Guide: How to Buy a Home

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How to buy a home: Let us guide you through the pitfalls

More than one in six people don’t know the process, says survey by Manchester property law specialist Slater and Gordon

For sale Signs

Do you know what ‘gazumping’ means? Or stamp duty, or mortgage deeds? More than one in six hadn’t a clue on buying a home in a survey of 2,000 people by Manchester property law specialist Slater and Gordon.

Samantha Blackburn, a lawyer at the firm, said: “It’s vital that buyers, especially first-time buyers, know their rights and have a basic understanding of the legal process.

“Buying a home can be confusing, time consuming and expensive. Misunderstanding the process and not getting the correct legal advice can not only delay a sale, lead to increased costs for the buyer and also potential issues in the future.”

Step-by-step guide on how to buy a home

Work out what you can afford

Don’t forget to factor in costs of the purchase including solicitor and surveyor fees, mortgage fees and stamp duty.

Work on the general basis that you will need 10pc of the total purchase price as a deposit; 5pc if you’re using the government’s Help To Buy scheme.

If you’re buying a leasehold property, such as a flat, remember that you may have to pay a ground rent and service charge for upkeep of your apartment block, or development.

For sale signs

Apply for a Mortgage Agreement in Principle

A lender, such a bank or building society, will take some basic information and perform a credit search and credit score. They will then come up with a figure that ‘in principle’ they are willing to lend. Your property search can now begin!

Find your dream home and make an offer

Once your offer is accepted you will need to make a mortgage application and appoint a conveyancer. A conveyancer is a specialist in property law who will act on your behalf during the buying process.

House-keys

Get the property surveyed

The type of survey you choose will depend on the type and age of the property as well as your lender’s requirements. A HomeBuyer Report is a survey suitable for conventional properties in reasonable condition. Costs start at £400 on average

A Building or Full-strucutural Survey is the most comprehensive survey and is suitable for all residential properties, particularly older homes or homes of non-standard construction. This type of survey typically costs upwards of £600 and provides detailed advice on repairs.

Your conveyancer will then take over the sale and carry out searches on the property. The conveyancer will get the draft contract prepared by the seller’s solicitors and raise enquiries with the seller’s solicitors.

Sign and exchange contracts

When all issues around the property are resolved, your conveyancer will ask you to sign a pack of documents which will include the contract for sale, transfer, stamp duty land tax return and where applicable mortgage deed. When the buyer’s and the seller’s solicitors hold contracts signed by their clients and the parties have agreed a date for completion of the sale contracts will then be exchanged.

At exchange of contracts, the sale becomes legally binding and the deposit must be paid.

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Completion. Congratulations! You’ve got the keys

Completion of the purchase usually takes place about four weeks after exchange of contracts, although it can be earlier. This is when the mortgage lender releases the money and the transfer of the property is completed.

Once the transfer is dated, the buyer’s solicitor will then attend to submitting the Stamp Duty Land Tax return. The buyer will then be listed on the Land Registry.

What is Stamp Duty?

It’s a lump-sum tax that anyone buying a property or land costing more than a set amount has to pay. The rate depends on the price

Up to £125,000: Zero

The next £125,000 (the portion from £125,001 to £250,000):2%

The next £675,000 (the portion from £250,001 to £925,000):5%

The next £575,000 (the portion from £925,001 to £1.5 million):10%

The remaining amount (the portion above £1.5 million):12%

Jargon-buster

Gazumping – Gazumping occurs when a seller accepts an oral offer on the property from one potential buyer, but then accepts a higher offer from someone else

Chain – This is where people may have to wait for others to sell buy or sell their current house before they move

Contract – A legally-binding document that states the details of the house sale or purchase

Deed – A formal document stating the owner of the property and who it is being transferred to. This is also known as conveyancing

Stamp duty – A tax the government charges sales of residential property over £125,000.

Survey – This is a report on the current physical state of the property you buying to ensure that there are no serious defects to the house.

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Some top tips

Frazer Fearnhead, chief executive of The House Crowd, a property crowd-funding platform based in Hale, says: “Whether you’re a first-time buyer or someone looking to make a financial investment, you must do your research.

“Make sure you pay the right price and get the property surveyed. If everyone involved is sensible, there’s not a lot can go wrong. Be careful your solicitor doesn’t gloss over anything. Believe me, a lot do. If you have good, thorough solicitor they will check everything out about the property.

“There are lots of things which could be wrong with it or onerous charges you weren’t aware of. Or people might have a right of way across your land – these are all factors your solicitor should find out.

frazer fearnhead

Frazer Fearnhead: You must do your research

“You’ll also need a good surveyor to carry out a home buyer’s survey. People often get caught out when buying flats. Quite often, they haven’t considered how expensive service charges can be.

“You also need to make an allowance for any increase in interest rates. Another tip is to make sure you visit the property at different times of the day. Talk to people who live nearby and neighbours to see what the area is like.”

Original Article written by Charlotte Dobson from manchestereveningnews.co.uk