Buying a property

How to find a property

You can find a property by

• speaking to an estate agent
• looking at property pages of local newspapers
• contacting house building companies for details of new properties
• looking at property websites such as Rightmove

The offer

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.

Mortgage Fees

Booking fee
You may have to pay a booking fee to reserve the mortgage which is generally around £99 to £250.

Arrangement fee
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.

Valuation fee
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.

Types of mortgage

Repayment mortgages
The money borrowed is gradually repaid monthly, together with interest, over a period of time.

Interest-only mortgages
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.

Beneficial joint tenants

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.

Tenants in common

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 the purchase price is contributed unequally by the parties.
• Where the owners are not married to each other.
• Where the owners want children or relatives from a previous relationship to benefit under their wills.

Where there are issues relating to inheritance tax planning.

Your solicitor will

• carry out searches relating to the property’s title and local council information, mining issues, drainage matters etc
• review the seller’s replies to pre-contract enquiries
• negotiate the purchase contract
• negotiate the transfer document
• provide a report containing detailed information about the property then obtain your signature on the necessary documents

• advise you in respect of your mortgage offer
• proceed to exchange of contracts and then completion of the purchase
• transfer funds to the seller’s solicitors
• calculate Stamp Duty Land Tax and prepare and submit the relevant forms to HM Revenue & Customs
• register the purchase and the mortgage at the Land Registry

The deposit

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.

The outstanding amount of the purchase price

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.

Other payments

You will also have to pay

• your solicitor’s bill
• stamp duty if your property purchase is high enough (your solicitor will arrange this for you)
• removal fees if you’re paying for help moving home