GUIDE: How To Buy A Home
The property market’s been in the news again – and prices are rising, again.
We talk you through this stressful process, giving you advice about finances, viewing, negotiating, finding the right home for you.
Whether you’re buying your first flat, hunting for a family house or finally retiring to your dream village, buying a home is one of life’s most important milestones, if not one of the most stressful.
1 – The Finances
Get finance in place early – and be realistic
Get your mortgage in place early. The reason for this will become clear when it comes to making an offer on a property, being able to show the seller a mortgage decision in principle is your way of demonstrating you are in a good financial position. Although a firm mortgage offer serves as a useful point in your favour when it comes to negotiating a discount on the asking price.
Are you financially healthy?
The Mortgage Market Review was introduced in October 2012. This was introduced to ensure that lenders were being responsible and that we were in a financial position to commit to a mortgage. Most of the changes come into effect on 26 April 2014 and in essence buyers can expect much more thorough affordability checks than existed previously. In particular:
- Lenders are now fully responsible for assessing whether the customer can afford the loan they are taking out, and they have to verify the customer’s income.
- Lenders are still allowed to grant interest-only loans, but only where there is a credible strategy for repaying the capital.
Full evidence of the borrower’s income will be required, as well as full details of expenditure, including committed expenditure (such as loans, credit cards and child support), basic essential expenditure (including utility bills, council tax and insurances) and basic quality of living costs (clothing, commuting costs, food etc.).
Before applying for a mortgage
Here are a few tips on how to reduce the chances of being turned down:
- Check your credit report. Check your history and deal with any mistakes or any outstanding entries.
- Get your paperwork in order. If you’re self-employed, you’ll need evidence of sufficient income for at least two years. If you’re a contract worker you’ll need to prove that your earnings will continue.
- If possible, pay off any outstanding loans before you apply for a mortgage.
- Think about any unnecessary expenditure which can be cut out at least three months before your application to make your financial position look as healthy as possible.
- Avoid drastic changes in circumstances before applying for a mortgage. Remember; lenders are looking for a ‘settled’ financial history.
- Check you are on the electoral roll. Lenders will need to verify your identity, and getting listed can avoid delays further down the line.
Finding a mortgage
You may be confident in researching and finding your own mortgage, but this can time consuming. Most buyers utilise and benefit from independent advice. As you deal with many estate agencies you will notice the trend that they will try to encourage you to use one of their in-house ‘independent’ advisors. If you feel the need to obtain advice, then look for a mortgage broker. For those who are self-employed, have had difficulty obtaining credit in the past then a mortgage broker will prove useful, as your choice of lender may be limited.
In any event, from 26th April 2014, around 50 per cent of borrowers will be required to meet a qualified mortgage advisor before they enter into a mortgage.
2 – Finding Your New Home
- How much can I afford?
- Where do I want to live?
- What amenities are around?
These are the two main factors that determine most people’s property search.
When considering these factors you also need to think about the future. For example, if you are planning a family would a second floor flat be suitable?
You think you have found your dream home?
First impressions are wonderful and we can often walk into a property and think – this is the one! If you get this feeling it is always a good idea to arrange a second viewing. Between the first viewing and the second you can formulate a list of questions you may have and also think about whether there were any negatives with the property, and if so what were these.
When you think you have found your dream home it is easy not to think about the negatives, or the problems that may be encountered in the future. Many people move into what they thought was their ‘dream home’ and then experience the problems; your dream home is no longer your dream home. This is where a surveyor can assist, in particular in ensuring the property is structurally sound and a Solicitor will ensure the legal side is taken care of.
There are many factors to consider when thinking about location of the property. These are not just limited to:- where are the nearest schools and shops? Is there a regular bus route?
Other considerations need to be catered for such as:-
- If you are near local shops, that is great but what about deliveries and early morning noise or even late at night?
Is there sufficient parking?
Formal enquiries will reveal issues such as risk of flooding, subsidence, access and potential developments on neighbouring.
Here are some more points to think about:
- Measuring the floor space: this is particularly important if you’re viewing an empty property here it can sometimes be difficult to visualise how the space will be used. Don’t be afraid to bring (and use) a tape measure.
- How much work is actually involved before you can move in?
- Check the locality.
