BUYING FOR THE FIRST TIME

A GUIDE by David Pett Solicitor/Director with MJP Conveyancing

‘’From my 16 years of working in the property market, I would have to say that the biggest mistake

people make is to give up on the hope of buying a property altogether,"

-Elliot Castle, founder of home-buying service Webuyanyhome.com

OVERVIEW

➤ How much will I need to buy my first property?

➤ How do I get the money together?

➤ What assistance can the Government provide me with?

➤ What type of property should I be looking at?

➤ What do I do once I have found a property?

➤ How do I make sure I am not paying too much for the property?

➤ When do I instruct a conveyancer and how do I choose one?

➤ How long will it all take?

CAN I AFFORD TO PURCHASE?

➤ Cost of property - 5%- 10% deposit with mortgage

➤ There are many other costs you will have to meet, that can add as much as 15% to the total bill:

➤ The biggest is stamp duty -2% over £125K

➤ Surveys and valuations, solicitor/conveyancer fees, Land Registry fees, removal costs and of course buying all the furniture, white goods and other things for your new home

➤ Future costs: mortgage repayments, rent/service charge on shared ownership, service charge on leasehold, major works expenditure, parking, Council tax, Internet, utility bills etc

➤ www.citizensadvice.org.uk/housing/moving-and-improving-your-home/mortgage-calculator/

WHAT DO I BUY?

➤ Existing housing stock

➤ New build. Attractive option with Government Help to Buy options, but often poorly built and come with future cost with shared services/areas

➤ Read my blog - ‘Read this before purchasing a new build property’ : http://solicitorsnews.blogspot.co.uk/2013/07/do-not-purchase-new-build-property.html

➤ Tip : Never use the broker or solicitor recommended by the developer. You need totally independent advice

➤ Shared ownership - purchase a share of the property with view to increasing share - cons include ongoing rent, valuations, costs associated with sale, liable for cost of maintenance and insurance

➤ Leasehold v Freehold - leasehold not ideal due to ongoing costs -ground rent - rent review - service charge - major expenditure

➤ Think about how saleable the property will be in the future

WHY TO AVOID LEASEHOLD

➤ Often low headline price to entice you

➤ You may never own the land the property is built upon

➤ Higher conveyancing fee at the time of purchase as there is more legal work to undertake

➤ High ongoing costs

➤ Ground rent - may increase quite steeply in the future on ‘review’

➤ Service charge - average £1800 pa - on new builds £2777

➤ May not include the cost of insurance

➤ May not include a contribution to a ‘sinking fund’ to cover the cost of major works e.g roof replacement

➤ May not include the management company fees

➤ When it comes to sell there may be additional expense to meet:

➤ If remaining term of lease is less than 80 years you may need to apply for the lease term to be extended and this could prove expensive

➤ You will need to supply the buyer with an information pack - these can cost between £250 and £600

FUNDING THE PURCHASE

➤ Mortgage with deposit of 5-10%

➤ Mortgages are more difficult to get hold of since 2014 -affordability

➤ Mortgages guaranteed by parents

➤ Combing resources - Buying with other family members -brothers, sisters , parents and in-laws

➤ How do I raise the deposit?

➤ Savings

➤ Gift/loan from family members - ‘Bank of Mum and Dad’

➤ Tax considerations

➤ Need to disclose to lender

➤ Extra fees payable to conveyancer as additional work is required

TIPS BEFORE APPLYING FOR A MORTGAGE

➤ Check you are on electoral roll

➤ Last three months bank statements and pay slips

➤ SA302 if self employed

➤ List of income and outgoings

➤ Do a free check of your credit history using Experian

➤ Getting a ‘mortgage in principle’

GOVERNMENT 5 YEAR INTEREST FREE LOAN

➤ Help to Buy Equity Loan

➤ Government has announced a further 10 billion pounds of investment into this scheme

➤ The scheme requires a minimum 5% deposit of the property value with the Government offering an interest-free loan of a further 20%. The remaining 75% is covered by a standard mortgage

➤ Only available on new-build properties in England worth up to £600,000. The scheme will remain open until 2020

➤ Not always cheaper than the cost of a 95% mortgage

➤ Interest on the loan becomes payable after 5 years

➤ Upon repayment its 20% of the value of the property at that time

FREE GOVERNMENT CASH

➤ Help to Buy ISA

➤ For every £200 you save into the account, the Government will add £50. This is up to a maximum bonus of £3,000 (which applies to £12,000 of savings)

