How do you buy a house?
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Buying a House

Buying a House

Buying a house can seem daunting if you're a first time buyer but if you have your mortgage sorted before you start looking, you can put yourself in a strong position.

Mortgage-in-Principle

Many lenders can agree a mortgage even before you find the right property through a mortgage-in-principle certificate.
You are not obliged to take up the offer with the lender and it doesn't guarantee that you get the loan, but it can bring credibility with the sellers and give you extra confidence for bargaining. It may also speed up your eventual mortgage application, as most of the checks will have been already carried out.
A pre-arranged loan can also help you discover how much you can actually borrow, and alert you to any problems with your credit rating - these can be sorted before you find your property.

How to get a mortgage

You will need bank statements and payslips for the past 3 months and your last P60, unless you are applying for a Self Certification (self-cert) Mortgage.
It usually takes about three weeks from the application to the formal offer being made by the mortgage lender. This can vary depending on personal circumstances.
As a general rule, mortgage repayments shouldn't exceed a third of your disposable income.

100 per cent loans are available but there is the potential for negative equity, and they tend to attract higher rates. A better option can be a loan that offers 90 per cent with the possibility of further unsecured advances.
Some lenders allow you to split your loan and have half on a variable rate and the other half on a fixed rate.
Mortgages offering additional benefits, such as free legal work or conveyancing are a bonus.

Watch out for early redemption fees - check what fees are payable if you decide to repay the mortage early.

Mortgage Glossary

Mortgage Rates

SVR - Standard Variable Rate - the normal rate when no special discounts apply, changes according to market conditions.

Fixed - the rate is fixed for a defined period of time. A fixed-rate mortgage is less attractive if you expect interest rates to fall as you could be stuck with an uncompetitive rate.

Discount - the rate fluctuates with the base interest rate, but at a lower discounted level for a set period. Make sure you also budget for the possibility of a rise in rates.

Capped - the rate may fall, but can only rise to a fixed limit.

Tracker - the rate reflects the changes made by the Bank of England. It can be for only a few years or for the duration of the mortgage.

Mortgage Plans

Repayment Mortgage

(also called Capital and Interest Mortgage) - you repay the interest on the loan and a proportion of the capital (the original amount you borrowed) monthly. This ensures that whatever term you decided on, you are guaranteed to have repaid the entire loan by that date, provided the repayments are made in full and on time. Initially most of your payments will be interest, but towards the end of the mortgage term most of your repayments will be capital.

Endowment Mortgage - this plan combines investment and life insurance and are designed to pay off your mortgage at the end of the term, or in the event of your death. These mortgages are not as popular as they used to be because investment returns have fallen in recent years, and some people have been left with not enough to pay off the mortgage debt.

Interest only Mortgage - you only pay the interest on the mortgage loan and have to pay the original amount borrowed at the end of the term. These mortgages usually run alongside an investment plan, like an ISA or endowment policy. With endowment and ISA investment there is no guarantee that they will repay your loan in full at the end of term.

Flexible Mortgage - enables you to pay off the loan more quickly without penalties, and you can use your mortgage as a reserve if needed.

Non-status Mortgage - helpful if you have had credit problems, no credit status or have suffered Bankruptcy.

Expenses to consider when buying a property

  • Stamp duty - payable on properties costing more than £125,000
  • Valuation fees
  • Survey fees
  • Land registry fee - a search that ensures the sellers own the property and there are no debts registered against it
  • Local authority search - releases information about planning applications near the property, such as new roads
  • Solicitor’s costs
  • VAT
  • Property insurance (if not included in mortgage)
  • Removal expenses
  • Final bills, such as gas and electricity

Survey and Valuation reports

These reports are carried out by a chartered surveyor to evaluate the property before purchase.

Valuation report - this ensures that the house value is enough so that if the mortgage is unpaid, then the outstanding amount of the loan will be covered. It is commissioned by the lender and the cost is usually passed to the borrower, but some lenders will not charge for the valuation.
It is advisable to have your own survey carried out on your prospective property, as a detailed report will reveal any potential problems - perhaps allowing you to renegotiate the price before you commit.

Homebuyers Survey & Valuation - includes significant matters such as subsidence or settlement and urgent repairs for which the client should obtain quotations prior to exchange of contracts.

