Sponsored by
The Simple Steps to Homeownership
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THE SIMPLE STEPS TO HOMEOWNERSHIP
Welcome Buying your first home is very exciting and there is nothing like walking through your own front door! Our aim at First Time Buyer magazine is to make the journey to homeownership a simple one, which is easy to navigate and understand. If you follow the path and take each step at a time then the process will be a great deal easier and much less stressful. We hope this little book – The Simple Steps to Homeownership – will help you navigate the first time buying process, answer all your questions and help you understand what is involved in buying your first property. We are delighted that Peabody, with its expert team in the first time buyer market, has sponsored this book. We wish you every success when buying your first dream home. Happy house hunting! Lynda Clark Editor, First Time Buyer 4
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Contents 08-11 STEP 1 Start getting your finances ready 12-13 STEP 2 Secure a mortgage in principle 14-15 STEP 3 Work out additional costs 16-19 STEP 4 Find the right property 20-23 STEP 5 Put in an offer 24-25 STEP 6 Choose a legal representative 26-27 STEP 7 Commission a survey
28-29 STEP 8 Complete your mortgage application
34-37 STEP 10 Protect yourself and your home
38-39 STEP 11 Mortgage offer – you’re nearly there! 40-41 STEP 12 Exchange contracts – point of no return! 42-43 STEP 13 On your marks, get set! 44-45 STEP 14 Completion – and celebration!
30-33 STEP 9 Instruct your solicitor to proceed
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THE SIMPLE STEPS TO HOMEOWNERSHIP
Our sponsor We know that the process of buying a home can sometimes seem daunting for first time buyers. It can be complicated and often overwhelming as there is a lot to think about all at once. ‘The Simple Steps to Homeownership’ should help to simplify the process. It explains the buying process in a digestible way, with tips and tricks along the way from saving to collecting the keys to your new home. Peabody is about helping people make the most of their lives by creating quality places that people want to live in and working with communities. We hope this guide can help first time buyers take the steps to become home owners. Debbie Coombs Director of Sales and Marketing, Peabody
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STEP 1 Start getting your finances ready
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home of your own is the biggest purchase you are ever likely to make, and it doesn’t come cheap! Even if you are at the very earliest stages of thinking about becoming a homeowner, the first and most important thing you can do is save – and the earlier you start the better. Research from estate agent Hamptons International suggests the average time it will take a single first time buyer in the UK to save for a 15% deposit for a first home is 10 years, longer
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if they hope to buy in London. Meanwhile, the Government’s English Housing Survey revealed the typical deposit put down by a first time buyer in 2017/18 was £44,635, and a survey by the Post Office found that the average deposit was around 24%, or £51,500. SO HOW DO YOU SAVE FOR A DEPOSIT? Cut costs Maximize income Invest wisely Plan your spending
STEP 1
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CUT COSTS – the most drastic way to keep costs down is to move back in with mum and dad, but if that’s not a possibility you could consider renting in a cheaper area or sharing with more people to reduce rental costs. Then think about where your money goes now – could you cut back on buying clothes, eating out or entertainment, or get rid of expensive subscriptions for music, TV and gym?
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MAXIMISE INCOME – is there potential for overtime, or a weekend or evening job? Providing you are not self-employed already, you are allowed to earn £1,000 a year tax free as a “trading allowance” that can be earned doing all sorts of odd jobs such as babysitting, gardening, dog-walking and so on, or through selling things that you make or no longer use.
STEP 1
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INVEST WISELY – The first place to consider putting your money is into a tax-free ISA that offers rewards for first time buyers. Until 30th November 2019 you can still open a Help to Buy: ISA which lets you make an initial £1,000 deposit and then save up to £200 a month. As well as interest from the provider, the Government pays a £50 bonus for each £200 you save, up to a maximum of £3,000, when you buy a home up £250,000 (£450,000 in London). The newer LISA (Lifetime ISA) lets you save up to £4,000 a year, and the Government adds 25%, but it’s only available for 18-39-year-olds and can be used to buy first homes up to £450,000. WORK OUT HOW MUCH YOU CAN SPEND – Mortgage lenders take into account your income, credit score, outgoings and spending patterns when assessing how much to lend you. There are many online calculators that will give you a good idea about setting your budget. You are likely to be offered a multiple of around four times a single or joint income. Add this to the deposit you hope to save and it will give you a rough idea of what price bracket of home you can look at.