- How much council tax are you going to have to pay? The VOA website gives council tax bandings for every area in England and Wales.
- If it’s a leasehold property, how much time is left on the lease? When it comes to resale, is extension of the term going to be desirable and how much is that likely to cost?
- Is this really a place I want to live? The Office for National Statistics website is a useful source of information on a number of topics including crime, health, housing and population
growth in each area of the country. It’s also worth checking the local authority’s website and ‘what’s on’ guides for a general feel for the area. The Environment Agency’s site is useful for specific issues, such as flooding risks.
When dealing with an estate agent:
- Explain your requirements.
- Give correct information. Be honest about where you are with your chain and with your mortgage application
- Remember;. Don’t be talked out of putting forward what you consider to be a sensible lower offer on the basis the estate agent has said the seller is “unlikely to budge”.
3 – Negotiate an offer
Always remember you can try to negotiate on price, there are no rules on this. If you want to offer the asking price because you feel the property is competitive against other similar properties you have viewed and for the area. Also, think about making an offer, remember to keep within your budget and do not get disheartened if you offer is rejected. You can reconsider your offer or look for another property.
Your goal is to get the property you want at the lowest possible price. Here are some points to bear in mind:
- If you think this is the property for you, make some further enquiries – are there any other viewings booked? What is the reason for the sale?
- Check out asking prices for other properties in the area. Sites like Zoopla are ideal for this.
- Hometrack survey tells you what percentage of the asking price sellers are typically achieving at any particular time.
- If putting forward a lower offer, give concrete reasons. Point to specific issues with the property itself and/or compare to similar, lower-priced local properties to justify your offer.
- If you reach an agreement request that the property is taken off of the market.
4 – Instruct a Conveyancing Solicitor
Offer accepted? You have had an offer accepted on probably one of the most expensive assets you will ever own. It is worth ensuring the conveyancing element is undertaken correctly. Whilst both you and the seller will be keen to complete the transaction, it is worth getting it right. Sometimes conveyancing highlights points which you may not have been aware and it is always worth getting it right from the outset.
Reasons to use a solicitor:
- They keep things moving.
- Liaise with Seller, Land Registry, Solicitors, agents and anyone else involved in the process.
- They know the right questions to ask. They know what to look for in terms of potential problems with boundaries, the extent to which you’ll be able to alter or improve the property, issues with the lease.
- They handle all searches; they assess the contract on your behalf and they oversee the transfer of money to the seller.
How much will it cost?
At Hill & Abbott we will provide you with a quote right from the outset. This will include any disbursements together with our costs.
Occasionally some issues may arise where the cost may be higher than the original quote and should this become the case we will of course notify you and explain the reasons why.
5 – Some of the Jargon
A surveyor exists to put you fully in the picture on the state of the property. There’s a choice of three different types of surveys:
Mortgage lender’s Valuation Report. This is essentially a valuation carried out on the mortgage lender’s behalf. It reassures the lender that the property’s not worth less than the amount of the proposed mortgage. The valuer is working on behalf of the lender, and not you.
Homebuyer’s Report. The most popular type of assessment: suitable for modern buildings or ‘standard’ older buildings in reasonable condition.
Full Structural Survey. Recommended for older properties. This will identify any potential issues and ensure there are no surprises later on.
Once your solicitor has received the contract pack from the seller or their representative we will request various searches to check whether there are any conditions which may affect the property. These searches include: Local Authority, Environmental, Water and Drainage searches – and sometimes more specialist searches such as a Coal Mining Report or a Flood Check search.
Some of the general enquiries we will make are:-
- Were extensions or other building works carried out with planning permission?
- What’s the position on flooding?
- Will there be any problems getting insurance?
- Title – does anyone else hold an interest in the property?
Exchange and Completion
Once your solicitor has confirmed that there is no reason to proceed the next step will be to exchange contracts and agree a moving (“completion”) date. The balance of the purchase price will also be transferred to the seller’s conveyancer.
- You still have a little bit of work to do to achieve your move. Consider…..
- Packing up your house yourself, or part of it
- It may be cheaper to move during the week
- Organise a removals company or hire a van
- Redirect your mail
- Sort out your utilities
We hope you have found this guide useful and should you have any queries or would like to speak with our Conveyancing team please call:
Talk to one of our team today:
0800 633 5543