When you decide you would like to buy a particular property you do not necessarily have to pay the price being asked for it by the owners. You can offer less if, for example, you thinks there are repairs to be done which will cost money.
If the property is being sold through an estate agent, you should tell the estate agent what you are prepared to pay for the property. The estate agent will then put this offer to the owners.
If the owners do not accept the first offer put to them by you, you can decide to make an increased offer. There is no limit on the number of times you can make offers on a property. If you make a written offer it will always be made subject to contract. This means that you will not be committed to the purchase before finding out more about the state of the property. If you make an oral offer this is never legally binding.
It is at this stage that having a Decision in Principle (DIP) Certificate from a lender can be beneficial as it proves that you are serious about the purchase and that you have spent time making sure you will have access to the finance.
When the offer has been accepted
When your offer for the property has been accepted you will have to consider the following:-
- whether a holding deposit is payable
- arranging a mortgage – see below
- whether a survey is necessary – see below
- who will do the necessary legal work – see below
- whether you want to buy with someone else – see below.
Once the owners have accepted your offer the buyer may be asked to pay a small deposit to the estate agent. This is usually between £500 and £1000. It is meant to show that you are serious about going ahead with the purchase. It is repayable if the sale does not go ahead. Often, however, this is not the case.
Arranging a mortgage
If you have not already begun to arrange a mortgage, you should start to do this now. It should take about three weeks from the application for the mortgage to the formal offer being made by the lender. However, this timescale may vary. As part of our service we collect all the relevant information about you and the property and also collect the documentary evidence required by the chosen lender. We provide you with an illustration that describes in detail the terms and conditions and costs of using the lender chosen. We take you through this to make sure you clearly understand your obligations. Once you are satisfied with this we will make the application on your behalf.
Whoever agrees to lend the money will want to have the property valued. This is to make sure that the lender could get the loan back if for any reason you stopped paying your mortgage and the house had to be sold again. The valuation will be done by a surveyor on behalf of the lender but you will have to pay for this valuation. The fee will be payable in advance. We will collect debit or credit card details from you in order that the valuation fee can be paid as part of the application process. You should be aware (and we will let you know this at the time of application) that the valuation fee is normally not refundable by the lender in the case of the purchase nor proceeding for any reason. It is possible that the lender may provide an incentive that means you don’t have to pay for a basic valuation. This is not always the case and changes depending on lender and over time as lenders change their marketing approach.
If the amount of money to be borrowed is more than a certain percentage of the valuation of the property (usually 75-80%), your lender may make it a condition of the loan that you take out extra insurance to cover the extra amount. You pay a single premium to your lender which is usually added to the loan. This is known as a higher lending charge (or mortgage indemnity guarantee). At the time of writing this there are very few lenders who currently require this.
If you only have a 5% deposit, you may be able to get a mortgage under the Help to Buy: mortgage guarantee scheme. We have a separate section that describes Help to Buy and the criteria that apply.
Arranging a survey
The valuation which is done for whoever is lending the money is not a survey. You should consider whether or not to have an independent survey carried out in addition to the valuation. The survey would not only consider the value of the property but would also examine the structure of the property and should identify any existing or potential problems.
There are two levels of survey that you can choose between:-
- a full structural survey. This is suitable for a property which is large, more than 80/90 years old or in doubtful condition
- an intermediate or ‘house/flat buyers report’ that gives a report on the condition of the parts of the house that are easy to see and to get at and may recommend further tests or investigations, for example, a specialist check for woodworm. This is particularly suitable for properties built this century which appear reasonably sound. It is much cheaper than a full structural survey.
It is possible for you to use the same surveyor who does the valuation to carry out the survey and this may be cheaper. However, you can use a different surveyor if you wish. At the time of application we can advise you of the cost of using the lender’s Surveyor to carry out your, more detailed survey, as well as the valuation for the lender.
If the surveyor reports that there are some problems with the property, you will have to consider whether you still want to go ahead with the purchase or want to negotiate further with the seller about the price. The surveyor will usually advise you as to how any problems they have identified should be dealt with and the likely costs of this. You can find more useful information about property surveys at www.rics.org.
Choosing who is to do the legal work (conveyancing)
The legal process of transferring the ownership of the property from the present owner to the buyer is known as conveyancing. You should decide who you want to do the conveyancing work. You can do it yourself – although this can be complicated – or you can:-
- use a solicitor; or
- use a licensed conveyancer.
Finding out how much it will cost
Before making a choice as to who will do the conveyancing, you should be advised to find out the probable costs of the conveyancing. It is important to contact more than one solicitor or licensed conveyancer as there is no set scale of fees for conveyancing.
We have access to a panel of conveyancers who can do the legal work on your behalf. They are hand chosen based on reviews from brokers and other home buyers and are often cheaper to use than a local firm. We will provide you with an exact quote for the purchase that you can use to compare with others you may be considering. We will need to know who you choose before the application is made as this needs to be stated on the application form.
- check whether the figure quoted is a fixed fee or depends on how much work is involved (all our quotes are fixed fees)
- check that the figure includes stamp duty, search fees, land registration fees, expenses and VAT and get a breakdown of these costs (our quotes give a to the pence breakdown of all these)
- find out what charges, if any, will be made if the sale falls through before contracts are exchanged.
Buying with someone else
You may choose to buy your property jointly with someone else, such as your husband, wife, civil partner, partner, relative or friend.
If you buy your property with someone else, you can choose to do this in one of two ways, as either:
- beneficial joint tenants, or
- tenants in common.
This is the case whether you own the freehold or leasehold of the property.
If you are thinking about buying a property with someone else, you should get legal advice on the best type of ownership for you.
Beneficial joint tenants
If you own your property as a beneficial joint tenant, this means that it belongs to you and the other owner(s) jointly. You can’t re-mortgage or sell the property without the agreement of all the other owner(s). However if there is a dispute, an owner can apply for a court order.
As a beneficial joint tenant, you don’t own specific shares in the property and you can’t give away a share of the property in a will. If you die, your interest in the property passes automatically to the other owner(s).
Tenants in common
If you own your property as tenants in common, this means that it belongs to you and the other owner(s)jointly, but that you all also own a specific share of its value. It is up to you to decide how much each share will be.
You can give away, sell or mortgage your share. If you die, your share of the property does not pass automatically to the other owner(s). You can leave your share to whoever you like in your will.
In England and Wales, for more information about owning your property jointly, see the GOV.UK website at www.gov.uk.