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The House Buying Process

What happens when all the house hunting is finally over, you have chosen the home of your dreams, organised a mortgage and are ready to get going? Well, every property purchase has to go through the same process, with some obvious stages, and some not so obvious. Some of these stages incur additional costs and all of them are important, so it is a good idea to be fully aware of what is required from you, and what you should require from others at this point to make the process run as smoothly as possible.

Appointing a Solicitor

You need to appoint a solicitor to handle the legal aspects of buying a property, known as conveyancing. The vendor’s estate agent will need your solicitor’s details once your offer is formally accepted, in order to begin the process.

Finalising Mortgage Arrangements

You will need to visit your mortgage provider at this stage to finalise on the arrangements, and to turn your ‘mortgage in principle’ into the real thing. Items such as your P60, recent payslips and bank statements are usually required to qualify your earnings.

Exchanging Contracts

When your solicitor has finalised their dealings with the vendor’s solicitor, contracts can be exchanged. These are, of course, legally binding documents once signed. Among the information included in the contract is the completion date, which is the date when the property becomes legally yours

Completion

When your solicitor finalises the deal on your behalf the purchase is completed, the property becomes vacant for your possession, and you collect the keys. The Transfer Deed, the document which states that you are the legal owner of the property, is sent to the relevant registry to update the records.

Moving In

Once you have completed on the deal and collected the keys, you are free to move into your new house. It is at this stage you have a legal responsibility to inform the local authority, statutory utility suppliers and Inland Revenue of your new address, along with other organisations (banks, telephone, power supplier etc.)

Other costs

As well as the monthly repayments there is a set of additional costs when finalising your mortgage, which are equally essential to consider when budgeting a property purchase.

Deposit
A one-off fee – usually between 5% and 10% of the purchase price – is generally required as a deposit. This is paid through your solicitor.
Valuations and Surveys
When you find a property that you are interested in, Mortgage Advisory Service can arrange the valuation and survey process. This offers an extra level of protection, giving information on whether the property is good value for money, and detailed information on any potential problems that may be present and their urgency. There are different levels of survey available, including a ‘homebuyer’s’ survey and a ‘structural’ or ‘full’ survey. The homebuyer’s survey takes into account the general state of repair of the property, giving an overview. The structural survey goes into more detail, and investigates all accessible parts of the building. The mortgage provider uses the survey to calculate the valuation. While the decision to buy shouldn’t rest solely on the result of the valuation and survey, they do provide important insights into the property and can prevent finding any nasty surprises when the deal is done!
Legal Costs
In most cases a solicitor or conveyancer is appointed to handle all of the legal aspects of the property purchase, including Local Authority Search, land registration and dealing with the vendor’s legal team and estate agent. Estimates of these legal fees are always available prior to any commitment.
Stamp Duty
Stamp Duty is a government tax based on the value of the property, liable for payment on completion. The existing system is as follows;
- £ to £125,000 = nil
- £125,001 - £250,000 = 1%
- £250,001 - £500,000 = 3%
- £500,001 + = 4%
Properties in certain areas are exempt from Stamp Duty, which will be made clear by the vendor or their estate agents.
Arrangement Fee
This is a one-off fee charged by your mortgage provider on arrangement or application. It is often added to the mortgage itself, and will vary between lenders.
Insurance
Every property purchase must be supported with a buildings insurance policy to protect against typical risks. Other related insurance policies that are generally taken out with a mortgage include contents, and payment protection that safeguards against unemployment, sickness and redundancy. Check out Mortgage Advisory Service’s dedicated insurance section for more information.