Residential Mortgages
Ready to purchase a new home? We are here to help with a guide to walk you through the process and the costs.
Purchase Process
What should you consider when buying a house?
When you are planning on purchasing a residential home, there are additional costs to be aware of:
- Deposit costs or other initial payments
- Mortgage affordability which will be based on your income
- Mortgage payments and living expenses once you have purchased your new home.
Most often prospective homeowners will ask us about the size of mortgage they can achieve on their income levels. This is an obvious first step. However, there are other factors you should consider as part of the process.
Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured upon it.
#1 Finding The Property
Once you’ve found the house you’d like to purchase, and you have checked that you can afford the deposit and the mortgage payments, you put in your offer.
If your offer is accepted, the house is described as Sold Subject to Contract (SSTC).
Essentially this means the estate agent will stop showing the property to other potential buyers while you work through the purchase process.
#2 What Will You Need To Pay?
Typical costs associated with purchasing a house include:
- Deposit
- Survey
- Valuation
- Mortgage Submission Fees
- Initial Legal Fees
- Stamp Duty
- Balance of Legal Fees
Some of these costs will need to be paid up front, whilst some can be added to your mortgage loan if you prefer. However you should note that by adding anything to your mortgage loan, you will be increasing the debt and the interest on the loan.
Speak with us today to talk to our Conveyancing partners to identify the costs that will be associated with purchasing a home.
#3 Exchanging Contracts
When you are ready to agree a moving date with the person or company selling the property, then you are ready to exchange contracts.
When your solicitors exchange contracts the purchase becomes legally binding and both the buyer and the seller can no longer pull out.
At the point of exchanging contracts, you will pay the balance of your deposit and legal fees.
Your moving date is legally titled the completion date, meaning the day the sale/purchase completes and ownership moves from the seller to the buyer.
#4 Stamp Duty
Stamp Duty is due on properties that are worth more than £125,000 unless you are a first time buyer, in which case different rules apply.
Stamp duty is banded, meaning you will pay a percentage of the entire value of the property, but the percentage amount will depend on the value of the property. This will also depend on wether you are a first time buyer or a property investor.
Further information can be found at www.gov.uk/stamp-duty-land-tax/residential-property-rates
Assessing the Property
Valuations & Surveys
Mortgage Survey Valuation
A Mortgage Survey Valuation is required by your mortgage lender to ensure there is sufficient equity in the property for them to recoup the loan if the property were repossessed.
The price of the valuation will depend on the property purchase price, and your mortgage broker or chosen lender will be able to price this for you.
The surveyor is acting on behalf of the lender, and will simply check for major faults or structural movement in the property.
Homebuyers Report
A Homebuyers Report covers the service included in the Mortgage Valuation, but in addition the surveyor will write a detailed report for you, the homeowner. The report will cover the general condition of the property including the drainage, windows, guttering, etc.
It is worth taking out on an older property and gives a good explanation of all major aspects of the property helping you to identify future expenses. It can also be useful when trying to negotiate the price down on the property.
Full Structural Survey
A Full Structural Survey may be recommended by a surveyor where there are signs of structural defect. There is no fixed price on this type of survey, as the work to be completed can vary depending on the age, size and condition of the property.
Talk to our advisers
PO Box 17324
Tamworth
Staffordshire
B77 5WD
01827 259658
info@meridianfinancialplanning.co.uk