Buying a house: Everything you need to know

 

Buying your own home can be an exciting but daunting prospect, especially for a first-time buyer.

A home with a new owner

It will probably be one of the biggest purchases that you ever make and therefore you want to make sure everything runs smoothly and that you are happy with your new home at the end of the process.

What’s important to remember is that buying a house is a legal process and it makes sense to get advice from a qualified property solicitor. They can guide you from start to finish and help you to avoid any legal pitfalls along the way.

If you are thinking about buying a new home, read our guide on buying a house to get to know all the different steps and learn about a property solicitor’s role in the conveyancing process.

Contents:

How much can you borrow?Finalising the mortgage
What are you looking for?Surveys on the property
Starting your searchSearches
HIPsExchange of contracts
Making an offer and hiring a solicitorCompletion
Acceptance of your offerAdditional services of a solicitor

 

How much can you borrow?

If you are considering buying, hopefully you will have been able to save up a considerable sum to put down as a deposit (usually five to ten percent of an asking price).

The rest of the money for the purchase is usually borrowed from a lender, such as a bank. You will need to work out the realistic amount you can afford to repay each month and this will allow your mortgage broker or bank to work out the amount that you are able to borrow.

It is just as important to work out your ideal monthly repayment accurately. You might be given a figure that you are technically ‘allowed’ to borrow, but if you physically can’t pay this back due to monthly expenses you will end up defaulting on your mortgage and possibly losing the house.

When working out your expenses don’t forget to consider the additional costs that are incurred when buying property, for example stamp duty land tax, surveyors’ fees, Land Registry fees and other legal costs.

What are you looking for?

Once you have worked out your budget you can start thinking about what sort of property you want to buy.

What’s important to you – is it location, size, or proximity to amenities and public transport? Do you want a flat or a house with a garden and a garage?

If you can decide on the key characteristics that are the most important to you at the beginning of the process, you may find you are able to be more decisive during your search.

Starting your search

Armed with your budget and your ideal property in mind, you are now ready to start your looking at potential properties.

Visiting estate agents in the area you wish to move to is a good way of getting to know the local market, and the estate agents will arrange viewings for you. Bear in mind that it can take a while to find the property that is right for you so don’t be disheartened if you don’t find it straight away.

HIPs

You might have heard of home information packs (HIPs). They were made compulsory in April 2009, but the coalition government abolished them in May 2010.

These packs were put together by sellers and were meant to give potential buyers information about the property to consider before they make an offer.

It was free of charge for the buyer and contained compulsory documents such as a Property Information Questionnaire, an Energy Performance Certificate, evidence of title (to prove the seller is the owner of the property and is entitled to sell it), and standard searches (drainage, water and local authority).

However, the onus for the required information was changed to be placed on the buyer as an attempt to help stimulate a selling market, and HIPs were abolished.

Making an offer and hiring a solicitor

If you haven’t already done so and you are ready to make an offer on a property, now is the time to find a property solicitor.

Firstly, they will ensure that all requirements for an offer are in place.

Then, if your offer is accepted, the legal process of conveyancing begins and a solicitor’s advice will be necessary to ensure your interests are protected.

In addition, many mortgage lenders will insist that you have legal representation in the form of a solicitor before they will agree to lend you the money. Your solicitor will contact the seller’s solicitor and act on your behalf throughout the rest of the conveyance.

The offer you make for a property will depend on the asking price, your budget and the market. If the house has been on the market for a long time, the seller may be willing to accept an offer below the asking price. However, if the property is highly desirable, the seller may have already received a number of offers and you may need to offer above the asking price.

If this takes you over your budget you will need to carefully consider whether the property is worth it for you.

Acceptance of your offer

If the seller accepts your offer, you should ask the estate agent to take the property of the market.

Acceptance of your offer does not mean that you and the seller are bound by the agreement yet; there are still a number of steps that need to be completed before you are compelled to hand over your deposit and the rest of the purchase money.

The seller’s solicitor will send the draft sale contract to your solicitor. In addition, they will send a list of fittings and contents that are included in the sale. You will need to check this list to see if it matches your agreement with the seller.