Building Survey - this comprehensive structural survey is very detailed and is recommended for older buildings built before 1960, and should reveal most defects. Each visible element of the property is inspected and any necessary repairs will be identified

Stamp Duty - this property tax imposes a percentage charge on the full price of a property, once the threshold is breached.
Mortgage lenders say stamp duty now affects 75% of first-time buyers, compared with around 25% in 1997.

Latest Stamp Duty Rates (UK Government site - opens in new window)

Insurance

Buildings Insurance - covers the cost of rebuilding or repairing the property if it is damaged by fire, subsidence, flood, etc. Surveyors include an estimate of the actual cost of rebuilding in the valuation or survey of the property.
If your policy includes the clause 'seek and find' the insurer pays the cost of finding the cause of a problem, such as ripping out your kitchen units to find a leak.
As well as building insurance you should obtain contents insurance - it is not compulsory, but is recommended - a policy with a 'new for old' clause ensures you get enough money to replace your possessions with new ones when you claim. The premium is often lower if you take out buildings and contents with the same insurance company. Some companies will reduce the rates if the security of the property is improved by fitting approved window locks or a burglar alarm.

Mortgage Insurance - taking out a Life Insurance policy will ensure that in the event of your death your mortgage is paid off - an endowment policy already includes this in the mortgage plan.
An Accident, Sickness and Unemployment Insurance will protect your mortgage payments if you are unable to work or are made redundant. The payments period is usually limited to 12-24 months, depending on your policy.

Completion

Once your solicitor is happy with all the searches, etc you will be asked to sign the contract and pay the deposit on your new property.
As soon as contracts have been exchanged then the sale is binding. Generally, on average it takes between 2-4 weeks between exchange of contracts to completion.

If you time your move to be on the last Friday of the month the first mortgage payment is kept low, because interest is charged from the completion date and the first payment is not taken until the month following completion.


Getting the Keys

Moving House Checklist and Tips

Moving house is one of the most stressful events in your life, but these tips might help ease the pressure a little.

Organising everything well ahead of the moving day is the best way to make sure things run smoothly. The countdown should begin six weeks before you move home.

6 Weeks before you move

  • Confirm your moving date (usually the completion date), and arrange your home insurance to cover you on the day you move in.
  • Get at least 3 quotes (in writing) for removal costs. Ask friends, family and work colleagues for a reputable removal company. If possible choose a company who is a member of the British Association of Removers (BAR) or the National Guild of Removers and Storers (NGRS). Fridays and bank holidays are usually in high demand, so try to opt for a mid-week moving date. Check if the removal company offers discount if you move on an off-peak weekday. Make sure there is insurance covering any damage to goods during transit. Check whether there are any exclusions as some insurance policies don't cover goods you have packed yourself.
  • Notify the utility companies of your moving date and arrange electricity, gas and water meter readings on your old and new property.
  • Arrange your new telephone line/ internet/ satellite/ cable connection.

2 Weeks before moving day

  • Confirm your moving time and ensure the removal company have directions to your new house and your mobile phone number.
  • Organise a time with your solicitor or Estate agents to collect your new keys and hand over your old keys.
  • Arrange to get your mail redirected by the Post Office to your new address.
  • Send your change of address and phone number cards or emails to friends, family, employer, school, bank, building society, pension provider, credit card company, vets, council tax, DVLA, Inland Revenue, TV licensing, etc
  • De-register from your GP and dentist if you are moving out of the area. Remember to register in your new locality.
  • Notify your local services, such as milk delivery, papers, window cleaning, etc and arrange a cancellation date.
  • Begin packing any non-essential items, i.e spare clothes, extra crockery, books. Colour code or label the boxes per room you want them in as you go.

Day before your house move

  • Defrost the fridge and freezer.
  • Label or colour code all the boxes and carpets with the room you want them put in. Mark boxes with any fragile items, so the removal firm will know to take special care.
  • Pack a bag to keep with you on moving day with the essentials - light bulbs, torch, fuses, loo roll, candles, matches, toiletries, underwear, cash, phone charger and tools.

