If you are a first-time buyer and wondering what you need to buy a house or flat, this guide will give you some handy tips, and breaks down the process.
Before looking at properties, you need to have organised your deposit. As a general rule you need a deposit of at least 5% to 20% of the cost of the home you would like. You should seek financial advice in respect of the mortgage, you may need to find out in advance how much you may be able to borrow.
You will need to budget for your disbursements i.e Search Fees, Land Registry Fees and any mortgage valuation fee or arrangement fee that might need to be paid up front., First-time-buyers currently pay no Stamp Duty on properties up to the value of £300,000. For homes costing between £300,001 and £500,000, a rate of 5% will apply – but only on that part of the purchase price. If you buy a home worth more than £500,000, you will then pay stamp duty at the normal rate, with no relief. When buying the property in joint names, the stamp duty will be higher unless you are both first time buyers. Also stamp duty rates or rules are subject to change from time to time.
One of the first stages in the conveyancing process after instructing your solicitor is to provide them with your ID; both photo and proof of address, and it is a legal requirement that a buyer provides adequate proof of the source of their funds to their Solicitor.
A solicitor’s obligation to prove the source of your funds is one of the most critical phases of the conveyancing process. In fact the Law Society states, “In many ways, client identification and verification is secondary in anti-money laundering compliance to understanding the source of funds”.
TOP TIP – Collate all the information that will be required i.e your ID and your source of funds, if the money is from savings, have six months bank statements. Have the evidence available to show the source of any other funds for the purchase money.
Having it all ready, can really help speed the process along for you
Your Conveyancing Solicitor will obtain the contract and title paperwork from the Seller’s Solicitor who will send your Solicitor the contract, with a copy of the Title Deeds of the property you are buying along with supporting documentation.
Your Solicitor will also apply for the Searches including the Local Authority search, which reveals any rights over the property – public rights of way, or planning permissions, notices for example. Once you have paid for your search fees, your Solicitor can start the search applications
If you are buying a new build property, you may be required to exchange contracts before it is fully built, to commit to the purchase. You may also be buying with assistance from Help to Buy, or a shared Ownership scheme. You Solicitor will help you with all the additional paperwork that this would involve. If you are not buying a new build and the seller is living at the property, they may have a related purchase that would need to complete simultaneously.
Your Solicitor will carry out Checks and queries, your Solicitor will go through the paperwork provided by the Sellers – and every search as it comes back – with a fine-toothed comb and raise any queries with the Seller’s Solicitor. These could include anything from discrepancies on the Deeds, to adverse entries a search result.
You can only ‘exchange contracts’ after your Solicitor is satisfied with the searches, replies to enquiries, a formal mortgage offer has been received, and arrangements made for the agreed deposit payable on exchange.
When you ‘exchange contracts’ with the seller you become legally committed to buying the property – and they are legally committed to selling it do you, at the point of exchange the date is set for the legal completion.
TOP TIP – Don’t book a removals firm until you have a completion date finalised. If the date changes further down the line, it could cost you to cancel or rearrange.
You need to ensure that you take out buildings insurance for the property from the date of exchange of contracts, as you are responsible for it from then on, unless the property is in a block of flats.
Completion is when you pay for the property and take ownership. On the day of completion, money is transferred and the deeds of the property are transferred, all dealt with by the Solicitors.
As Head of Residential Property at Edwards Duthie Shamash Solicitors, I am highly experienced in all aspect of the conveyancing process, do not hesitate to contact us if you have any queries, or if there is any way that we can assist you.