How to Buy a Home

HOW TO BUY A HOME Before you start hunting, it's best to have a good idea of what you can afford. Along with mortgage and deposit costs, you'll WHAT IS need to consider the cost of furnishing your home, building YOUR BUDGET? work / repairs, contents insurance or reconnection of utilities. A typical budget will comprise of the following: INCOME ONE - OFF FEES How much do you earn a year? How much can you save These fees can add up to 7% to the property price. before purchasing a property? If you have any outstanding debts or committed outgoings, be sure to WHAT ARE THESE FEES? consider this in your budget. Stamp duty 1% for properties between £125,001 to £250,000 Property survey £250-1200 DEPOSIT Conveyancers / Solicitors You'll need a minimum of 5% of total house price for a 3% for properties between deposit. The bigger your deposit, the lower your £250,001 to £500,000 £500-1500 monthly mortgage repayments will be. 4% for properties between Land Registry fee £200-500 £500,001 to £1million GOVERNMENT LOAN In some circumstances, the Government can provide a EXISTING EQUITY protected loan to buy your new home. If you already own a property, you can use its value as equity against your prospective new home. MORTGAGE A loan secured against a property that you pay back FINAL COSTS over time. Consider how much you can afford to repay Costs surrounding moving, repairs, contents insurance per month. Explore the market to get an idea of how lenders differentiate in interest rates and repayment and furnishing your new home. Also consider reconnection costs of your utilities, such as your water, costs - an estate agent or your bank should help with electricity or internet. this. THE HELP TO BUY SCHEME This scheme is designed to help first-time buyers and existing property owners move up the housing ladder. It must be your only property and you can't sub-let your home. PHASE 1 - EQUITY LOAN Limited to new build properties and properties up to £600,000, the buyer must contribute at least a 5% deposit and find a mortgage to cover 75% of the property value. They can then 75% MORTGAGE borrow up to 20% of the value from the Government, interest-free for 5 years. After this 5 year period finishes, borrowers will be charged a fee equal to 1.75% of the loan's 20% EQUITY LOAN value every year. The borrower must pay back the government loan when they sell the home or at the end of the mortgage 5% DEPOSIT period. PHASE 2 - MORTGAGE GUARANTEE Available to both first-time buyers and existing home owners buying new build or older properties. Like Phase 1, borrowers 95% MORTGAGE will need a 5% deposit and lenders will be able to buy a guarantee from the Government covering up to 15% of the property value. This makes it much less risky for lenders to offer mortgages to lenders with only a 5% deposit, allowing them to 5% DEPOSIT offer cheaper rates to buyers. Think of a location that best suits your needs by considering the neighbourhood and the state of the market in those areas. Consider council tax costs, your proximity to WHERE DO YOU WANT TO LIVE? supermarkets, transport links, schools and hospitals too. How do you plan to commute to work? Here are some useful figures about the UK property market and how house prices have changed over the last 12 months (year-on-year/YoY increase/decrease): REGIONAL AVERAGE HOUSE PRICES LONDON BOROUGHS WITH GREATEST GROWTH ΥΟΥ YOY LONDON £403k +11.2% HACKNEY £502k +17.2% SOUTH EAST £220k +5.9% WANDSWORTH £489k +16.4% EAST £180k +5.2% WALTHAM FOREST £292k +16.2% SOUTH WEST £176k +3.6% H'SMITH & FULHAM £659k +15.3% WEST MIDLANDS £131k +3.2% LAMBETH £429k +15.1% EAST MIDLANDS £126k +4.1% LEWISHAM £313k +12.5% WALES £118k +3.5% ISLINGTON £565k +12.5% YORKSHIRE + HUMBER £116k +0.5% SOUTHWARK £445k +12.4% NORTH WEST £110k +1.7% WESTMINSTER £863k +12.3% NORTH EAST £97k -0.1% HARINGEY £416k +12.1% LEEDS NEWCASTLE 124K 112K AVERAGE PROPERTY TYPE PRICE LIVERPOOL 90K BIRMINGHAM 114K SHEFFIELD YOY MANCHESTER 116K 96K NOTTINGHAM DETACHED £296K -4.4% 83K FLAT/MAISONETTE £159K +5.8% READING SEMI-DETACHED £158K +4.3% 205K BRISTOL LONDON 177K 403K TERRACED £125K +3.5% CARDIFF 144K SOUTHAMPTON OVERALL AVERAGE £167K +4.4% 142K ISLE OF PLYMOUTH WIGHT 126K 152K Data correct as of January 2014 courtesy of Land Registry There are several different places you can look to find your new WHAT ARE YOU home, but arming yourself with knowledge about the property LOOKING FOR? ensures you can make a sensible decision, informed by facts and not emotions. There are two types of property you will encounter: FREEHOLD LEASEHOLD If a property is freehold you would own the If a property is leasehold, you would own the building and the land that it stands on. It will property for a fixed period of time and would be your name in the registry as the 'freeholder'. You are