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STEP 1
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CONSIDER INCENTIVES – If your potential deposit plus your mortgage doesn’t seem like nearly enough, then two Government schemes might be helpful. Help to Buy: Equity Loan lends you 20% interest-free for the first five years (40% in London), enabling you to buy a home with a 5% deposit while taking advantage of a cheaper 75% mortgage. The scheme is available on new homes up to £600,000.
75%
Rent payment
25%
Mortgage
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£10,000
Buyer’s 5% deposit
£40,000
Government’s 20% loan
£150,000
75% mortgage from commercial lender
Example: 20% Equity Loan for a home purchased for £200,000.
Shared ownership enables those with a household income of less than £80,000 (£90,000 in London) to buy a part-share of as little as 25% of a home, then pay rent on the rest. Over time, through a process known as staircasing, you can buy additional shares until you own the whole home. You need a deposit of as little as 5% of the share you are buying. Normally shared ownership properties are new, but some resales are available. See helptobuy.gov.uk STEP 1 11
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STEP 2 Secure a mortgage in principle
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ow is the time to think about mortgages more seriously – if you see a house that you love, you will need to have secured a “mortgage in principle” (sometimes called an “agreement in principle”
or “decision in principle”) in order to get the ball rolling. It is a certificate from a lender showing how much, in theory at least, that lender is happy to loan you to buy a house. It shows the seller that you are serious –
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some developers won’t even let you put down a deposit unless you have one, nor will an estate agent be prepared to submit an offer on your behalf without one. To obtain the mortgage in principle you will need to answer some basic questions about yourself and pass a credit check. Many lenders will allow you do this quickly online and there is no charge, or you can do it via a mortgage broker (although check if they will charge a fee for this). If possible, look for lenders who only perform a soft credit check at this stage, rather than a hard check that could affect your credit score. A mortgage in principle does not actually guarantee that the lender will loan you that amount when you apply (that will entail a much more detailed look at your finances and at the property in question). Nor does it commit you to borrowing from that particular lender. However, it is
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worthwhile doing some research first to find suitable mortgage products for your needs, as being rejected for several mortgages in principle in a row can look bad on your credit score.
Bear in mind that a mortgage in principle is only valid for 60-90 days, depending on the lender, so only apply when you have saved up a deposit and are ready to start house hunting in earnest! Of course, if you haven’t found your dream home when it expires, you can always apply for another one, although you will probably have to start from scratch.
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STEP 3 Work out your additional costs
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n the past, one of the major costs involved in buying a home was Stamp Duty Land Tax (SDLT) which is payable by the purchasers of homes costing more than £125,000. However, recent changes to the regulations have meant that many first time buyers won’t need to pay anything. As long as all those buying the property are genuine first time buyers and intend to live in the home, there is now no Stamp Duty payable on homes in England costing up to £300,000,
and a reduced rate of 5% on the portion of the price between £300,000 and £500,000. If the home costs more than £500,000 there is no discount at all. For more information on rates of Stamp Duty, including on the more complex rules on shared ownership properties, visit gov. uk/stamp-duty-land-tax Unfortunately there are other costs to consider as well, when you are working out how much money you need to have available.
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MORTGAGE FEES AND VALUATION – some of the best mortgage deals can come with arrangement fees of up to £1,000 or more, and while you can usually add this on to your mortgage, you will then end up paying interest on the amount, so if you can pay it up front it costs less in the long run. You will also have a valuation fee of several hundred pounds (although some mortgages offer this free), and an electronic transfer fee of around £50 to send the money from the lender to the solicitor.
CONVEYANCING AND LEGAL FEES – the process of transferring the legal title from one person to another (conveyancing) will cost from around £930£1,200 for a freehold property and £1,110-£1,390 for a leasehold. Searches will cost around £300 more, plus the Land Registry Fee of between £95 and £540. MOVING COSTS – this could be anywhere from hiring a van for £100 and doing it yourself, to employing a full packing and removals service for anywhere up to £1,500. In the end, it’s a question of stress versus cash!
