Property Hub Limited
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buyers guide

Buyers Guide

Purchasing your new home or investment property can be a complicated and sometimes frustrating experience, so here at the Property Hub, we provide buyers with independent and informed advice, to help you make the right decision.

Knowledge is key to successful completions so we have provided you with a complete guide to the buying process. If there is anything you are unsure of or need further information on, our friendly and experienced team of property consultants are always happy to help and make sure your purchase goes smoothly and without issues.

  • As the property market moves rapidly, it is sometimes difficult to judge if the price asked for a property is realistic or not. It is therefore wise to check the price against similar recently sold properties in the vicinity with other local agents. If possible it is prudent to view the property with someone like your builder and find out what or if work needs to be carried out to improve the condition of the property. It is also wise to find out how much any remedial work would cost should it be required and how this could impact the asking price. We would also advise checking to see if there are other similar properties currently listed and how long they’ve been on the market.
  • Once you get an idea about the property’s pricing in your preferred area, the next step is to assess your finances and work out how much you can afford. We have a mortgage calculator to assist you with this but we recommend you also visit either your current bank or speak to a professional mortgage advisor who can advise you on a variety of different mortgages to suit you and your budget.
  • Once your mortgage is in principal agreed, along with your deposit, you are ready to go house hunting in earnest. Register with local agents and keep eye on the leading property portals, such as Rightmove, Zoopla, PropertyPropertyProperty, and Prime Location for constant updates of new property listings.
  • Once you have found a property you are interested in, check the tenure of the property i.e. Freehold, Leasehold, share of freehold, virtually freehold. Keep in mind, the majority of properties on leasehold / virtually freehold have ground rent and services charges payable, especially with purpose built flats.
  • It is also important to check if the property is eligible for a mortgage. For example, lenders may not consider finance against leasehold properties with under 60 years of lease, a property built without brick work, such as reinforced material or a property near vulnerable seacoast areas.
  • Take time to fully read the property description, including details of room sizes, total sq. Ft/Mt area, garden and parking allocation attached to the property. Check to see if any part of the property is in sharing zone i.e. shared driveway, right-of-way, common part / way property or public footpath.
  • Once you have found a property that fits your criteria and you are happy to proceed, it is time to put in an offer. There may be a period of negotiation at this point as even if you have put in the highest offer, the vendor may have a chain above him that requires a different timescale to your own and a lower cash sale may be preferable due to speed or maybe they are willing to wait for a higher price to enable them to buy a specific property. This can be an extremely frustrating time for buyer but the vendor’s agent will negotiate with all parties to reach an agreeable sale that suits all parties.
  • Once an offer has been accepted, the vendors agent must remove the property from all property portals and websites or it should be displayed as a under offer or sold (STC). You must also then pay a holding deposit to ensure the property isn’t sold to someone else and to show that you are serious about proceeding with the purchase. This is typically in the region of £1,000.00.
  • You must then arrange for a survey and finalise your mortgage arrangements plus appoint a conveyancing practitioner or solicitor. This must be done within the agreed terms of sale timescale or you risk forfeiting your holding deposit.

To help you understand the terms used, please find below our Jargon Buster.

Applicant

A person who makes a formal application for mortgage or to purchase a property. Applicants can also be in group; for example a couple or a family where everyone is working and taking out a mortgage or property in joint names. You can register as an applicant with us and receive constant updates on new property listings and news about the property market or call our team on 02089031002 or 0208 459 3333.

STAMP DUTY

Stamp Duty - or Stamp Duty Land Tax (SDLT) is a levy paid by buyers to HM Revenue & Customs on land purchase.

You’ll need to submit a SDLT Transaction Return and pay any Stamp Duty you owe within 30 days of completing a property, lease or land transaction. If you miss this deadline, you will face a fine and be charged interest on the overdue payment.

It’s the responsibility of the purchaser to fill in a Land Transaction Return and make the SDLT payment to HMR but your solicitor or conveyancer normally takes care of this on your behalf.

Some mortgage providers will allow you to add Stamp Duty and other fees to your mortgage but bear in mind that you will then have to pay interest on this.

To help you work out how much stamp duty you will need to pay, please use our Stamp Duty Calculator.

Mortgage

A mortgage is a legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

In simple terms a mortgage is a legal agreement in which a person borrows money to buy property (such as a house) and pays back the money over a period of years. Our in-house mortgage advisor can help you select a suitable mortgage. For further information please email us or call us on 02089031002 or 0208 459 3333.

