on price. Also, look at the seller’s perspective.Treat the asking price as no more than a guide.In areas where there are plenty of homes for sale, you’re likely to find a buyers’ market. You should be in a strong negotiating position.In other areas property shortages could result in higher asking prices prices.
Some sellers may be over-confident, with asking prices too optimistic.Your opening offer is an important part of negotiating.Rely on your market research and knowledge of the seller. When you make an offer on a house, strike a balance. Too low. You risk hardening seller’s attitude to price. Too high. You could overpay. Leave room to negotiate.Expect the agent to ask for an increase in your opening offer, maybe a lot. It’s now that negotiating firmly will pay.
- Have a Survey and Valuation Done
The contract paperwork that you will be asked to sign will indicate that, as Buyer, you have inspected and surveyed the property and have satisfied yourself regarding its actual state and condition at the date contracts are exchanged, whether or not you actually do this. There is nothing that can be done about any defects that you may discover after exchanging contracts or completing the transaction.
It is therefore essential that you have the property thoroughly checked out by an expert. There are various types of inspections that you can obtain:
- Mortgage valuation
Your Lender (i.e. your bank, building society or other lending institution) will usually obtain a mortgage valuation by its in-house survey department or a local Chartered Surveyor. This report is obtained to satisfy the Lender that the house is good security for the proposed mortgage loan. It is not, in the true sense, a survey. - A Home Buyers report and valuation
This is a “middle” range report, which is more detailed than a mortgage valuation. It will usually extend to several pages which will include a valuation of the property and suggest a re-instatement value for insurance purposes. The Surveyor will inspect the main structure including the roof, if it is accessible, and will usually take moisture level readings in case of damp. - A full structural survey
This is particularly useful for older or larger properties but should not be discounted in other cases. The Surveyor will report on everything that is visible – from the outside of the roof to under the floorboards, where practicable. In addition to looking at the structure of the building and any outbuildings, this type of survey will also include comments on any nearby trees that may be causing damage to the property and will also detail water and drainage services. The surveyor may suggest that you undertake further tests, for example, if damp or dry rot is suspected, or may even suggest a specific structural engineers report is obtained if a structural problem is detected.
- Mortgage valuation
- Do Any Necessary Legal Work
- Arrange for Life Assurance
- Finalise Your Mortgage
- Exchange Contracts
- Organise Your Move
- Finalise Your Contract Details
- Move In
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