Once you’ve found a property you like you’ll need to make an offer, arrange a mortgage and appoint a solicitor to help you complete the process.
There are a lot of hidden costs when you’re buying a house and it can be a long and sometimes frustrating process. You’ll be asked to pay various fees and charges and you need to budget for these.
Making an offer
You don’t have to offer the asking price. You may want to look at what similar properties in the area have actually sold for and base your offer on this.
If your offer is accepted this will usually be subject to contract. This means that the price or the terms of the offer could change. This could be because your survey finds a fault with the property and you want to reduce your offer or because someone else is interested in the property and the sellers want to increase the price.
When your offer has been accepted you will need to arrange the financing for the house. For many people this means applying for a mortgage.
As part of the mortgage application process your lender will send a qualified valuer out to assess the value of the home. This is to make sure that the property is worth what you have offered.
You will normally have to pay for the valuation and you won’t get this money back if you decide not to proceed with the property or if the lender decides the property isn’t worth what you’ve offered. If the valuation is less than you have offered you may have to reduce your offer, increase the amount of the deposit you pay or withdraw from the sale.
If the valuation identifies a fault with the property the lender may not agree to the mortgage.
Surveys and homebuyers reports
On top of the lender’s survey many people also get a more detailed survey carried out before purchasing a property.
Theses reports may find problems with the property and will give you an idea of what, if any, repairs are needed in the near future. If a lot of repairs are needed you may want to
- ask the seller to carry out these repairs before you complete the purchase or
- ask for a reduction in the selling price to account for the cost of the repairs
Your lender or mortgage broker may be able to recommend a surveyor. You can also find your own independent surveyor. Ask friends or family who’ve been through this process to recommend someone.
Whether you get a homebuyer’s report or a full survey is up to you. A structural survey can be expensive but is much more detailed and will give you a much better idea of any problems in the property. A homebuyer’s report will detect any visible structural problems and give you a good idea of the general condition of the property.
The legal part - conveyancing
Conveyancing means transferring ownership of the property from one person to another. Most people will hire a solicitor for this as it is a complicated process.
Ask friends or family members that you trust to recommend a solicitor. Ask the solicitor to give you a quote for how much the process is likely to cost, but remember that this may increase or decrease.
Your solicitor will contact the seller’s solicitor and get a copy of
- the Land Registry entry for the property
- the title deeds
- the lease
There may be a bit of back and forth about the specifics of the contract and the date that the sale will complete. You should agree with the seller in writing any fixtures or fittings that you expect to be included in the sale. The seller may include things like floor or window coverings in the sale price, ask you to pay an additional fee for these or take them to their new property.
Talk to your solicitor if some of the included items have been removed from the house. You may be able to claim compensation.
You can make a formal complaint to the Law Society if you feel your solicitor has provided a poor service.
Exchanging contracts and paying the deposit
Before you sign the contract, make sure
- all the legal documents have been thoroughly checked;
- you have seen or received a copy of the Energy Performance Certificate;
- your survey or homebuyer's report has been done;
- any repairs arranged by the seller before the sale are agreed;
- your mortgage has been formally agreed;
- you have the money to pay the deposit and will be able to access this quickly.
Once all the details have been agreed, the contracts are signed and exchanged. You will have to pay the deposit. Your solicitor will explain how to do this.
You or the seller could pull out at any point until the contracts are signed and exchanged. Once the paperwork has been finalised you are locked into the deal. You will be given a date when the sale completes and you get the keys to the property.
Completing the sale and moving in
You are the legal owner of a property when:
- the money for the sale is given to the seller;
- you pay any outstanding costs involved in the purchase.
Either your solicitor, the agent or the seller will arrange to hand over the keys to the property.
You may need to hire a van to move your possessions into your new home. You may also need furniture, appliances and household items. Save some money for these when working out your budget.
If you paid £125,000 or more for your home you'll need to pay stamp duty. You must pay this to HM Revenue & Customs within 30 days of completing the sale. The amount you'll pay depends on the final purchase price for your home, including any additional money you paid for fixtures and fittings. If you're buying a home priced at just under a stamp duty threshold, be aware that any extras you pay for (such as additional tiling, paying extra for the existing carpet or other fittings, or turfing your garden) may bring you over this threshold and make you accountable for a higher band of stamp duty.
You won't have to pay any stamp duty if your home cost less than £125,000. You'll pay 2% on the portion up to £250,000, 5% on the portion between £250,000 and £925,000, 10% on the next percentage up to £1.5 million and 12% on everything over that. So, if you pay £260,000 for your home, you'll pay a total of £3000. That is 2% of 125,000 (£2,500) and 5% of £10,000 (£500). If your home costs £130,000, you'll pay £100, 2% of £5,000.
Stamp duty on second homes
Since 1 April 2016 people who are buying a property and who already own a residential property will have to pay a 3% surcharge in additional stamp duty. You will not have to pay this surcharge if you are buying a second property to use as your residential home and you have sold your current residential home. If you have not yet sold your current home, you may be entitled to a refund of the additional charge if you sell it within 18 months of buying the second property.
Property purchases of less than £40,000 will not attract the stamp duty surcharge as transactions below this threshold do not have to be reported to HMRC.
You will be responsible for paying rates on the property as soon as you become the owner. You should contact Land & Property Services once you move in to let them know that you are now responsible for paying rates on the property.