Your property solicitor will start to carefully go through the contract and negotiate amendments if necessary.

Finalising the mortgage

Once your offer has been accepted, you will need to contact your mortgage lender so that your loan can be finalised. You will be asked to provide paperwork confirming your income and expenses.

Surveys on the property

Before your mortgage lender hands over the loan money to you, they will need to be convinced that the property is worth the amount that you have agreed to pay for it.

This is because if you default on your loan and are not able to repay it, the lender will need to sell the property to recover their money. If the property is not worth what you are asking, they will make a loss.

In order to determine the value of the property, the lender will have the property surveyed by a surveyor and you will be responsible for paying for it. You as the buyer should also commission a survey of the property.

A survey will bring your attention to potential issues with the house that you may have missed when you looked around the property, such as structural faults or damp.

In order to save costs, you can ask the lender’s surveyor to prepare a home buyer’s report for you. If the survey reveals any issues with the property that may cost you to repair, your solicitor may be able to renegotiate the selling price for you.

It is important to know as much as you can about the property before you buy it because of the legal principle ‘caveat emptor’ or ‘let the buyer beware’. This means that you buy the property as you see it and the seller is not responsible for pointing out any problems and cannot be held responsible for them later on (however, they are not allowed to deliberately mislead you).

It is for this reason that your solicitor will also send a standard set of enquiries to the seller’s solicitor that they must answer and return.

The enquiries will ask about a number of important things concerning the property including:

If any issues arise as a result of the enquiries, your solicitor will inform you and devise a plan of action to deal with them.

Searches

Searches are undertaken by your solicitor to find out as much as possible about the property you wish to buy and the surrounding area.

Searches include local authority searches to see if there are any road improvements planned near the property and if any planning permissions have been granted for the property.

Additional searches your solicitor may undertake include water authority searches, coal mining, contaminated land, flooding, and commons searches. If any of these searches reveal any potential issues, for example the house may be built on contaminated land, your solicitor will tell you and suggest ways to deal with the problem.

Exchange of contracts

The exchange of contracts happens when both parties’ solicitors have agreed on the purchase price and the draft sale contract. Once you and the seller have signed the contract, the agreement is legally binding.

This means if one of you pulls out of the sale, the other will be able to sue. You must pay the seller the deposit on exchange.

It is important that you do not sign the contract until you have received a formal mortgage offer from your lender and you have signed the mortgage deed given to you by your solicitor.

In addition, you must also be sure you are completely happy to go ahead with the purchase before you sign. Ask your solicitor any final questions and make sure you have your deposit ready to pay.

By exchange the date of completion will have been agreed by you and the seller. Completion is when the rest of the purchase price is paid to the seller and you are given the keys to the property.

You must have building insurance in place by exchange ready for the date of completion.

After exchange your solicitor will prepare the transfer document. This document transfers the title of the property from the seller to you and it needs to be signed by both parties. You will receive this document and the title deeds to the property on completion.

Completion

Finally, the long awaited day is here and you are the proud owner of a new home!

Your solicitor has a number of tasks to perform on the completion date to ensure you are able to collect the keys and move in.

They must receive the loan funds from your mortgage lender and pay these to the seller’s solicitor. Once the seller’s solicitor has received the money, the property is yours.

In addition, your solicitor will pay the stamp duty on your behalf and register you as the new legal owner of the property with the Land Registry (the official record of all land titles in England and Wales). Your solicitor will also register your mortgage lender’s interest in the property with the Land Registry for you.

Additional services of a solicitor

In addition to helping you complete the purchase of your new home, a property solicitor can assist you with a number of legal issues that may arise during or as a result of your purchase.

For example, if you are buying the property with someone who is not your spouse, you may need to create a deed of trust that sets out the proportions of ownership. In addition, you may need to write or update your will.

For more advice on buying a house, speak to a specialist property solicitor today. We can help you through the process, so give us a call or fill in a web-form using the details at the top of this page. And good luck!

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