Remortgage

A remortgage (also known as refinancing) is the process of paying off one mortgage with the proceeds from a new mortgage, using the same property as security (equity).

In simple terms a home remortgage, or refinance, fulfils the terms your existing mortgage contract and creates a new contract with more favourable terms for you. Our in-house mortgage advisor can advise you on your remortgaging options. Please feel free to email us or call us on 02089031002  or 0208 459 3333 to arrange a consultation.

Under Offer

The property’s price has been agreed between purchaser and seller and this is the first step towards exchange of contracts and completion. However, at this stage, should a higher offer be submitted before exchange, then vendor may accept that offer and the lower one can be reject.

A property is under offer when a homebuyer has made a formal offer to purchase the property but the homeowner has not confirmed whether to accept. If the offer is rejected then the property remains on the market until the next formal offer is made at which point the homeowner must again decide whether to accept the offer or reject it. If the offer is accepted then it becomes 'Sold Subject to Contract' (Sold STC). Sold STC ‘Subject to Contract' (STC) means that the homeowner has accepted an offer from a buyer but the paperwork is not yet complete. You can still enquire about a Sold STC property as the sale is not complete until the signed contracts are exchanged. Technically the property is still available. It may still be worth contacting the estate agent to discuss the strength of the accepted offer, particularly as there is no legal obligation on homeowner or homebuyer to complete the sale. On average about 15% of Sold STC properties come back on the market after the sale has failed to proceed.

Home Buyers Report

This is a property survey which lies between a mortgage valuation and a full survey. It is a multi-page report which gives the buyer some piece of mind about the property they are purchasing. It contains a report with comments on the structural condition of the property that is readily accessible, visual inspection of the property, a concise report based on the inspection, a property valuation. However this may not involve in-depth investigation, the testing of water, drainage, heating systems, environment search, HSR (High speed railway passing). We can help in arranging a home buyers report. Please feel free to email us or call us on 02089031002  or 0208 459 3333.

Down Payment (Deposit)

An initial payment made when property is going to be purchased. It is a set amount of money that is paid to the vendor on exchange of contracts on a property by the buyer. Generally normal purchasers pay a deposit of around 10 % - 15 %. Buy to let purchasers pay on average 20 % - 25 %, whilst commercial property purchasers pay between 30 % - 35 %. Help to buy schemes allow deposits as low as 5 % as do some part-own/part-let purchases. For advice on Help to Buy and Buy to Let mortgages, why not speak to our in-house mortgage advisor? Email us or call our dedicated team on 02089031002 to book your consultation.

Annual Percentage Rate (APR) Interest

The nominal APR is calculated as: the rate, for a payment period, multiplied by the number of payment periods in a year. Defined by law, it includes repayments on the loan plus any mortgage related fees such as booking, arrangement or basic valuation fees. The APR shows the true cost of borrowing over the entire term and should appear on all mortgage illustrations. Our in-house mortgage advisors can explain in depth the APR on your mortgage and how to choose the right one for your needs and budget. Please feel free to email us or call us on 02089031002  or 0208 459 3333.

Building Survey

A full inspection of the property, conducted by a chartered surveyor, who will write a detailed report setting out the soundness of a property and any property defects. Suitable for any house, particularly older properties and those that have been poorly maintained as well as properties that have been extensively altered or extended, or any property due to be altered or extended. We can help you arrange a building survey if you required, with our reliable and experienced surveyor as partner firm. Feel free to email us or call us on 02089031002  or 0208 459 3333 to book your building survey.

Buildings Insurance

Building insurance is purchased to protect owners from financial risks due to loss or damage to physical structures that you own. Three common types of building insurance are part of insurance packages purchased by home owners, landlords and business owners. This coverage category protects against total loss from natural disasters, as well as payments for certain types of damage repairs. Definitions of buildings insurance are generally the same and to define a building this means, for insurance purposes, the actual structure, the foundations, the walls, floors, roof, windows, plumbing, fixed electrical wiring and its decoration and permanent fixtures and fittings. Buildings insurance could also cover fitted kitchen units, fitted bedroom furniture, toilets and baths. Basically anything that is a fixture to the building is normally classed as within the buildings insurance cover. There are many different types of buildings insurance which is dependent on the type of construction and the actual use of the building. Basically the core areas of cover are the same. Our trusted business partners can help you obtain the most cost effective and appropriate building insurance for your needs. For further information, please email us or call us 02089031002  or 0208 459 3333 to arrange a consultation.