responsible for lease it from the freeholder. As the leaseholder, you will be permitted to use the maintaining the fabric of the building home for a certain number of years and including the roof, walls and surrounding operate under the legal rights and grounds. responsibilities set by the freeholder. In most cases you will need to pay the freeholder maintenance fees, annual services charges and ground rent, plus their share of the building insurance. Freehold properties are usually more valuable and desirable than leasehold properties. There are less restrictions and third parties involved in freehold properties, and it can be a FREEHOLD OR complicated and expensive procedure to extend a lease with leasehold properties. Be wary of lease terms of less than 90 LEASEHOLD? years as these can affect the value of the property during re-sale, and mortgage companies will be hesitant to lend against it. WHERE TO LOOK? Online estate Online property Your local Adverts in Local 'for sale' Word of mouth agents directories portals estate agent newspapers signs in your and magazines area WHAT TO DO WHEN VIEWING A PROPERTY? WEDNESDAY FRIDAY See a property more than once and at different times Ignore decorations and Even if you are buying alone, Ask if you can take your own or days of the week. You personal items. You are buying bring someone else for a pictures of the property. ideally want to see the the property, not the previous second opinion. property at its worst as well owner's taste! as its best. WHAT DO YOU NEED TO FIND OUT? What else is included in the Is the property damaged by sale? Does the garden come Are the windows double Is there enough room for your subsidence or damp? Check with the property? What glazed? Is there central requirements? How much for cracks, watermarks or about the garage? heating? Gas or electric? storage is there? doors that don't close properly. ЭЕDЕ Why is the owner What's the history of the Has the property been moving/selling the property? Are there enough power property? How long has it redecorated recently? Are they part of a larger Has the owner covered points in the property? Where been on the market? Has the property chain? is the phone line? price been lowered recently? anything untoward? So, you've found your perfect home. It's now time to make MAKING A 4 PURCHASE an offer for it. Here are a few things to think about before you sign the dotted line. II III KNOW YOUR DO YOUR STAND LIMITS RESEARCH FIRM Determine on how low you want to start Consider the history of the property and When you make your offer, say it with your offer on your perfect home and make note of any price drops that have confidence then wait to hear feedback decide your maximum value you're occurred in the past. Also research prices from the agent and the owner. willing to offer before the negotiations of other properties in the area. start. If your offer is at the asking price, you're The average time for a property to be on the market is around 8.5 weeks. If your entitled to ask the agent to take the This will ensure that you won't exceed property off the market immediately. If perfect property has been on the market for 10 or more weeks, then you may your budget or rush into buying a your offer is under the asking price, be property you can't afford. prepared to justify your decision, but stand firm and wait for a response. consider offering below the asking price. FINALISING Here are the final steps to sort out before moving in to your new home! THE SALE MORTGAGE APPROVAL INSTRUCTING SOLICITORS PROPERTY SURVEY Solicitors are hired to undertake the The lender formally approves their conveyancing of the property - A property survey is requested to loan contribution and committal to ensure the property is in a good and paperwork, transferral of funds and helping to fund the purchase. safe condition. property searches. REMAINING DEPOSIT COMPLETION STATEMENT FUNDS Hand the deposit over to the seller's The solicitor prepares a final The solicitor organises the collection of any remaining balance of funds required. solicitor. completion statement for your approval. PREPARE DEEDS FINAL CHECK THE MORTGAGE The solicitor prepares deed of transfer The solicitor conducts a final check for Money changes hands from the lender and mortgage deed and arranges for debts and bankruptcy. to the solicitor/conveyancer who holds you to sign them. it in advance for the seller. SEND STAMP DUTY LAND REGISTRY DEEDS The solicitor arranges payment of any The solicitor prepares and sends off Once everything is approved, the full stamp duty to the application to Land Registry. confirmation that you are the new HM Revenue and Customs. owner is sent by the solictor. CONGRATULATIONS! YOU'RE A HOMEOWNER! Time to introduce yourself to the neighbours! atlantis property atlantisproperty.co.uk 15