➤ You can save up to £1200 in the first month and then up to £200 each month

➤ £250,000 limit on value of property outside London

➤ Unable to use towards deposit

MORE FREE GOVERNMENT CASH

➤ Lifetime ISA

➤ LISA

➤ 18-39

➤ You can save up to £4,000 a year in a LISA as a lump sum or by putting in cash as and when you can. The state will then add a 25% bonus on top. So if you save £1,000, you'll have £1,250 and if you save the full £4,000, you'll have £5,000 before interest is added

➤ First home or pension for retirement

DISCOUNTED PROPERTY

➤ Starter Homes Scheme

➤ Gavin Barwell confirmed that construction on the first Starter Homes would get underway in 2017 with first completions earmarked for 2018

➤ Starter Homes will be available to buyers aged between 23 and 40 who don't own a home and have never owned one before

➤ The 200,000 new homes built under the scheme will be sold at a minimum discount of 20% of the market price

➤ www.new-homes.co.uk/starter-homes/

WHERE DO I START?

➤ theadultbible.com - ‘things they didn't teach you at school’ - types of mortgage and how to find and buy a home

➤ Speak to an independent financial advisor - not one connected to an estate agency

➤ Speak direct to high street lenders

➤ Do research on Government funding support -www.gov.uk/affordable-home-ownership-schemes

➤ Do your sums not just for purchase but for future expenses

➤ Register for shared ownership property - over a million of people registered on waiting lists.

TIPS ON CHOOSING YOUR PROPERTY➤ Look at similar properties which my have sold recently

➤ Look at Zoopla to get some idea of comparable property prices

➤ Check out the locality

➤ Visit at night and at the weekend

➤ Speak to neighbours

➤ Check school ratings

➤ Broadband

➤ Crime rate

➤ Transport links

➤ Useful websites/apps:

➤ Facebook: Community Facebook groups and pages

➤ Google Streetview

➤ aroundmeapp.com

TIPS ON NEGOTIATING

➤ Don’t be afraid to ask questions

➤ Ask estate agent lots of questions about the seller

➤ How long have they lived in the property?

➤ How long have they been trying to sell the property?

➤ What is their motivation for moving?

➤ When are they hoping to move?

➤ Don’t be too quick to make arrangements to move

➤ Role of the survey

➤ Make it clear there is no chain behind you and you have a mortgage agreed in principle

➤ Put a 24 hour expiry on your offer

SURVEY

➤ Never buy a property without first obtaining a full survey

➤ Why?

➤ Check the ‘bricks and mortar’ are sound

➤ Negotiating tool

➤ Statistics show that those who don't proceed with a survey can on average lose :

➤ £5K on repairs which would have been avoided, and

➤ £2K in the reduction of asking price

➤ Difference between Mortgage Valuation and Survey

HOW DO I CHOOSE A CONVEYANCER ?➤ Do research

➤ Reviews - Facebook, Trust Pilot, Google and solicitor own websites

➤ Don’t just think local

➤ Always try and compare like with like - some conveyancers when quoting do not include all of the fees

➤ Don’t be swayed by promises of speed

➤ Badges - Conveyancing Quality Scheme

➤ Look for specialists not businesses which do the occasional conveyance

➤ Will the service supplied suit your lifestyle -traditional v technology driven service

SOME FAQ ON THE LEGAL PROCESS ➤ How long will it take?

➤ Months rather than weeks - 3 months - depends on how fast others are in the chain

➤ How can I make the process quicker?

➤ Make sure you can promptly produce your identification and proof of address and source of funds evidence

➤ When will I be able to move in ?

➤ Difference between ‘exchange of contracts’ and ‘completion’

➤ When should I begin ordering removals and new furniture delivery or give up my tenancy?

➤ Wait until you exchange contracts - nothing is definite until then

WHAT ELSE DO I NEED TO CONSIDER?

➤ Will

➤ Declaration of trust - where one of the joint owners puts more in than the other

MJP CONVEYANCING

➤ Act for people all across the country

➤ Specialise in moving people into their new homes

➤ Brilliant client reviews

➤ Award winning service

➤ Nominated by our clients for an ESTAS award

➤ Low cost but hot on client service

➤ Technology driven

➤ Transparent

➤ Unique -Property Log Book

➤ Between 100 to 200 updates during the course of the transaction

➤ Fixed fees

➤ Register now to get 10% off your legal fee if and when you decide to instruct us in the future