Buy-to-let mortgage

Buy-to-let is specific type of mortgage, solely taken to purchase the property which is going to be let. Lenders calculate how much they are willing to lend using a different formula than for an owner-occupied property. They tend to look at the expected monthly rental income to determine the maximum loan available. First-time landlords might also be required to have a separate annual income of at least £25,000. For an owner-occupied property, the calculation is typically a multiple of the owner's annual income. The interest rates and fees that are offered on BTL mortgages are, on average, slightly higher than those for an owner-occupied mortgage. This is due to the perception amongst banks and other lending institutions that BTL mortgages represent a greater risk than residential owner-occupier mortgages. We can offer advice on a suitable buy-to-let mortgage via our in-house mortgage specialist. For further information or to book a consultation, please email us or call us on 02089031002  or 0208 459 3333.

Exchange of contracts

Exchanging of contracts is the final step in the house purchase process and occurs after a solicitor has carried out all the necessary searches and the contract terms and conditions have been agreed. Once each party has signed the contracts and they have been physically exchanged, they are legally binding. The contracts will include a completion date, which is the date that the property becomes acquired by the purchaser. At exchange of contracts, any deposit needed has to be paid and arrangements for building insurance must be made so that the property is insured from that day. Usually, the present insurer will cover this new property free of increased premium until the completion date. For more details and advice on appointing a cost effective and reputable conveyancing solicitor, please email us or call us on 02089031002  or 0208 459 3333.

Fixed rate mortgage

A mortgage that has a fixed interest rate for the entire term or for a limited term during the agreed for loan. The unique factor of a fixed-rate mortgage is that interest rates may rise and fall over the period of the mortgage but the interest rate on this type of mortgage remains static. The benefit of a fixed-rate mortgage is that the homeowner will not have to contend with varying loan payment amounts that fluctuate with interest rate movements. For mortgage advice, please speak to our in-house mortgage advisor by emailing us or calling 02089031002  or 0208 459 3333 to arrange a consultation.

Fixtures and fittings

There is no legal definition of what constitutes fixtures and what constitutes fittings, however, it is generally considered that 'fixtures' are items that are secured or bolted to the walls or floor and 'fittings' are free standing items. We would like to give you an idea by simple example as list here for fixtures and fittings:

Fixtures: Light fixtures, central heating systems (inc. radiators & boiler, hot water tank), kitchen units, bathroom suites, built in wardrobes, plugs and sockets, etc.

Fittings : Paintings, pictures and mirrors (hung on wall), curtains and rails, free standing kitchen appliances (i.e fridge, washing machine, tumble dryer). Other free standing furniture (i.e. sofa), TV aerials & satellite dishes, carpets and lampshades, in brief all non-structural items included in the purchase of a property.

Fixtures and Fittings which are included in the purchase price can be deducted from Stamp Duty calculations.

To avoid confusion or disputes why not make use of our cost effective professional inventory services. For further details, please feel free to email us or call us on 02089031002.

Flexible mortgage

Flexible Mortgages allow you to make additional payments when you have extra money available. Extra payments can be lump sum or an increased amount per month. Most flexible mortgages also offer the option of taking a 'payment holiday' by building up a reserve of excess payments. Both these features can help in paying the mortgage off early, or coping with unexpected expenses. A flexible mortgage is usually offered on a daily interest basis, and because you are being offered this flexibility as an extra service you will pay slightly higher rates of interest compared to standard variable rates. We can help you select a suitable mortgage with the help of our in-house mortgage advisor. Please feel free to email us or call us on 02089031002  or 0208 459 3333.

Flying freehold

Flying freehold is legal term to describe a freehold which overhangs or underlies another freehold. Common cases include a room situated above a shared passageway in a semi-detached house, or a balcony which extends over a neighbouring property.Flying freeholds are viewed as a title defect, because they rarely have adequate rights of support from the structure beneath or rights of access to make repairs. This is an issue if, for example, scaffolding needs to be erected on the land beneath the flying freehold: the landowner's consent will be required and he may refuse, or want to charge a premium. If the work is necessary it may be possible to obtain a Court Order under the Access to Neighbouring Land Act 1992, but there are costs and uncertainties involved, and the situation could be even worse if the structure beneath is unregistered land and the identity of the owner is unclear.

