The entire process begins with your financing and the importance of ensuring your mortgage is in place and available before you embark on your house-hunting adventure.
Budgeting and Mortgage Pre-approval
This is a two-part process. Before you buy a house, it is essential to have saved enough to afford the deposit, legal fees and other costs, such assearches , stamp duty land tax and Land Registry fees.
Equally important is having your mortgage agreed in principle. That means you must speak to your lender or mortgage adviser, give them details of your circumstances and ask them to confirm they will be able to provide you with a mortgage. This, of course, is subject to the preliminary information you provide being supported by documentary confirmation.
Depending on the condition of the property you propose to buy, it is important to budget for any immediate repairs you might need to carry out when you’ve purchased the property.
Making an offer
This is possibly the most important part of the entire process. Your offer is critical to your success as the price point of your offer must be sufficiently attractive to the seller that they feel inclined to accept it.
Importantly, once you discover that your offer has been accepted, you should request that the estate agent removes the property from the market. If the property remains exposed to the market, there is the possibility of you being gazumped where someone else offers more than you and the seller withdraws to deal with the other party.
Appoint a Conveyancing Solicitor
You should appoint a conveyancing solicitor once you know your offer has been accepted. They will advise you of the conveyancing process, taking you through to completion. They will also confirm the likely costs involved in the house purchase process to help you budget to meet these costs.
Your solicitor will also ask you to provide proof of identity and source of funds. Solicitors are under a regulatory obligation to ask you for this information. Also, if a relative is helping you with your deposit, your solicitor will ask them to provide proof of identity and source of funds. Again, this is a regulatory obligation solicitors must fulfil.
The importance of searches
Your solicitor will obtain searches to ensure there is nothing adversely affecting the property. The searches include a local authority search to discover if there are any adverse planning or other notices affecting the property. A search should also be conducted with the water authority to determine that the water and drainage servicing the property are public and to find out of there are any unexpected charges on the horizon. An environmental search will also be conducted to find out if there is any flood risk or if there is any contaminated land in the vicinity.
The searches help to identify any potential issues that could affect the property's value or marketability. They can also help to uncover hidden costs.
Reviewing the contract
As the transaction begins to progress, your solicitor will review the contract for your purchase. This will include checking the title to the property, ensuring the seller owns it and has the right to sell it to you. Your solicitor will also check whether the property is subject to any restrictions or covenants. In addition, your solicitor will check to ensure all planning permissions and building regulations are in order.
Arranging a Survey
Before finalising the contract, you will need to have a survey conducted over the property. This will help establish the value of the property and indicate whether there are significant repairs required or outstanding structural issues.
There are three main options available:
Valuation report: Also known as an RICS Level 1 Survey. This is the most basic of surveys and most suitable for properties in good condition or recently built properties. It will highlight any significant defects and identify urgent repairs.
Homebuyer report: Also known as an RICS Level 2 Survey. This is a visual inspection that identifies potential issues that could affect your decision to purchase the property. It includes an inspection of the property’s services, structural problems, damp-proofing, insulation and general condition of the property. A homebuyer report is most suitable for conventional properties that are in reasonable condition.
Building Survey: Also known as an RICS Level 3 Survey. This is a detailed inspection of the condition of the property. This type of survey will:
- Identify defects, potential issues, or necessary repairs
- Highlight areas of failure or concern
- Identify causes of past, or ongoing, deterioration
- Provide an estimate of the cost of any works that may be required
- Recommend conservation and maintenance
You should consider this type of survey if you are buying a large, older or run-down property or if you are planning substantial works to the property post-purchase.
The more detailed the survey, the more expensive it will be. There are also other, more extensive, surveys available but sellers will resist these surveys because they can be disruptive.
Organising your buildings insurance
Once you exchange contracts with the seller, you are obligated to buy the property. You will have an insurable interest in the property as you become responsible for it from that date and must arrange buildings insurance to protect against damage or destruction. You should arrange the commencement date from the date of exchange of contracts.
Reviewing, signing and exchanging contracts
Your solicitor will go through the terms of the contract with you and explain what these mean. Once signed and exchanged, the contract will be binding on you and the seller, and you will be obliged to proceed with the purchase.
When the contracts have been signed and are ready for exchange, you will pay the deposit (normally 5% - 10% of the purchase price) and agree a completion date.
Preparing for completion
Your solicitor will arrange to draw down your mortgage in readiness for completion. In addition, your solicitor will provide you with a completion statement outlining the costs of carrying out the work along with the various expenses of the purchase. You must pay this before your solicitor can complete the purchase with the seller’s solicitor.
Completion
On completion, your solicitor will pay the balance of the price to the seller’s solicitor. Once the seller’s solicitor has received the funds, they will then authorise the release of the keys to you.
Post completion
Once completion has taken place, your solicitor will pay the stamp duty on the purchase and then register your ownership with the Land Registry. In addition, they will inform various third parties about the change of ownership. Examples of third parties who are likely to be notified are the freeholder or management company.
Your legal “to do” list is now complete
If all the steps of your legal “to do” list are complete, you will now be the owner of your new house. Ownership will be registered in the Land Registry, you will be in possession of the property and the costs will have been paid. It’s now time to enjoy peaceful possession of the property until it comes time to sell!
This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.
