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Mortgage Information - Buying a House

 

Buying a House - Mortgage Information

 

What is Involved in Buying a House?

The first thing you need to decide when you buy your new home is what sort of area you want to live in. Make a list of the things that matter, such as: having a good school nearby for your children, good or convenient local transport links and shops or restaurants.

The following list includes a number of factors likely to assist you in making your choice of where to move to:

  • Distance from Work and travelling time
  • Distance from Amenities (Schools, Shops, restaurants, hospitals and transport links)
  • Quality of Amenities
  • Local environment rural or urban
  • Relative cost of housing


Steps in the legal work of buying a property

Although it is impossible to give a precise idea of how long the legal work involved in buying a property takes, it is possible to offer guidelines. From having an offer accepted to exchange of contracts can take up to seven weeks and from exchange of contracts to completion can take up to four more weeks. However, if there are any problems the time taken may be longer.


Enquiries made by the solicitor or, in England and Wales, licensed conveyancer

Once you have instructed the solicitor or, in England and Wales, a conveyancer, the seller’s solicitor or the licensed conveyancer draws up a contract which will eventually be signed by you and the seller. But before the contract can be signed, your solicitor or licensed conveyancer must make sure that there are no problems with the ownership of the property, rights of way, access, or future developments in the area that might affect the property. This is called ‘making enquiries and searches’. The solicitor or licensed conveyancer makes the enquiries and searches.


local searches

These are enquiries made to the local authority (or in Northern Ireland, the appropriate government department) about any matters which affect the property which involve the local authority, such as whether there is a compulsory purchase order on the property. Local searches also include questions about any proposed changes or development in the area that might affect the property such as roads, housing, shops. During the local search, the local Land Charges Register (Registry of Deeds in Northern Ireland) is also checked. This gives information about any matter which affects the property such as tree preservation orders, if it is a listed building or in a conservation area; and enquiries made to the seller by the solicitor or, in England and Wales, a licensed conveyancer. These are a set of standard questions about the property, boundaries, neighbour disputes and fixtures and fittings that will remain in the property. There may also be additional questions that the solicitor or licensed conveyancer thinks are necessary, such as the transferability of guarantees for any work done on the house, for example, a damp proof course; and from the Land Registry.


Arranging to pay the 10% deposit

Whilst the solicitor or, in England and Wales, a licensed conveyancer is making the enquiries, you should sort out how you will pay the deposit that has to be made when the contracts are exchanged. This deposit is usually 10% of the price of the home. However, it is sometimes possible to come to an agreement to pay a smaller deposit. If you are also selling a house it is usually possible to put the 10% deposit on the property being sold towards the deposit on the property you are buying.

If you are unable to provide the 10% deposit it is possible to use a ‘deposit guarantee scheme’. Your solicitor or licensed conveyancer can arrange this with an insurance company. If raising the deposit may be a problem, you should discuss the options with your solicitor or licensed conveyancer.

Alternatively, you could consider borrowing the money for the deposit from elsewhere, for example, from relatives or a bridging loan from a bank. However, the amount of interest you will have to pay for a bridging loan will be high and you should check how much this arrangement will cost.


Insuring the property

You should make sure that buildings insurance is arranged from the date of exchange, because once contracts have been exchanged you are responsible for the property. You may be able to get information on buildings insurance from your mortgage lender, solicitor or, in England and Wales, a licensed conveyancer.


Exchange of contracts

The final contract between you and the seller is prepared when:

  • the solicitor (or licensed conveyancer) and you are satisfied with the final outcome of all the enquiries
  • any surveyor’s report has been received and any necessary action taken
  • the formal mortgage offer has been received
  • arrangements about the payment of the 10% deposit have been made
  • the date of completion has been agreed

You and the seller each have a copy of the final contract which you must sign. These signed contracts are then exchanged. At exchange of contracts both you and the seller are legally bound by the contract and the sale of the house has to go ahead.

You should make arrangements for the supply of gas, electricity and telephone service and make sure that the seller is arranging for final meter readings to be made.


Completion

Completion of the purchase usually takes place about four weeks after exchange of contracts. On the day agreed for completion:-

  • the mortgage lender releases the money
  • the deeds to the property are handed over to your solicitor or licensed conveyancer
  • the seller must hand over the keys and leave the property by an agreed time

The solicitor or licensed conveyancer (in England and Wales only) will usually send their account to you on, or soon after, the completion date.


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