Buying a house is, for many people, one of the most serious financial commitment that they will make in their lives. With the right legal guidance, the process doesn’t have to be daunting or complicated, and there are in fact many different schemes that can help first-time buyers onto the property ladder. A new mortgage scheme that has been introduced by the government in the wake of the pandemic could make your plans for a first time purchase more possible than you previously may have thought.
Buying a property – the process
Put as simply as possible, the overall process of buying a property involves five steps. These are:
- Finding and securing the best mortgage for your financial situation
- Carrying out any necessary searches on the property that you are buying – you may also want to get a survey completed
- Preparing, reviewing and exchanging contracts
- Paying any relevant taxes on the property
- Registering your property
Securing a mortgage & the new mortgage guarantee scheme
When you are a new buyer, there are a number of different mortgages that are available to you. It is important to choose one that is right for you now, but also is likely going to be suitable for any future plans that you may have. Discussing your financial plans with a trained advisor will help you to decide what the best mortgage for you may be.
In great news for first time buyers, the government launched a new 95% mortgage guarantee scheme on the 19th April 2021. The scheme is designed to encourage banks to lend mortgages at a 95% rate, and it involves the government taking on the financial risks that are usually taken by the banks, such as the cost of borrowers defaulting on their payments. Both first-buyers and home movers are eligible, with mortgages being theoretically available on properties for sale for up to £600,000. One of the reasons that this will be beneficial for first-time buyers is that it will bring more choice, and the increase in competition will then bring lower rates. Already, there are now 68 fixed-rate mortgages available to first-time buyers, the highest number recorded since last April.
Searches on the property that you want to buy
Unless you are buying a very recently built house, it is often a good idea to get surveys carried out on your property to assess any potential problems. There are also certain searches that must be carried out before lenders will agree to a mortgage. These searches will likely include:
- Environmental searches – these could include checking for flood risks, ground stability and any other potential problems that could arise from any environmental factors surrounding the property
- Local authority searches – these are designed to look at anything in the local area that could potentially reduce the value of the property in the future. This could be local council plans for any new roads or buildings.
- Water and drainage searches – this will determine whether the property is successfully connected to the mains water supply, and where any drainage could be directed to. In some cases, a public sewer may be within the bounds of the property and therefore could stop any future plans to extend the property.
Preparing & exchanging contracts
Before you exchange and sign legally binding contracts, it is worth having a legal advisor look over them to check that you are happy with all of the terms.
Paying any relevant taxes on the property & registering your property
Before you can complete a house purchase, you must ensure that you have paid all of the relevant taxes on a property, and that it has been registered. Land or property must be registered for the first time if it’s unregistered when you take ownership of it or mortgage it. Even if you do not technically have to register, voluntary registration is a good idea because:
- It helps protect your land from fraud
- It makes it easier to change, sell or give your property away in the future
- It gives you proof of ownership
Our specialist solicitors will be able to help you to register your property in a straightforward manner.
In addition to these five steps, there are also other things that you will need to understand in the process of first-time buying. These are:
- Ensuring that your mortgage provider knows how your deposit has been raised i.e. whether it was a gift from your parents
- How the Stamp Duty Land Tax will affect your purchase
- The difference between joint tenants and tenants in common – this will apply if you are buying a house with someone else and will be deciding if you will be having equal rights to the whole property
- The difference between leasehold and freehold
- The principle of ‘caveat emptor’, and how it could affect you
All of these processes and principles can be explained to you in a straightforward way by a qualified solicitor.
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