Moving Day

  • Unplug any of your remaining appliances.
  • Ensure a box containing a kettle, cups, tea and bedding is loaded last of all - that way it will be the first to be unpacked. Put in a bottle of champagne and glasses to celebrate later!
  • Keep your essential bag out of the way of the removers, such as in the car, and label anything you want to keep with you 'Do Not Remove'.
  • Count the boxes before they are moved and check when they are delivered to your new address that you have them all.
  • Make it your priority once you reach your new home to make the beds and hang the bedroom curtains as soon as possible - by the end of the day you'll be exhausted and it will be great to just relax. Don't attempt to do all your unpacking on the first day, just unpack the essentials - and make sure there is somewhere comfortable to sit, eat and sleep.

Enjoy your new home and open the champagne!

Who knows where you live? (article in the Independent - opens in new window)


Bridging Loans

What is a Bridging Loan? Why would you need one? How do you find a Bridging Loan?

Selling and buying houses does not always go smoothly, it just takes a break in the chain for the sale of your existing home to fall through. You quickly need a Bridging Loan to complete on your new property purchase, otherwise you could lose it if someone else makes an offer. A Bridging Loan can also be the solution if :

  • you need to buy a new property before you complete the sale of your home and the equity is released.
  • there is likely to be a delay in moving after completion.
  • you need funding for short-term commercial or residential renovations.
  • saving a property purchase if the mortgage is delayed.

Fast, easy application

The main advantage of a Bridging Loan is the speed you can get the money you require, in order to successfully complete the purchase of your new home.
Find a lender specialising in arranging fast personal and commercial low-rate bridging loans with easy online application and competitive rates.
Most lenders can usually give you an in-principle decision within 24 hours and provide a speedy release of funds to you - usually in less than a week and often within days.
Find specialists who will advise you on the best option and the best rates, and help you to bridge the funding gap.

What is a Bridging Loan?

A Bridging Loan is a short term mortgage which is secured by your property. This is usually arranged by getting a mortgage on the new property, and taking out a second mortgage on the property being sold. This type of loan is mainly available for house sales and is usually taken out to solve a temporary cash shortfall which can happen when selling and buying different properties or to pay for renovations. It 'bridges' the gap between the purchase of a new property and the sale of an existing one.

There are generally two categories of Bridging Loans:

Closed - this is when you have exchanged contracts on both the property you are buying and the property you are selling.
Open - this is when you have not exchanged contracts on the property you are selling.


Bridging loans can be arranged for:

  • Residential property
  • Commercial property
  • New house building
  • Land purchase
  • Renovations
  • Conversions
  • Overseas Property
  • Auctions

This can be the most cost-effective way to fill the gap that can sometimes occur between buying and selling your property.
Due to being for a short term Bridging Loans are usually at a higher rate than your conventianal mortgage, interest rates are generally around 2.25% a month. We ensure that the most competitive rates are offered to our applicants, due to our specialist team of top lenders and brokers.

Purchasing a property at auction

Completion needs to be fast as you have to complete within 28 days, so you need a bridging lender who can act quickly and professionally.
Unlike many of the main banks Bridging Loan specialists recognise the need to deal rapidly with your request - which is vital where property purchase is involved. You can expect to receive your funds within the week, enabling you to continue with your property plans.

Fast-track

Find lenders who specialise in providing fast online access to Bridging-Loan finance on residential or commercial properties in the UK.

Find lenders who have no maximum limit for Bridging Loans, so a substantial amount is available if needed.

Find lenders who lenders will usually allow Bridging Loans of up to 80% of the value of the property. The amount is borrowed for a period from a week to a year. The maximum term for a Bridging Loan is generally 12 months and no repayment is required until the loan term has expired or the loan is refinanced. There is, in certain circumstances, the flexible facility of extending the loan period if necessary for some clients. Short term Bridging loans are quick to arrange and are repayable either in a lump sum payment of principal or monthly instalments.
A Bridging Loan is generally available as a stand alone product or is available in conjunction with a mortgage.

Being self employed or having an adverse credit history or CCJs need not be a problem. A Bridging Loan can even enable people who have an adverse credit history to build a track record before applying for a conventional mortgage. A successful Bridging Loan can have a positive effect on a borrower’s credit score making future finance more attainable.

Fast-track to your financial solution if you require bridging finance quickly in order to secure the property of your choice, and only need funds for a limited period of time. Find financial experts who will help you through the application process to achieve your property needs in the most cost effective way.

 

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE

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