How Much Can You Afford

The first thing you need to do is decide how much you can afford. You will need to look at how much money you have available yourself and how much you can borrow. There are a number of different financial institutions which offer loans to people buying a property, for example, building societies and banks. You should find out if you are able to borrow money and if so, how much .

Some building societies now provide buyers with a certificate that states that a loan will be available provided the property is satisfactory. You may be able to get this certificate before you start looking for a property. Building societies state that this certificate may help you to have your offer accepted by the seller.

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:-

  • survey fees
  • valuation fees
  • Stamp Duty Land Tax
  • land registry fee
  • local authority searches
  • fees, if any, charged by the mortgage lender or someone who arranges the mortgage, for example, a mortgage broker
  • your lawyers costs
  • VAT
  • removal expenses
  • any final bills, for example, gas and electricity, from your present home which will have to be paid when you move.

For more information about Stamp Duty Land Tax, go to the Directgov website at www.directgov.uk .

You should be aware that if you start the process of buying a property and then the sale falls through you may have already paid for a valuation or a survey. If we have started any legal work you may also have to pay for the work done.

You should also take into account the running expenses of the property you wish to buy. These may include:-

  • council tax (in England and Wales)
  • water rates (in England and Wales)
  • ground rent, if the property is leasehold
  • service charges, if the property is a leasehold flat
  • insurance costs, including life insurance, buildings and contents insurance
  • heating bills. An energy performance certificate can help you work out how energy efficient your property is.

You will have to pay a deposit on exchange of contracts a few weeks before the purchase is completed and the money is received from the mortgage lender. The deposit is often 10% of the purchase price of the home but it can vary.

How To Find A Property

There are a number of ways in which you could find a property to buy:-

  • using estate agents
  • looking at the property pages in local newspapers
  • contacting house building companies for details of new properties being built in the area
  • looking on the internet
Deciding On A Property

When you find a property you should arrange to look at it to make sure it is what you will need and to get some idea of whether or not you will have to spend any additional money on the property, for example, for repairs or decoration. It is common for a potential buyer to visit a property two or three times before deciding to make an offer.

Warranties For Newly-Built Properties

If the property is a newly-built property, check whether it has a Buildmark warranty. Buildmark warranties are organised by the National House-Building Council (NHBC) which is an independent organisation with over 20,000 builders of new houses on its register. Before being accepted onto the NHBC register, builders must be able to show that they are technically and financially competent and they must also agree to keep to NHBC Standards.

The Buildmark scheme covers homes built by NHBC registered builders once the NHBC has certified them as finished. The scheme will, for example, protect your money if the builder goes bankrupt after contracts have been exchanged but before completion. It also covers defects which arise because the builder has not kept to NHBC Standards. For more information, go to the NHBC website at: www.nhbc.co.uk.

Freehold Property

If the property is freehold, this means that the land on which the property is built is part of the sale and no ground rent or service charge is usually payable. However, if there is a residents company or management company set up to manage any communal areas of an estate, sometimes a small yearly fee is payable to them for this service. We will of course advise you once we have ascertained this information from the sellers solicitors.

Leasehold Property

A property may be leasehold, which means that the land on which the property is built is not part of the sale. You have to pay ground rent to the owner of the land – who is called the freeholder.

Our costs will be higher if the property is leasehold due to the additional work involved in checking the lengthy documentation involved in properties of this nature.

The length of a lease can vary and we will check that the length of the lease on the property you are interested in buying is acceptable to the mortgage lender.

In addition to ground rent on a leasehold property, you may have to pay an annual service charge. This usually happens with a flat. The service charge covers such items as maintenance and repairs to the buildings, cleaning of common parts and looking after the grounds.

A group of leaseholders living in the same building may have a right to jointly buy the freehold of the building or take over its management.

Commonhold Property

If the property is commonhold, this means that you can buy the freehold of a flat and own common parts of the building jointly with the owners of other flats in the building (known as a commonhold association).

In commonhold a ground rent or service charge is not payable. However, a share of the commonhold association’s expenditure on maintenance, insurance and administration will be payable for the common parts of the building.

These are extremely rare in the UK however, as the scheme did not really take over as was hoped from leasehold properties.

Making An Offer

When you decide you would like to buy a particular property you do not necessarily have to pay the price being asked for it by the owners. You can offer less if, for example, you thinks 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 what you are prepared to pay for the property. The estate agent will then put this offer to the owners.

If the owners do not accept the first offer put to them by you, you can decide to make an increased 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 always be made subject to contract. This means that you will not be committed to the purchase before finding out more about the state of the property. If you make an oral offer this is never legally binding.

When The Offer Has Been Accepted

When your offer for the property has been accepted you will have to consider the following:-

  • whether a holding deposit is payable (please note the terms of payment of any holding deposit must be agreed between the lawyers to ensure any payment of a deposit such as this is protected)
  • arranging a mortgage – see below
  • whether a survey is necessary – see below
  • whether you want to buy with someone else – see below
Arranging A Mortgage

If you have not already begun to arrange a mortgage, you should start to do this now. It can take about three weeks from the application for the mortgage to the formal offer being made by the lender. However, this timescale may vary.

Whoever agrees to lend the money will want to have the property valued. This is to make sure that the lender could get the loan back if for any reason you stopped paying your mortgage and the house had to be sold again. 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, usually when the you send a completed mortgage application form to the lender.

Arranging A Survey

The valuation which is done for whoever is lending the money is 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:-

  • a full structural survey. This is suitable for a property which is large, more than 80/90 years old or in doubtful condition
  • an intermediate or ‘house/flat buyers report’ that gives a report on the condition of the parts of the house that are easy to see and to get at and may recommend further tests or investigations, for example, a specialist check for woodworm. This is particularly suitable for properties built this century which appear reasonably sound. It is much cheaper than a full structural survey

It is possible for you to use the same surveyor who does the valuation to carry out the survey and this may be cheaper. However, you can use a different surveyor if you wish.

If the surveyor reports that there are some problems with the property, you will have to consider whether you still want to go ahead with the purchase or 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.

If you would like details of a local surveyor, please do not hesitate to contact us and we can provide you with this information.

Buying With Someone Else

You may choose to buy your property jointly with someone else, such as your husband, wife, civil partner, partner, relative or friend.

If you buy your property with someone else, you can choose to do this in one of two ways, as either:

  • beneficial joint tenants, or
  • tenants in common

This is the case whether you own the freehold or leasehold of the property.

If you are thinking about buying a property with someone else, you should get legal advice on the best type of ownership for you.

Beneficial Joint Tenants

If you own your property as a beneficial joint tenant, this means that it belongs to you and the other owner(s) jointly. You can’t re-mortgage or sell the property without the agreement of all the other owner(s). However if there is a dispute, an owner can apply for a court order.

As a beneficial joint tenant, you don’t own specific shares in the property and you can’t give away a share of the property in a will. If you die, your interest in the property passes automatically to the other owner(s).

Tenants In Common

If you own your property as tenants in common, this means that it belongs to you and the other owner(s)jointly, but that you all also own a specific share of its value. It is up to you to decide how much each share will be.

In this case it is vital that a Declaration of Trust deed is entered into between you, to confirm the shares you will each own, and also it is vital that you both make wills to confirm who will inherit your share in your new home, in the event of your death.