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SURVEY – as well as the valuation you will also want to have some kind of independent survey on the property. This can range from a simple Condition Report (around £250) or a snagging survey on a new home (from £300) to a more in depth HomeBuyer’s Report (£400-£700). A full Structural Survey gives you the most protection as it includes looking in the loft and taking up floorboards, but it costs from £600-£900.
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STEP 4 Find the right property
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ow you’ve done the groundwork, you can start on the far more interesting part – actually finding your dream home! You now know roughly how much you have to spend, so it’s time to think about priorities. Do you need to live in a particular area, or would you consider moving somewhere where property prices are cheaper and you’ll get more for your money? Research the area you are
looking at carefully. You might want to check crime statistics on police.uk, flooding risks on gov.uk/check-flood-risk and, if relevant, look at Ofsted reports on local schools. When you’ve decided on an area, what factors are most important to you? A small detached house might be a similar price to a larger semi-detached; a new apartment might be the same as an old terrace; a property with two
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When you go to view take a checklist of questions to ask (search on which.co.uk or moneytothemasses.com for a downloadable version), and use your camera or phone to take some quick snaps (with permission) to help you recall the details when you get home. You’ll want to get answers to important questions such as council tax bands, maintenance charges, the age of the boiler and if there are problems with neighbours, so a written list can make sure you don’t forget. If you are visiting an occupied home remember to be polite and friendly, offer to take your shoes off and don’t start nosing in cupboards without permission! Allow at least half an hour for a visit.
bedrooms and a large garden might cost the same as a threebed home with a tiny yard. Decisions, decisions! Try not to restrict your ideas too much initially – you’ll soon get a feeling for what suits you. Register on as many websites
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as possible – rightmove.co.uk, zoopla.co.uk, onthemarket. com, sharetobuy.com and home.co.uk are all popular with buyers, and some have phone apps for easy house-hunting on the go. Look slightly above your maximum price, as the posted prices are often
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substantially higher than what the seller would be prepared to accept. Don’t forget to drop in and make friends with local estate agents – they often see properties well before they make it online, so can give you an advantage if they know you’re serious. When you see a home you like, arrange a viewing. With new homes you should contact the sales centre in advance as you may need to book an appointment. Often there will only be one or two property types available as show homes,
but you may be able to visit the house type you are interested in at another site nearby. If you are looking at a secondhand home you will usually arrange a viewing with the estate agent, who may accompany you. Alternatively, there may be an open house event, or a block viewing where several interested parties view at once. Beware the emotional impact of these events – don’t be pushed into a purchase just through fear of missing out, or enter into a bidding war with other viewers! Try to look beyond the décor – strong colours and patterned carpets can be off-putting in an older home, while sneakily tiny beds and sofas can trap the unwary into thinking that new homes are more spacious than they really are. Empty homes can be very deceptive, so check the measurements against your existing rooms to get a real idea of size.
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If you see a place you like, it’s important to visit again, at a different time and on a different day, to make sure there isn’t excessive noise from neighbours or rush hour traffic that your initial quiet Sunday morning visit may have missed.
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According to a Which? survey, 26% of people viewed their current home once before buying it, 43% twice, 21% three times and 11% four or more times.
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STEP 5 Put in an offer
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hen you’ve found a house you love, and your finances are in place, then it’s time to either agree to the sale price or put in an offer. If you are buying a shared ownership property, the price quoted is the price you have to pay. If you are looking at a new home, there may be some room to manoeuvre, but this will depend very much on how
well the development in question is selling. If sales are slow and there are plenty of that house type available, then you might be able to negotiate a discount on price. More likely, you can strike a deal on extras like an upgrade on kitchens or bathrooms, or getting the garden landscaped.
