Introduction

Purchasing a house is expensive - but also potentially one of the safest investments that can be made. Many buyers, whether first-time or repeat, will have certain criteria that must be met for them to consider purchasing a specific property. Younger families, for example, will want safer neighbourhoods, good schools and work opportunities close to their ideal home, while retired couples will seek quieter neighbourhoods with easy access to shops and leisure facilities to enjoy their retirement.

 

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Research the property

Purchasing residential properties requires an extensive amount of research before even visiting the property in question. You will need to determine your price range, the current state of the neighbourhood, the crime rates in the area and whether the property itself meets any of your personal criteria.

If you are being sold the property by an estate agent, they will generally expect an initial offer of around 95% of the total asking price, this gives both sides “wiggle-room” to negotiate.

The ongoing costs to look out for are:

• Council tax – The amount you will be paying will be based on the value of the property and the number of people living in it. You will still have the option to choose to pay it every month or yearly, according to your preference.
• Leaseholder fees – If you choose to buy a leasehold property, you will also be responsible for paying the lease of the land. The average leasehold cost is between £150 and £450 depending on the type of property you buy.
• Insurance costs – It would be advisable that you also take out building and contents insurance to protect your property and possessions against damage. The average insurance costs can go from £200 to £500 depending on the type of insurance features and you can choose to pay it every month or annually.
• Utility costs – Like in renting you will be responsible for paying utility costs as well. These costs include water, gas and electricity, you can choose to pay monthly or quarterly.

 

Visit the lender and agree on a mortgage in principle

A lender here would typically be a bank that puts up the money to purchase the property based on your income, savings and credit history. They will offer you the amount they can loan out on a means-based test. Note that this is not a mortgage outright, but rather an indication of what the lender is willing to give you before you finalise the purchase of the property. This is known as a Mortgage in Principle but may be known alternatively as ‘Decision in Principle (DIP), ’Agreement in Principle (AIP) or as a mortgage promise.

 

DIPs are important measuring tools to determine whether you could afford the property and pay off the home loan. Buyers with poorer credit histories can use this as an indicator as to whether lenders will be willing to provide them with a loan despite their current credit rating.

 

Note that DIPs are not indicative of the interest rate of the loan at purchase - if a significant amount of time passes between getting the DIP and finalising the purchase of the property in question, interest rates may have changed and you could find a better deal elsewhere. It is imperative that when you get a DIP that an offer to the seller is made as soon as possible and that all checks have been made for the purchase of the property before any interest rates increase.

 

Make an offer to the seller

Offers made to the seller should be on your terms - they should be ideally below your absolute budget and the asking price to allow some room for decorations and renovations.

 

Ensure you have the funds

After you have made your offer, you should inform your lender and confirm that you wish to proceed with the purchase of the house, and ensure that the funds are still available.

 

Determine whether the property is fit for sale

The buyer (assuming it is not a cash sale) would be required by their lender to arrange a property survey and their solicitors will arrange the necessary searches.

 

Make a deposit

Buyer pays the deposit to your solicitor.

 

Exchange the contracts

After making the deposit, the buyer will instruct their solicitor to exchange the contracts with the sellers solicitor, the deposit is transferred and the land registry informed. At this stage, buyers will be legally committed to the purchase of the property andwill need to arrange property insurance.

 

Completion

Your solicitor will then claim the remaining funds from your lender (minus your deposit fee) and pass it on to the seller’s solicitor. The deed of the property is also transferred to the buyer. The seller's estate agent will then give you the keys.

 

Pay for the work and stamp duty

Finally, you will pay the solicitor for their time. If the property you have purchased is also above a certain threshold, you will need to pay Stamp Duty land tax. Your solicitor will transfer this amount on your behalf after the invoice has been settled.

 

What is a property chain?

A property chain is when a line of sales and purchases rely on each other. Chains usually start with a first-time buyer and end with somebody who is selling their property but not buying another. When you are in a chain, buying or selling a house depends on the purchases on either side (who is buying your property and who’s property you are buying).

 

Risks of a property chain

The chain is at risk if one party is no longer able or willing to complete their planned end of a deal, such as backing out of a purchase. Resultantly, the seller of that house cannot afford to purchase their planned property and drops out of the one they were planning to buy. Effectively, the chain collapses. Because legal work would have been ongoing during representing clients broken chains always results in liability for legal costs, making them frustrating and expensive.

Common problems with property chains:

 

Gazundering

 A buyer reduces their offer at the last minute, trying to force the seller to accept a lower figure or lose the sale.

 

Gazumping

This is when a seller wants a higher sum at the last minute, forcing the agreed buyer, who has already spent money on legal fees and got their sale lined up for their property to pay more money or have to start over.

 

How would Lestons help?

We use a specialist third party to manage all property matters for our clients, we would simply create a brief for them and they would take it from there, by using Lestons to create this brief saves them significant time and as their hourly rate is higher than ours it saves our clients’ money. To gain our assistance simply click on the link at the top of the page, activated by the link at the top of the page, should you wish to start a case the caseworker will send you the suitable payment link.

 

Please note your caseworker can only give generic advice, their role is to prepare your details for handling by our legal team and to act as your point of contact.