Getting on the Mortgage ladder
Also Read - Mortgage Conveyancing | Mortgage Protection
Purchasing property can be a very daunting task, it is often drawn out
and confusing and on top of all that there can be charges and fees
involved that are easy to simply forget about.
Deciding to purchase property is probably the largest investment we make
in our lifetime, so it is only wise to take the time and whatever advise
is available to make sure of being certain before accepting and signing
any paperwork.
We have simplified the process of buying property down to 4 bite size steps:
Step1: Deposit and Mortgage
The Deposit - The majority of UK mortgage brokers offer mortgages up to 95% of the value of the property. Therefore a deposit is needed of at least 5% of the price. The more of a deposit saved also means less is required for a mortgage so you should save as much as possible. Typically the deposit is saved for in advance, but it may possible to arrange a loan to create the finance required for a deposit if time is short, or customers will have to arrange a 100% mortgage which costs more overall.
The Mortgage - The most important step towards purchasing property, once you decide
what type of mortgage you require, is to find out how much can be
borrowed for the mortgage.
UK mortgage amounts are worked out according to salary using income
multiples. The more you earn the more you may be lent for a mortgage. A
mortgage indemnity guarantee premium is charged if the mortgage is for
more than 75% of the property's value. Also the valuation report has a
bearing on the amount loaned for the mortgage. A joint mortgage
application could have an affect on the amount loaned for a mortgage,
indeed more should be offered in most cases. It is easier for you to
know how much you can borrow before you start to look for a home because
you will know what price ranges you can afford.
Step2: Locating Property
Finding a Home - Now you know you have a mortgage and know how much you can borrow, it is time to find a property that fits into your price range. If you want to save money on searching for a property, there are web sites online with lists of available buildings to buy. These web sites usually include pictures and descriptions of the properties along with any prices and contact information.
Estate Agents - Finding a home to buy can be a very time consuming process so most people use an estate agent to perform the more tedious and time consuming tasks involved. Estate agents should have lists of or contacts for properties in the required area, all in the customers price range and they should be of a suitable type. Estate agents can cut the time involved in home buying down but they do charge a fee for the use of their expertise and facilities.
Step3: Surveys, Fees and Making an Offer
Surveys - Once a desired property is located there are procedures to follow to
ensure the purchase is a sound investment for you and the asking price
reflects the properties value.
A property valuation must be carried out so the mortgage lender can
ascertain the size of loan it is prepared to make for the property. The
home buyers' survey and valuation report is required to check on the
condition of the property and its surrounding area. The fee involved
varies according to the size and value of the property. A building
report is a full structural survey and therefore the cost is likely to
vary with the buildings size.
Making an Offer - Once all the surveys and inspections of the building are complete and the mortgage lender is satisfied that purchasing the property is a sound investment, you are free to make an offer to the owner. The price offered should reflect anything found in the surveys with reductions for problems. You should be alert to the possibility however that if your price is too low, the seller may opt to sell elsewhere. This process is basically a continued negotiation until an agreement is reached between both parties.
Legal Fees - As well as the charges for setting up and the arranging of your mortgage, there are other fees you should be aware of such as for legal procedures. The legal procedures are undertaken by a solicitor and a conveyance and their roles are negotiate the price and to contact the sellers legal team and process any necessary paperwork. This is to make sure that the name on the property deeds are transferred. They pay both the land registry fees, which changes the legal owner of the property, and the stamp duty so the buyers rights as the new legal owner of the property are recognised. The amounts charged will depend upon the agents fees and the complexity of their work.
Exchange of Contracts - When the price has been agreed and both parties are fully satisfied, then contracts are exchanged between the seller and purchaser's solicitors. Both parties are now legally bound to the sale and purchase of the property. Title deeds are sent to the buyers mortgage lender who will hold them until the mortgage has been repaid in full. Now a completion date can be set and arrangements made for the buyer to move in and for the seller to move out.
Step4: Occupying and Utilities
Moving In - The process of moving in and inhabiting the property is one of the most
over looked stages of property purchasing.
Does the property require decorating and are there any alterations to be
made? There are removal company fees to be paid for shifting furniture.
Utilities such as telephones, electricity and gas need to be informed of
change of ownership and activated. Cookers, washing machines and phones
need to be fitted.
Companies used or owed need to be informed of the change of address, and
any mail redirected. If consumers have children schools need to be found
and informed, and routes worked out to these and to any shops needed.