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If you have chosen a secondhand home, find out how long it has been on the market and if previous sales have fallen through. If the home has been for sale for more than a couple of months, there aren’t any other buyers on the horizon or the owner is desperate to move, then you should put in an offer below the asking price. How much below? Well research last year by Hometrack found that across the UK, houses sold for around 3.5% below the asking price, but with some big regional variations – from 2.2% below in Bristol to 5.1% in Oxford and 8.3% reduction in Aberdeen.
If your first offer is turned down, you can always make a higher offer, but beware of putting in an offer so low that it insults the buyer. There may end up being a whole round of offers and counter-offers, but don’t get carried away and end up agreeing to a price that is higher than you are able to manage. You usually make your offer via the estate agent. It helps to stress that you are a first time buyer, as you won’t be in a housing chain that might slow things down.
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Of course, if there are a lot of buyers interested in a property you may want to offer the asking price straight away. Sometimes agents price a house as “offers in excess of...” which is a means of drumming up interest by appearing to price a property low, when in reality the owners want much more. Agents may also encourage buyers to submit a sealed bid. In this case you should almost certainly offer more than the lowest suggested price if you want to seal the deal.
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In any event, however stressful it all gets, remember your budget. There will be other houses you will love… With a secondhand home your solicitor will make sure there’s a formal inventory of what’s being included before completion, but you should chat with the seller at an early stage. Unless
agreed, a seller is not required to leave behind anything that isn’t structural – so in theory you could move in to find you have no cooker, lightbulbs, carpets or smoke alarms. In practice, you’ll probably find that sellers are willing to include things like carpets and mirrors, and may be happy to leave light fittings, white goods and garden planters.
If there’s a particular piece of furniture that fits the home perfectly, like bookshelves or a sofa, there’s nothing to stop you agreeing a price to buy it privately.
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When you are putting in your offer, or certainly before you get too far into the legal process, you need to make absolutely sure you know exactly what is being included in the sale so you don’t move in to find things you expected to see have gone, or tons of stuff you don’t want have been left behind. If you are buying a new home, especially if it is off-plan (not built yet), make sure you confirm exactly what will be included (eg kitchen white goods, bathroom fittings, carpets and garden turf) and what you may have to pay extra for. It may be possible to change or upgrade aspects of the interior but you will need to negotiate with the developer.
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STEP 6 Choose a legal representative
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t this point you should be thinking about who you want to do the legal work, known as “conveyancing�, around your house purchase. Sometimes developers offer free legal fees, or a discount, if you use their in-house legal team, however you will probably feel happier if you choose your own representative who will only have your interests to worry about. Solicitors specialise in all kinds of areas of law, so the firm down the road that drafted your will or handled your divorce
may not be the best choice for conveyancing. Look for a solicitor specialising in property, and if you are buying using Help to Buy: Equity Loan, or buying a leasehold home, where the legal work will be much more complicated, you should look for a solicitor with extensive experience in that area. Some solicitors charge a flat rate fee for conveyancing, others may charge a percentage of the property sale price. Make sure you know exactly what is included in the price (the lowest
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quotes may well have lots of extra charges for things that other companies include as standard) and whether it is an “estimate” – a rough guide as to what it should cost if everything goes smoothly, or a “quote” – the actual price you will pay.
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You may find that an online solicitor is cheaper than an office nearby, but you need to balance that against the convenience of being able to “pop in” in the event of any problems. You can also have your conveyancing carried out by a licensed conveyancer, or, indeed, do it yourself – although unless you have legal experience and time on your hands the latter is almost certainly a bad idea!
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STEP 7 Commission a survey
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ometimes first time buyers are confused about the difference between a mortgage valuation and a survey. In essence, the former only satisfies the mortgage company that the home is worth the asking price, and is for the benefit of the lender (even if you often have to pay for it). The mortgage valuation may only take 15 minutes and will be based mainly on the surveyor’s knowledge of prices in the local area.
