| Choosing a mortgage
Buying a property can be a complicated and confusing
exercise, particularly as it's something most of us
only do a few times in our life. For first-time buyers,
the process can be even more baffling.
Our simple guide takes you all the way from finding
the right property to the day you move in.
Choosing a property
The first thing you need to decide when you buy your
property is what sort of area you want to live in.
Make a list of the things that matter most to you.
These might include having a good school nearby or convenient
local transport links.
Next, you will need to decide how many bedrooms you
want, whether you need a garden and whether you would
prefer a house or a flat.
Here's a quick checklist:
Area
- Distance to work and quality of local transport
if required
- Quality of schooling if required
- Convenience of local shops and restaurants
- Transport links (e.g. to visit friends or relatives)
- Other local amenities (e.g. local parks, leisure
centres etc)
Type of property
- You can afford the asking price
- You can afford the heating, other maintenance and
on-going costs including council tax
- Are you looking for a flat or a house or a bungalow
- If a house, are you looking for detached, terraced
or semi
- Are you looking for something old or new
- How many bedrooms do you need
- What is the size of the garden
- Does it have a garage or off road parking
Finding a property
Once you have decided what sort of property you are
looking for and the area where you want to live, contact
as many local estate agents as possible. Ask them to
send you details of suitable properties on their books
on a regular basis. You can also look at the various
estate agency and other Internet sites that list properties.
Once you have identified a property you are interested
in, it is worth calling the relevant estate agent once
a week or so to ensure you get an early look at properties
which have only just been placed with the agent. In
this way, they will know you are a serious buyer and
they will generally make the effort to contact you when
new properties come up.
Once you get started, you will probably see a lot of
different properties in a fairly short period of time.
Keep a record of each one you have visited, together
with a few notes reminding you of its good and bad points.
Then you can look back on this list to check that you
are still fulfilling your requirements in the properties
you are viewing.
It is important to organise your mortgage as soon
as you think you have found a suitable property. The
loan may take a few weeks to process, and the person
you are buying from (and the estate agent) will want
to know your mortgage lender is all set to go.
If you want to arrange mortgage finance before you’ve
even found your property you can get an Approval In
Principle from your chosen lender. This Approval can
often help to convince the vendor that you are a genuine
purchaser. We can arrange for your mortgage application
to be submitted as an Approval in Principle –
just make sure you mention this when submitting your
application online.
The amount you are able to borrow is primarily determined
by your income, your employment status, the size of
deposit you can provide and what other financial commitments
to you have.
There are two ways you can find a mortgage...
THE HARD WAY
This is to trawl around among the different mortgage
lenders yourself and see what each has to offer.
THE EASY WAY
This is to talk to Harris &
Associates, who can search the whole of market for
a constantly updated
database of lenders to find a suitable mortgage or loan for your needs.
Mortgage Checklist
Checklist for choosing your mortgage:
- Does the mortgage guarantee a fixed rate of interest
(and hence monthly payment) for the first few years?
This can be a help during the early years, when your
finances may be stretched.
- Look out for early redemption penalties which can
make it costly to change lender.
- Will the loan let you take payment holidays if
the repayments are likely to become a strain at certain
times of year? This is known as a flexible loan and
can also be helpful for people whose income fluctuates
from one month to the next.
- Does the mortgage offer you a cashback lump sum
when you first take it out? Loans like this can help
you pay for furniture, carpets and all the other things
you will need in your new home.
- Will you still be able to afford the loan when any
fixed-rate or discounted period is over? When special
offer periods like this come to an end, most mortgages
move to the lender's standard variable rate which
may be significantly higher.
What happens next?
Once you have chosen and applied for a mortgage, the
lender will want some supporting documentation. The
information your lender may require includes:
- Evidence of your income and commitments, such as
recent pay slips, a P60, your latest mortgage
statement and your bank statements;
- Information from credit reference agencies, your
employers, other lenders and your landlord;
- Proof of identity, such as a passport or birth certificate;
If you apply for your mortgage through Harris &
Associates we will handle this documentation on your
behalf and manage the process with the lender –
one of the advantages of using a broker to select
your mortgage.
Finding a solicitor
As a first-time buyer, you will not have to worry about
selling a property before you can move.
But you will still need to find an experienced solicitor
to carry out the conveyancing on the property you want
to buy.