Your solicitor can negotiate with third parties involved to agree access and maintenance terms which can be attached to your deeds.

Freehold

Freehold property can be defined as any estate which is "free from hold" of any entity besides the owner. Permanent and absolute tenure of land, property with freedom to dispose of it at will.

Gazumping

Gazumping occurs when a seller (vendor) accepts an oral offer of the asking price from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price at the last minute (prior to exchange of contract), after previously orally agreeing to a lower one. In either case, the original buyer is left in a bad situation, and either has to offer a higher price or lose the purchase.

Gazundering

When buyer reduce an offer on a property immediately before exchanging contracts, having previously agreed a higher price with (the seller / vendor), this is usually done during contract negotiation. The timing of this demand is usually intended to prevent the seller from rejecting the lower price,as the sale could collapse if they did, although it may also reflect a genuine downturn in property prices in an area or sometime if lender values the property lower than agreed price.

Ground Rent

A fixed rent paid under the terms of a lease by the owner of a building to the owner of the land on which it is built. It is applicable especially on flat, block of flats, leasehold maisonette, leasehold buildings (garage, basement).

Home Buyers Report

The homebuyer's report comments on the structural condition of most parts of the property that are readily accessible, but does not involve in-depth investigation or the testing of water, drainage or heating systems.

Homebuyers Survey & Valuation

A property survey that includes a valuation and should reveal any major faults in the property. It is not as detailed as a Structural or Building Survey but will give your mortgage lender a valuation of the property you intend to purchase and outline any major structural repairs that may be required.

Inflation

Inflation is defined as the increase in the price of goods and services in a particular economy over a period of time. As it relates to the housing market, inflation can drive up house prices and lead to many potential buyers being priced out of buying a property.

Interest Charges

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR). The assets borrowed could include, cash, consumer goods, large assets, such as a vehicle or building. Interest is essentially a rental, or leasing charge to the borrower, for the asset's use. In the case of a large asset, like a vehicle or building, the interest rate is sometimes known as the "lease rate".

Interest-Only Mortgage

A mortgage, were the borrower is only required to pay off the interest which arises from the principal amount that is borrowed. Because only the interest is being paid off, the interest payments remain fairly constant throughout the term of the mortgage. However, interest-only mortgages do not last indefinitely, meaning that the borrower will need to pay off the principal of the loan eventually. Interest-only mortgages can be useful for first-time home buyers because it allows young people to defer large payments until their incomes grow. At the end of the interest-only mortgage term, the borrower has a couple of options. He or she can either renew the interest-only mortgage or repay it through standard means, such as entering into a normal mortgage and liquidating investments. We can help you select a suitable mortgage with the help of our in-house mortgage advisor. Please feel free to email us or call us on 02089031002  or 0208 459 3333.

Joint Income

Meaning of joint income is to combined gross income of all earning members of a house. Individuals do not have to be related in anyways to be considered members of the same household. Joint income application can be made when all these members of a household who jointly ready to apply for credit. Household income is an important risk measure used by lenders for underwriting loans.

Land Certificate

Land certificate is a document of title for registered freehold or leasehold land issued by a government's land registry agency (office). The certificate of title lists any impediment on the property, such as liens or easements, but does not guarantee good title. The land registry office provides certificates of title to lenders that require these documents prior to approving mortgage loans.

Land Registry

Land Registry registers the ownership of property, officially known under the Land Registration Act 2002 as Her Majesty's Land Registry. It was created in 1862 to register the ownership of land and property in England and Wales.

Land Registry Fee

The Land Registry is a government department which looks after the registers of all registered properties in England and Wales. It charges a fee for transferring the register to the new owner. This fee is charged according to property price stated during the purchase. A rough guide to the costs payable to the Land Registry office, are: up to £ 40,000 Fee is £ 40, £ 40,001 - 70,000 Fee is £ 60, £ 70,001 - 100,000 Fee is £ 100, £ 100,001 - 200,000 Fee is £ 200, £ 200,001 - 500,000 Fee is £ 300, £ 500,001 - 1,000,000 Fee is £ 500, £ 1,000,001 and over Fee is £ 800.