In fact, some valuations are done as a “drive by” where the surveyor won’t even enter the property. While that may give a rough estimate of value, it doesn’t tell you anything about the condition of the property – and you don’t want to move in to your dream home only to find you have to spend a fortune on major repairs, so once your offer has been accepted you will want to commission some kind of survey. There are a variety of different options to choose from:
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CONDITION REPORT – This basic survey gives you an overview of the property’s condition using traffic light ratings. It’s probably most suitable for a secondhand property that’s less than 10 years old and has no obvious issues. SNAGGING SURVEY – if you are moving into a new build home then you won’t need a normal survey, but you may want to commission a Snagging Survey to find out any issues. Ideally, you should get this done between building work finishing and completion, but not all developers allow this. It’s still worth doing after completion, as soon as possible, as it puts pressure on the developer to sort out any outstanding problems.
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BUILDING SURVEY (also known as Full Structural Survey) – this much more in-depth survey is essential if you are buying a property that’s over 50 years old, of non-standard construction, or if you suspect anything might be wrong with the home. The surveyor will look behind furniture, go up in the attic and look under floorboards to give a comprehensive report on the condition of the house (this type of survey is not usually carried out on apartments). HOMEBUYER’S REPORT – This involves a more detailed visual inspection of the property and should pick up things like poor repair, damp and subsidence. It is suitable for most relatively modern properties that are of standard construction and visibly in good repair.
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STEP 8 Complete your mortgage application
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opefully you have already looked around at mortgage options and received a “mortgage in principle� giving you a good idea of how much you can borrow. Now is the time to make absolutely sure that you are getting the best deal for your particular needs, and making a formal mortgage application. First you should consider whether you want a fixed rate deal (where the interest rate remains the same for the duration of the mortgage) or a variable or discounted deal where the rate can move and
your monthly costs go up or down. Most first time buyers like the security of a fixed rate, but think twice about going for fixes of less than two years where you constantly need to remortgage to avoid ending up on a poor standard variable rate when the fix ends. Fixes of two, three and five years are particularly popular in uncertain times. You might want to speak to a mortgage broker, particularly if you are not an ideal customer as far as high street lenders are concerned. This might apply if
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you have been bankrupt or had county court judgements against you, you have a criminal record, you have missed payments on your bills, or you have a chequered job history. You might also benefit from seeing a broker if you are self-employed, or if you are buying a non-standard property such as a former council house, high-rise apartment or something unusual like a thatched cottage! Otherwise, make the most of online mortgage comparisons sites to make sure you are applying for a good deal. Your actual mortgage application may be done over the phone, in branch or online, depending on the lender, but you will have to produce proof of identity and address, and up to six months of bank statements, credit card bills and
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payslips to prove your income and expenditure. If for any reason you are turned down at this stage, try to sort the problem out rather than keep applying in different places. In particular, check with credit reference agencies to make sure there are no mistakes on your files, such as you being affected by the debt problems of a previous tenant in your property. Then use a broker to help you apply again. While all this is going on, you need to make sure that you have your deposit money readily available, so if you need to give notice on any savings accounts, or move money around so it is all together in one place, you might want to start thinking about that at this stage as well.
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STEP 9 Instruct your solicitor to proceed
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ou are now in a position to formally instruct your solicitor to begin the conveyancing process to transfer ownership of the home to yourself. The solicitor will liaise with the developer‘s or homeowner’s own solicitor to find out all the relevant facts about the property, and will keep you informed every step of the way. In particular, if you are buying a leasehold property, the conveyancer will ensure that all the details of the lease are clear,
including the number of years left on the lease (lenders won’t generally give you a mortgage on a lease with fewer than 7090 years remaining). You should also confirm at this stage (if you haven’t already) what ground rents are applicable and if there are any maintenance/estate charges and how they are calculated. Whether the home is leasehold or freehold there may be restrictive covenants in place – these are often fairly standard things such as not keeping pigs
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in your garden or parking commercial vehicles on your driveway, but if there is anything that might concern you, your solicitor will bring it to your attention. The solicitor should also make you aware of any charges that also apply to freeholders, such as estate maintenance charges on newer homes. The money you spend on your solicitor can seem like quite a
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lot – but while you are busy dreaming about paint colours and curtains, your legal team will be hard at work doing all kinds of vital things to ensure your purchase goes smoothly. Searches are likely to include: LOCAL AUTHORITY SEARCHES – there are two parts to this. The LLC1 (Local Land Charge Register) looks at issues relating to the property itself, such
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ENVIRONMENTAL SEARCH – will look at flood risks and other issues such as whether there are landfill sites or areas of contaminated land nearby.
