I’ve found a property I love. What do I do now?
The first step is to apply for a Decision in Principle from a mortgage lender. This information confirms how much you could borrow to buy a house. With a Decision in Principle, you can put in an offer for a property you love, as long as it’s within your budget.
How do I arrange a mortgage and how much can I borrow?
The amount you can borrow to buy a house depends on several factors. The most critical factor for mortgage lenders is your ‘loan-to-value’ ratio (LTV). The LTV is the percentage of how much you can afford to pay compared to the property’s price. A lower LTV typically means you can borrow more money.
How long will it take to complete my purchase?
It usually takes up to ten weeks to complete the purchase of a home. However, several factors can affect the length of time from when you put in an offer to receive the keys. For example, fast home sales happen if the seller has already vacated the property, no chain exists and you have already secured a mortgage.
How much will stamp duty cost?
Stamp duty rates depend on the cost of the home. The rate also varies depending on the purchase price. First-time buyers buying a house up to the value of £300,000 and properties up to £125,000 are exempt from stamp duty. For properties over £125,000, here is what you can expect to pay on stamp duty:
- Properties between £125,001 and £250,000 — 2%.
- Properties between £250,001 and £925,000 — 5%
- Properties between £925,001 and £1.5m — 10%
- Properties selling over £1.5m — 12%
It is vital to remember that you only pay the stamp duty rate on the proportion of the applicable sum. For example, a property costing £450,000 would incur a stamp duty rate of 2% from £125,000 (£2,500) and 5% from £200,000 (£10,000). No one pays stamp duty on the first £125,000 of the purchase price. So, for the example of a property costing £450,000, you would be paying Stamp Duty of £12,500 when buying your next home.
First Time Buyers don’t pay stamp duty up to £300,000, so for the example of a property costing £450,000, you would be paying Stamp Duty of £7,500 when buying your first home. This equates to 5% of the remaining £150,000 of the total cost of the property.
Also, when buying a second or additional home, there’s an additional 3% tax, meaning you’ll pay Stamp Duty of £26,000 for the example of buying a £450,000 property.
Do I need a survey?
Although not required by law, we strongly recommend arranging a survey before buying a property. A survey will let you know the actual condition of the property, not just its value. Getting a survey can help avoid the unpleasant experience of buying a home in a poor state of repair.
When do I need to pay the deposit?
You must pay the deposit when you exchange contracts.
When will my mortgage lender release the funds?
Typically, your mortgage lender releases funds four to five days after your solicitor requests the loan. The time it takes to release the money affects the completion date when you become the new legal owner.
When do I sign the contract?
After your offer has been accepted for the house, the seller’s solicitor will draft a contract. Next, your solicitor performs searches and ensures the contract is in order. During the process, your mortgage lender conducts a valuation and sends an offer. You can sign the contract when these steps are completed.
How and when do I get the keys?
You receive keys to your new house when the seller’s solicitor confirms that the seller has received funds. After that, your estate agent will confirm where you can collect the keys.
What happens to my title deeds?
After receiving the keys and moving in, your solicitor holds the title deeds for some months. After that, they send the title deeds to your mortgage lender, who keeps them until the mortgage has been repaid in full.