Here, your solicitor (or licensed conveyancer) will prove a valuable asset. Conveyancing is notoriously complicated, but your solicitor should be able to explain the process and advise you at each step. Conveyancing relates to the legalities behind transferring the property from its current owner to you. If possible, try and find a solicitor that specialises in property law and conveyancing.
For starters, your solicitor will conduct searches on the property to make sure there is nothing out of the ordinary or any issues that you or your mortgage provider should be aware of. For example, you’d want to know if the government was planning in build a major road nearby. If there is, you’ll be informed of what action you should take. They’ll then prepare you what is called a “report on title”, which includes information on everything you need to know about the house you’re buying.
It’s important to keep in touch with your mortgage lender during this stage, too, in order to get a mortgage offer for the property.
When you exchange contracts, you’ll have to hand over a deposit to your solicitor which is usually between 5 and 10% of the asking price. This is different from your mortgage deposit, and locks you into the house purchase. If you drop out after this stage, you will lose the money.
Once your solicitor is content with the contracts and survey results, your mortgage in principle should be approved providing your mortgage lender is happy too – they’ll then issue you and your solicitor with the formal mortgage offer. The solicitors will then read out the contracts over the phone during a recorded conversation to make sure they are identical, and they will then be sent between each solicitor by post. Once exchanged, you’re legally tied into purchasing the property. If the build is a leasehold property, you’ll have to inform the freeholder that you’re the new owner.
Another important fact to remember is that you will have to pay stamp duty on the property if it costs more than £125,001. You can find out just how much you’ll have to pay below:
0% on properties £125,000 and less.
2% on properties between £125,001 and £250,000.
5% on properties between £250,001 and £925,000.
10% on properties between £925,001 and £1.5 million.
On completion day – which is the day you pay for the house – your solicitor will organise the money transfer between you and the seller’s solicitor, pay any tax you have to and register your home purchase with the Land Registry.
Your solicitor or conveyancer will be in touch with your mortgage lender to finalise your mortgage on completion day, and the lender will pay them the money to pass onto the vendor’s solicitor.
If you’re buying a property that someone else is living in, you’ll be at the end of a potentially long chain of other buyers and sellers. This means you’ll have to wait for the seller to have completed a purchase of the home they are moving to, and the seller of that house, and so on… This means you may have to wait until later on completion day to get your keys and move into your new home.
Bag yourself some home insurance
Although it’s not a legal requirement in the UK, your mortgage lender will require you to have buildings insurance in place from exchange of contracts. You don’t have to take out a policy with an insurance company connected to the lender you are taking the mortgage out with – it is fine to shop around for the best deal. However, the lender may want to see proof that the cover is in place – after all the property is its security on the money they have lent you.
Remember that you should get buildings insurance from the day that you exchange contracts, as this is the point where you are legally obliged to purchase the property. If anything should happen to it between this date and you moving in, you’ll still have to buy the property (or forfeit your deposit).
In order to get a quote, you’ll need to know information about the surrounding area, such as whether the property is near any trees or bodies of water. If you had one of the more extensive home surveys carried out, these problems should have been made clear here.
To get a quote you’ll also need your new home’s “rebuild value”. This is how much it would cost to rebuild the property from scratch (this will be less than the purchase price as it doesn’t include the land value). The Association of British Insurers offer a free calculator that you can use for a rough idea of how much your home will cost to rebuild. The lender’s valuation report should also contain a rebuild value.
Once you’ve completed this and the keys have been handed over, congratulations! You’re now the new owner of your first ever home. The hard part’s over, now the fun really begins – take some time to soak in your new surroundings and pat yourself on the back for all that hard work, you deserve it! If you’ve got any more questions, feel free to get in touch via our Facebook or Twitter pages.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.