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as whether it’s a listed building, in a conservation or smoke control area or has any tree protection orders. The second part, CON29, is about the local area and should reveal any planning applications that might affect the property, such as housing developments or new roads. It should also show if there are any major environmental risks, such as it being on contaminated land.
Depending on where you are buying, the solicitors may do other searches as well. If the home is close to a church they will check Chancel Repair liability (in some cases you might be legally required to contribute towards church repairs). If you are in an old mining area they will do a Mining search to check there are no tunnels running under the property.
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LAND REGISTRY SEARCH – this makes sure that the person selling the home is actually the legal owner!
WATER AUTHORITY SEARCH – checks if the property is connected to water and mains drainage, as well as if there are any public sewers under the property that could, for example, prevent you from building an extension in the future.
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STEP 10 Protect yourself and your home
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ow you are well on the way to becoming a homeowner, it’s time to think carefully about
how to protect yourself, your loved ones and your new home if something goes wrong.
CONSIDER CONTENTS INSURANCE – this is not compulsory, but most homeowners do take out some level of cover, as the chances are you will have little in the way of savings at this point with which you could replace all your possessions in the event of a disaster. Use price comparison sites to check around for the best deal.
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BUY BUILDINGS INSURANCE – if you are buying with a mortgage, this is compulsory unless you are buying a leasehold, when it is usually the freeholders responsibility to insure the buildings. Your solicitor will make sure that there is cover in place and that you and your lender’s interests are noted. Building insurance should be based on the rebuild value of your home, not what you paid for it (you should find this information on your survey, or you can work it out yourself here abi.bcis.co.uk). The rebuild cost is usually cheaper than the sale price as you are only talking about construction costs, not the price of the land. You may be offered building insurance through your lender, but it’s always worth shopping around. Remember that your buildings insurance must run from exchange of contracts (i.e. before completion) as you have entered a legally binding agreement to buy the property at that point (even, astonishingly, if it becomes a smoking pile of rubble in that intervening time!)
MAKE A WILL – especially important for tenants in common, as it will determine who gets your share of the house if you die. If you have married or entered a civil partnership any previous will is void, and your new partner will have some inheritance rights. If you are not married, but want to leave an inheritance to your partner, you must make a will or they will not inherit.
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LOOK AT COHABITATION AGREEMENTS – particularly if you are buying with friends as tenants in common, a legally binding cohabitation agreement confirms practicalities such as what share each one owns, how it will be valued if one of you wants to sell, what happens if someone dies and who pays for repairs and maintenance. It can also cover issues like whether someone’s partner can move in.
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DECIDE ON TENANCY TYPE – if you are buying with someone else, decide whether you want to be joint tenants or tenants in common. If you are joint tenants; if one of you dies, the property automatically falls into the ownership of the other joint tenant. If you are married or in a civil partnership this might be your favoured option as it will make life simpler for the surviving partner. If you are buying with a friend, sibling, or recent partner, you might prefer to be tenants in common. In this case, you are deemed to own a share (usually half, but it can be a different proportion) of the property and you can leave it in your will to whomever you please.
CONSIDER INSURING YOURSELF – if you die, will you leave a partner or children in a house they cannot afford to keep? If so, life insurance is prudent. Decreasing term insurance gradually reduces the amount you are insured for as you pay off your mortgage. If you are buying with a partner and both of you are earning you could consider joint life first death cover for half the mortgage – so the surviving partner will have a much reduced mortgage to pay back. Budget around £10-£25 a month for £100,000 cover. You might also consider mortgage protection insurance to cover your monthly mortgage payments in circumstances such as illness, accident or redundancy. Premiums are based on your age, mortgage and occupation, but average £20-30 a month.
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STEP 11 Mortgage offer – you’re nearly there!
