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Once you’ve found a property you make an offer to the seller. This is usually through an estate agent, or directly to the seller if the sale is private. This offer is ‘subject to contract’ which means you can withdraw it if problems arise from the survey or during the contract stage. When your offer has been accepted, the legal process begins.
Many people need financial assistance in the form of a mortgage. Banks tend to offer their own products. However an independent mortgage broker has access to a range of products so you can find the best interest rate (the monthly cost of borrowing the money).
You may have to pay a booking fee to reserve the mortgage which is generally around £99 to £250.
The fee to set up the mortgage could be as much as £2,000. You can usually ask for it to be added to your mortgage, although that means you’ll pay interest on it.
This pays for a survey of the property carried out on behalf of the mortgage lender. It checks that the property’s value is sufficient for the mortgage amount. The cost is usually between £150 and £1,500, depending on the value of the property and how detailed the survey is.
The money borrowed is gradually repaid monthly, together with interest, over a period of time.
Only the interest on the loan is paid monthly, which means the amount you’ve borrowed still has to be repaid in full at the end of the mortgage term.
If you buy a property with someone else – such as your husband, wife, civil partner, partner, relative or friend – there are two ways you can own it.
If you hold the property as joint tenants, you will own the whole property jointly and must both agree to, and join in, any future sale.
If one person dies, the other becomes entitled to the whole property. It would not pass to any children or family. This method is popular with married couples. However, it may not be suitable if either of you have children from previous relationships whom you want to benefit under your will. You may also prefer not to use this method if you are concerned about the impact of inheritance tax on your estates after death.
This method enables you to divide ownership of the property into distinct portions which can be left to children or family when you die. For example, if one person contributes 70% of the purchase price of the property and the other 30%, it may be appropriate for the property to be held as tenants in common in the proportions of 70:30. Each party would benefit proportionately from an increase in the value of the property (or share the same percentage of any decrease in value).
Legally, you both still own the property in its entirety and therefore need to agree to, and join into, any future sale. This method of holding the property can be appropriate in the following types of situation.
Where there are issues relating to inheritance tax planning.
A solicitor must complete the legal aspects of buying a property. This is done once your offer is accepted, either before or after you’ve finalised your mortgage.
Your solicitor will
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At the point you exchange contracts, you will be required to pay a deposit (usually 10% of the purchase price), and often the balance, as well as arranging buildings insurance. Once the exchange has taken place, both parties are committed to the sale. If you withdraw after you exchange contracts, you lose the deposit.
On the completion date (when you actually buy the property) you must pay the remaining amount that you owe if you haven’t already. The mortgage is transferred from your mortgage lender to your solicitor’s bank account, then onto the seller’s legal representative’s account. Or if you’re a cash buyer, you need to pay any outstanding amount yourself.
You will also have to pay
Once you’ve made an offer, it usually takes ten weeks or so depending how quickly different stages of the process are completed.
Freehold is where the land on which the property is built is included within the purchase. No extra fees are charged.
Leasehold is where the land on which the property is built is not part of the purchase. You pay ground rent to the ‘freeholder’ who is the owner of the land. The length of the lease can vary, so you should always check it is sufficient for the mortgage lender you are using.