The job of a solicitor or conveyancer comprises the
following tasks:
- Obtaining the deeds which prove it legally belongs
to the person you are buying from;
- Researching just where the property's legal boundaries
lie and passing this information on to you;
- Preparing a fixtures, fittings and contents list
which makes it clear whether or not things like carpets
or kitchen appliances are included in the purchase
price.
This enquiry form will also ask the vendor whether
they are aware of any material structural or other defects
to the property that you should know about;
- Advising you on a draft contract for sale, prepared
by the seller's solicitor, setting out the terms of
your purchase;
- Carrying out a search of local planning information
to uncover details of any upcoming developments, such
as a new road, which could affect the property's value;
- Agreeing a date for completing which suits both
you and the property's seller.
Conveyancing may well take longer than you had imagined,
but don't be tempted to rush matters.
Your house or flat is probably the most expensive thing
you will ever buy, so it is important to be sure there
are no loose ends.
Most lenders will be prepared to accept your choice
of solicitor, as most experienced solicitors will have
acted for the lender in question before. However some
lenders can insist on the firm having at least two partners,
so it can be best to check beforehand.
Conducting a survey
Once your offer has been accepted, a survey is required
to assess the property's condition and value. Your mortgage
lender will require at least a basic valuation before
allowing your loan to go ahead. In almost every case,
we recommend strongly that you get a more detailed report
on the condition of the property to protect not only
your lender's interests, but your own as well.
Make sure that the surveyor you use is a member of
the Royal Institution of Chartered Surveyors or the
Incorporated Society of Valuers and Auctioneers.
There are two kinds of surveyor's report beyond the
basic valuation:
- A House Buyer's Report comments on the condition
of only those parts of the property which are easily
accessible or visible. The surveyor will recommend
any further investigations he thinks are necessary
– for example if he thinks the wiring needs
checking or there is the possibility of some structural
problems.
- A Full Structural Survey involves a more extensive
investigation. A full
survey is more expensive than a house buyer's report,
but should tell you much more about any work that
may need doing on the property if you buy it. Full
surveys are recommended in many cases, particularly
if you are buying a property that is more than 100
years old or the building is more than three stories
high.
When you view the property yourself, look out for
any signs of problems like cracks or damp patches so
you can point these out to the surveyor later for him
to inspect properly.
When you set out on the home-buying process, you should
budget for the cost of more than one survey. You might
find the surveyor's report on your first property uncovers
serious faults (such as subsidence or rot) which mean
you want to withdraw your offer. Even if there are no
problems with the property itself, another bidder could
step in with a better offer at the last minute. Either
way, you will have to start the whole process again,
and that includes organising a survey for the next property
where your offer is accepted.
Where the survey does reveal serious problems, you
are free to withdraw your offer. If the problems can
be fixed, you may be able to use the survey results
to negotiate a reduction in the sale price to compensate
you for this extra expense.
Exchanging contracts
With your survey safely completed and the lender happy
with it, you can move to the stage of getting a formal
mortgage offer from your chosen lender which will detail
all the conditions of the loan. Read this carefully
and get your solicitor to explain anything you do not
understand.
By this time, your solicitor should have a draft contract
ready for you and the seller to sign.
Once you have signed this contract, there is no going
back, so be very sure you are happy with all the sale
arrangements before you commit yourself.
Typically at exchange (unless exchange and completion
are on the same day), you will have to put down a deposit
of 5 or 10% of the purchase price. You also need to
make sure that the building is insured as you are now
legally obliged to buy it (your solicitor will help
make sure that this happens).
Check that:
- Your solicitor has completed all the local searches;
- The surveyor's report is complete and accepted by
all concerned;
- You have a formal mortgage offer in writing which
you have read and understood;
- You have the agreed deposit available;
- You have agreed a firm completion date for the sale,
and this date is noted in the contract;
- There are no outstanding issues remaining to be
settled between you and the seller.
When you have signed the contract, your solicitor will
deliver it to the seller’s solicitor in exchange
for the contract the seller has signed. From this point
onward, both you and the seller are legally committed
to the deal.
Completing and moving in
All that remains after exchanging contracts is to
pay over the money needed to buy the property, less
any deposit already paid at exchange, on the agreed
date. Your solicitor will get the mortgage funds direct
from the lender and the remainder (if any) from you,
and then pass it all on to the seller’s solicitor.
Once payment has been confirmed, you can collect the
keys to your new home from the estate agent.
In the last week or two before the move, contact all
the relevant institutions that you deal with. We can
supply you a checklist upon request.
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