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t usually takes anywhere from two to six weeks after applying for a mortgage for you to receive your formal mortgage offer, which is then usually valid for six months. You are now ready to go! If you haven’t done so already, think about giving notice on rental accommodation, then start making removal arrangements. You may not get your first choice of moving date – you cannot complete on a weekend or Bank Holiday, only during the week, and if you are
part of a chain then everyone will have to agree on a moving day. Of course, if you are moving from rented accommodation and there are a few days left of the tenancy, or you are staying with parents, then you can complete and collect your keys during the week, and move in at the weekend. You may have more flexibility on choosing your moving date if you are buying a brand new home. When you have an idea of dates, contact local removal companies to find out about
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costs and availability. The most expensive days to move house are on Fridays, especially Fridays before a Bank Holiday, so choosing a midweek date can save you some money. If you have only a small amount of stuff and are moving a short distance you could rope family and friends
in to move you with their cars, hire a trailer or hire a van. If you are going to move yourself, it’s worth starting to hoard bubble wrap, tissue paper, packing materials and cardboard boxes – if you know anyone who is moving house before you, put in a request for their empty crates!
If you haven’t done so already, you might want to have a declutter – now is your last chance to put things on Ebay or Facebook sales if you can’t see them fitting in with your new home, or if you’re moving in with a partner and you don’t need two of everything!
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STEP 12 Exchange contracts – point of no return!
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ou and the seller will both sign copies of the contract, and then both sets of solicitors will exchange them. Sometimes this is done by the solicitors reading the contracts to each other over the phone before posting them. Once you have exchanged contracts, the deal is legally binding on all parties. If you are in a long chain, you will have to wait until everyone is ready to exchange on the same day, which can cause delays. At this point you will need to pay an exchange deposit to the
seller. This is usually 10% of the property price. If you are unable to pay 10% – perhaps because you are using a 95% mortgage or Help to Buy and have only saved up 5% – your solicitor should be able to negotiate a lower figure (although if you pull out of the deal, the seller could sue you for remaining 5% as well as keeping your deposit). If you have saved through a Help to Buy: ISA, the Government bonus is only available on completion so cannot count towards your exchange deposit.
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You can use the money you have put into the ISA yourself and the interest for your exchange deposit, but you must tell your ISA manager that this is what you are doing so that you get a proper closing statement, as your solicitor will need this to claim the bonus. Do not just withdraw all the money or you will lose the bonus. When contracts are exchanged you will agree a completion date – this is generally set for one to two weeks after exchange, although it can be done faster if necessary. With a new build property the
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developer may insist that you exchange contracts within 28 days of reserving the property, although completion cannot take place until the property is completely ďŹ nished, so there could be a longer waiting period than usual. Once contracts have been exchanged, your solicitor will lodge your interest with the Land Registry, and, if applicable, will apply for your Help to Buy: ISA bonus (paid directly to your solicitor), or your Help to Buy Equity Loan (paid to the developer).
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STEP 13 On your marks, get set!
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ow you have a confirmed moving date you can firm up arrangements with a removal firm or organise van hire. If you are using a removal company’s packing service, make sure that everything is in the right room, as packers will put everything in the vicinity into the same box. Eat up the contents of the freezer, fridge and store
cupboard, throw away rubbish and take anything you no longer need to a charity shop. If you are doing your own packing, start with things you are least likely to need – Christmas decorations or wrong-season clothes, for example. Pack heavier things at the bottom
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of boxes, but you usually take You should arrange for don’t overload. over paying the Royal Mail to redirect your Label every existing supplier post, which takes a week’s box as to until you decide notice, and costs £67 for which room it if you want to a year. You might want to should go to on switch. order printed change of arrival. Leave You should address cards to post out to friends and family. vital things also begin the like the kettle process of and teabags changing your until last, as they will be the address – you will need to notify first thing you need at the other important organisations such as end. Consider putting pets your bank, the Inland Revenue, into kennels on moving day, or doctor, dentist, your place of sending children to grandma! work, children’s schools and so on. Don’t forget to send your Contact your utility companies driving licence off to be changed at least 48 hours in advance of as there’s a £1,000 fine for not the move, and give them your notifying the DVLA (although new address to send the final remember that you’ll need to bill. You will be asked to take produce it if you are hiring a van). meter readings in your old home on the day of your move, and If you are currently living in you should also send these to rented accommodation, you will your landlord. If you’re buying a need to leave your home clean new home, it’s worth confirming and tidy if you want to get your that all the utilities will be in place deposit back. It might be worth on your move date; phone lines paying a professional cleaner and broadband can often be rather than cleaning the oven on delayed. In a secondhand home moving day.
