Buying a House: Overview And The Purchase Process
This part of Beagle Street’s Home Buyers’ Guide is about the actual process of buying a house. We cover the subject in two sections:
Here we’ll look at everything that happens between your offer being accepted and what’s known as ‘completion’ (the point at which you take legal possession of the property). As this process might be confusing to first-time buyers, we’ve divided it into two parts:
- The legal stuff: including terms and legalities
- What is conveyancing?
- Finding a solicitor
- Types of ownership
- Insurance and Wills
- The practicalities
- What to expect
- The estate agent
- Completing your mortgage application
Before you’re in a position to move in, you’ll need to complete. It’s an exciting day, but could throw up one or two anomalies. To protect against these, this page goes over:
- Information about completion day
- The nitty gritty – setting up your home
After reading this page, you’ll be fully clued up on:
- The next steps after your offer has been accepted
- The role of a solicitor and what they might need from you
- How to finalise your mortgage application
- What happens when your purchase ‘completes’
The Purchase Process
Picture the scene: you’ve spent hours, weeks and months searching for the property of your dreams. You may even have spent years in the preparation. Then comes the news you’ve been waiting for: your offer has been accepted!
Undoubtedly this is one giant leap onto the property ladder. But the hard work isn’t over yet – there’s still plenty to do before you officially own the property. In which case, what happens next and who does what?
Let’s start with some basic terms and legal considerations which are critical to the purchase process.
What is conveyancing?
Conveyancing describes the process of legally transferring a property from seller to buyer. It starts when your offer on a house is accepted and finishes when you complete.
How long the conveyancing process lasts mainly depends on how many others buyers and sellers are involved (the ‘chain’). As a first time buyer, it’s likely that the conveyancing time could be towards the lower end of this range.
To complete the conveyancing process most people seek out a solicitor or ‘conveyancer’.
Why do I need a solicitor?
A solicitor could play a very important part in the process of buying a house. In particular, they are able to provide expert assistance in the following areas:
- Explanation & advice
Your solicitor may explain the house buying process in full. A good solicitor may not only provides invaluable expert advice on various legal issues that could arise through the purchase process but also warn (and protect) against those that could happen in future.
It’s very important that various searches (for example, legal boundaries, rights of way and planning permissions) are carried out on the property before you buy. Your solicitor might do these for you and advise if anything unusual arises.
Your solicitor can arrange the contract that you must exchange with the seller to make the sale legally binding. They can also arrange a date for completion.
This is when the property legally becomes yours. There are several duties required for completion, including the transfer of funds to the seller and registration of your (and your mortgage lender’s) name with the Land Registry. Your solicitor can do this, as well as arrange for payment of any tax due to HMRC (stamp duty).
How much do solicitors cost?
You need to be a little careful, here, to distinguish between the cost of your solicitor and the cost of conveyancing. They’re not the same.
- Cost of solicitor
This is the basic fee charged by your solicitor for doing the legal leg-work, and advising you. As it’s a very competitive market, fees vary quite widely, though the average cost in 2015 was around £8002 for a residential property (it’s different for commercial properties).
- Cost of conveyancing
On top of their basic fee, a solicitor could add ‘disbursements’. These are costs that the solicitor has paid on your behalf, for things such as the Land Registry fee, bank transfer fees, search fees and other associated conveyancing costs. According to the CEBR (Centre for Economics and Business Research), the average total residential conveyancing cost in 2014 was £1,419. It is now likely to be a little higher.
If you decide to get a solicitor quote and want a balanced view on whether it’s good value, it’s worth checking out The Advisory.
If you’re thinking of agreeing to use the solicitor recommended by your estate agent, remember that this is probably a commission-based recommendation, so it could cost you more.
Types of ownership
When you buy a property, ownership might be legally shared in different ways. Your conveyancing solicitor may be able to explain the different types of property ownership in detail, but they are basically as follows:
- Sole ownership – that is, in your name only. In this case, your property could be part of your estate if you pass away.
- Joint tenants. Here, your share in the property automatically passes to the surviving owner(s) if you die. You cannot pass on your share of the property in your Will.
- Tenants in common. When a property is owned on this basis, you might own a different share to others. While this share doesn’t automatically go to the other owners if you die, you could pass it on in your Will.
It’s easy to see how the type of ownership you have could be important in a number of different circumstances, such as marriage or divorce. It could also be important if you’re co-habiting (not married or in a civil partnership) and decide to split up. In almost all cases, you’ll have certain rights, and might take steps to protect your own home. However, there may also be aspects of your ownership that you’re not aware of, which could threaten your ownership. A useful article on protecting your rights if you’re married is found at the Citizens’ Advice Service Website. If you’re cohabiting, you may find this article, at the Money Advice Service helpful.
Could I do it myself?
There’s no legal reason you can’t do the conveyancing yourself, but if there’s a mortgage involved (more than likely for first time buyers) then it’s almost certain that your lender could insist you use a professional service. Many lenders also require you to use one of their recognised solicitors to do your conveyancing.
This is, perhaps, understandable, given that conveyancing involves a lot of legal jargon and paperwork and it’s essential that all aspects are completed correctly. Mistakes could cause considerable delays, or even cause the sale to fall through. You might even end up being sued – which could result in your spending far more in legal and court fees than you might have done on a conveyancer.
How do I find a solicitor?
There are several ways to find a reliable conveyancing professional. For example:
- Get a recommendation from family or friends.
- Ask your mortgage lender or adviser.
- Go with your estate agent’s recommendation – but remember that this could end up being an expensive option, as the estate agent could be paid commission by the conveyancer.
- Search online. This might help you find a cheap quote, but you have no information about the quality of their service. Compare conveyancing quotes on sites such as the Home Owner’s Association.
Insurance and Wills
In the excitement of buying your first home, things such as Life Insurance and making a Will may not be uppermost in your mind. And that’s understandable: few of us like to think about our own death. But it’s important to ensure that your home is protected should misfortune strike. Here, we’re going to look briefly at some of the main things you could do to ensure peace of mind.
A mortgage is a large commitment, and if you have financial dependants it’s important to think about how they might cope in your absence. This is where Life Insurance comes in – it could help to ensure that your loved ones would be able to pay the mortgage should you die.
As you might expect, there are different types of Life Insurance. One common type is called ‘Term Life Insurance’. It’s called this because it is designed to pay out if (and only if) the policyholder dies during the term of the policy. A typical term is 20 or 25 years.
The two main types of term insurance are:
This type of policy pays out a fixed sum if you die within the policy term. As the payout stays the same, premiums tend to be higher than with decreasing term insurance. This type of life insurance policy would be more appropriate if you have an interest only mortgage.
If you have a repayment mortgage, the balance of your mortgage (the amount you owe) goes down over time. This means the amount that your policy needs to cover goes down, too. A decreasing term insurance policy reflects this – which is why it’s often called ‘Mortgage Life Insurance’. It’s worth noting that this type of cover may not be appropriate if you have an interest-only mortgage (as the amount you owe doesn’t decrease with time).