Everything you need to know about conveyancing
Before you start looking, you will need to know roughly how much you can afford to spend on a new home. The main determinants are likely to be:
Your available savings
They will need to be in an easily accessible form so that you can
meet any deposits and charges as they arise. Because of current
Money Laundering Regulation we will require written confirmation
of the origins of this money.
Mortgage
Lenders will usually lend up to about 95% of their valuation of a
property, depending on its age and condition, although some will
advance more. Your income is also important. Normally loans are
available for up to 3 and a half times the main earner’s income,
however these guidelines can be exceeded. You should have in mind
what you can afford. Remember the statutory warning “Your home
is at risk if you do not keep up repayments on a mortgage or other
loan secured on it”.
The cost of moving
See the checklist at the end of the booklet.
The value of your existing home
If you have a home to sell, it is important to take into account such
items as the cost of selling your property when calculating how much
you can afford on a new home. It may also be advisable to
be reasonably conservative in your expectations of how much you
can afford on a new home. It may also be advisable to be reasonably
conservative in your expectations of the price your existing property
might fetch. When you have found a home that you want to buy
and you negotiate the price, your offer should always include the
words “subject to contract”. This means that you can withdraw
from the purchase at any time until the contracts are exchanged.
You should also check which fixtures and fittings are included in the purchase price at the time you make the offer. It is usually a good idea to make a list so that they can be included in the contract.
After the offer is accepted
If your offer is accepted, give the estate agent your solicitor’s name
and address so that the legal part of the transaction can start quickly.
Complete your mortgage application as fast as possible. Arrange to have the deposit available for the time when contracts are exchanged. Usually, it is 10% of the purchase price.
Mortgages – the choice
A wide range of institutions now offer
mortgage facilities including building
societies, banks, insurance companies and
home loan companies. The choice can be
bewildering so ask your financial adviser for
the best choice for you.
REPAYMENT MORTGAGE
The majority of home loans are still made
on repayment of capital and interest basis.
Each month you make regular payments of
both capital and interest to the lender.
During the early years of the mortgage, you
will normally pay off relatively little of the
capital because the repayments largely
consist of interest. In the second half of the
loan repayment period, the capital element
is generally larger.
It is normally a good idea to cover the amount of the mortgage with a life assurance policy so that the loan is paid off if you die.
INTEREST ONLY MORTGAGE
These are more common for Buy To Let clients,
but as the name suggests they are mortgages
where monthly instalments only cover interest.
The principal loan remains the same.
It follows that it is wise to have a vehicle to repay the loan itself upon expiry of the term of the loan.