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STEP 14 Completion – and celebration!
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n the previous few days your solicitor will have received your remaining deposit and your mortgage funds. Your solicitor will then transfer all the money to the seller’s legal team on completion day. This happens electronically, but it can be quite slow, and it’s not unheard of to be sitting in a removal van outside a home waiting for the money to clear, especially if you are part of a long chain. Once you have confirmation, usually via a phone call from your solicitor, that the seller’s solicitor has received the money,
then you are given the keys. Go in, walk around, take a deep breath, make a cup of tea. It’s finally yours. What next? Well becoming a homeowner is always a cause for celebration, so we would suggest you postpone the decorating for a week or two and take time to celebrate and throw a housewarming party. It doesn’t have to cost a lot of money – you can always ask your friends to bring a bottle or a contribution for a buffet, or do a simple meal like a giant chilli.
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Enjoy relaxing in your own space!
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Case study Financial sales rep Goran and his partner Matt, an interior designer, had been renting in Elephant & Castle for four years and loved the area, so when they saw Peabody’s The Levers development just up the road, they were quick off the mark. “We wanted to stay in the area but nothing felt like the right property,” says Goran. “When Peabody started building The Levers, we were keen to take a look and ended up going the first day it came to market. We both fell in love with it. It’s a huge decision to purchase a property but this felt right straight away. The Levers offered a far higher quality of build than we’ve had before so we didn’t have to find more budget to refurbish when we moved in.” Working in finance gave Goran a strong grasp of the financial benefits of getting on to the property ladder: “Renting was so expensive. The property ladder can be competitive but by using Help to Buy, it was far easier to purchase our flat. We only had to put down a 5% deposit and don’t have to pay interest for five years, which works perfectly.”
Homes at The Levers start from £595,000
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HELP TO BUY NORTH EAST, YORKSHIRE & THE HUMBER Tel: 0113 825 2436888 6893 helptobuyneyh.co.uk
HELP TO BUY NORTH WEST Tel: 0300 790 0570 helptobuynw.org.uk 1) 2) 3) 4) 5)
Cumbria Lancashire Merseyside Greater Manchester Cheshire
1) 2) 3) 4) 5) 6) 7)
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Northumberland Tyne & Wear Durham North Yorkshire West Yorkshire South Yorkshire East Riding of Yorkshire
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HELP TO BUY EAST AND SOUTH EAST
HELP TO BUY MIDLANDS Tel: 0345 850 2050 helptobuymidlands.co.uk
Tel: 03333 214044 helptobuyese.org.uk
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1) Shropshire 2) Staffordshire 3) Derbyshire 4) Nottinghamshire 5) Lincolnshire 6) Herefordshire 7) Worcestershire 8) West Midlands 9) Warwickshire 10) Leicestershire 11) Rutland 12) Northamptonshire
1) Norfolk 2) Cambridgeshire 3) Suffolk 4) Bedfordshire 5) Buckinghamshire 6) Hertfordshire 7) Essex 8) Surrey 9) Kent 10) West Sussex 11) East Sussex
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2 HELP TO BUY SOUTH
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Tel: 0800 456 1188 helptobuysouth.co.uk 1) 2) 3) 4)
Gloucestershire Oxfordshire Bristol Bath & NE Somerset, Mendip and North Somerset 5) Wiltshire 6) Berkshire 7) Hampshire 8) Isle of Wight
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HELP TO BUY SOUTH WEST Tel: 0300 100 0021 helptobuysw.org.uk Cornwall Devon South Somerset Dorset
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HELP TO BUY LONDON Tel: 0300 500 0996 helptobuylondon.co.uk 1) London
Map supplied by Help to Buy South
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firsttimebuyermag.com
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