Leasehold

Leasehold property, you own the property for a set number of years but not the land on which the property is built. During leasehold ownership you will havea legal agreement with the landlord (sometimes known as the ‘freeholder’) called a ‘lease’, this tells you how many years you’ll own the property. Ownership of the property returns to the landlord when the lease comes to an end.

Most flats are leasehold. Houses can be leasehold too and usually are if they’re bought through a shared ownership scheme. The leases are usually long term – often 90 years or 120 years but as high as 999 years – but can be short, such as 40 years. A leaseholder has a contract with the freeholder, which sets down the legal rights and responsibilities of either side. The freeholder will normally be responsible for maintaining the common parts of the building, such as the entrance hall and staircase, as well as the exterior walls and roof. However, other leaseholders might have claimed their “right to manage”, in which case it is their responsibility. Leaseholders will have to pay maintenance fees, annual service charges and their share of the buildings insurance. Leaseholders normally pay an annual “ground rent” to the freeholder. Leaseholders will have to obtain permission for any major works done to the property. Leaseholders may face other restrictions, such as cannot remove chimney, loft conversion, change of use or subletting. If leaseholders don’t fulfil the terms of the lease – for example, by not paying the fees – then the lease can become forfeit.

Government has given a leaseholders protection against short leases, by giving them the right to extend their lease or the right to buy the property – but this can be very expensive indeed. Leaseholders normally have the right to extend their lease by 90 years on top of unexpired term. If so they won’t have to pay any more ground rent and they can negotiate new terms for the lease, like who pays for works on the flat. However, leaseholder only have the legal right to do this if they have held the lease on the property for 2 years and it was originally leased on a “long lease”, usually more than 21 years. Leaseholder will have to pay a premium for extending the leasehold. Many people considering buying a short leasehold property (generally less than 80 years) insist that the leaseholder extends the lease before they buy it. After leaseholder should tell a freeholder that they are qualify for the right to extend the lease, freeholder can accept your offer, negotiate, or reject your offer. If freeholder does that latter leaseholder can challenge them in court.

Legal Fees / Legal Charges

Whether you are buying, selling or remortgaging your property you need to appoint a conveyancer to oversee the legal requirements and ensure everything progresses to completion without unnecessary complications and for these you have to pay a legal fee to your solicitor or conveyancer. The legal fee generally includes a professional fee, any searches ( i.e. Bankruptcy, Local Authority, Drainage, Chancel Repair Liability, Environmental, Location Specific Local), mortgage fees, land registry fee, postages (Postage, Photocopying & Phone), bank charges, disbursements (Filling Out the Stamp Duty Tax Return, Dealing with your Lender, PI Contribution, Insurance).

Maintenance Charge (or service charge)

Under the terms of your lease, you must contribute towards the cost of the services that you receive. The services are listed here i.e. Caretaking, Grounds maintenance, Cator Roads, Refuse, Concierge, CCTV, Communal lighting, Fuel costs, Buildings insurance, Block communal plant, Boiler servicing, Door entry servicing, Lift servicing and maintenance, Block repairs, Estate repairs, Ground rent, Management fees. However, you may only receive some of these.

Maisonette

An apartment occupying two or more floors of a larger building and often having its own entrance from outside.

NHBC scheme

The Nation House Builders Confederation is the standard setting body and leading home construction warranty and insurance provider for new and newly-converted homes in the UK.

Offer

Making or putting in an offer means buyers will say to the seller or his/ her agent, how much he/she willing to pay for the house (property).

Offer of a Loan

A loan agreement is the document in which a lender – usually a bank or other financial institution – sets out the terms and conditions under which it is prepared to make a loan available to a borrower. Loan agreements are often referred to by their more technical name ‘Mortgage in Principal’.

Office Copy Entry

When purchasing a property the buyer will want to be assured that the property belongs to the seller and that it is as described in the contract. The solicitor acting for the intending buyer would send a form to theHM Land Registry requesting a set of Office Copy Entries of the Land Certificate or Register. These are known as Official Copies of the Register meaning that the proposed buyer and his or her solicitor can rely on the documents as if they were originals.

The entries would state, among other things, the full names of the present owners of the property and describe the property. In some cases the description of the property would be supported by an Official Plan of the property. The entries would also reveal if the property was charged (held as security for a mortgage or loan) to a bank or building society.

Peppercorn Ground Rent

Peppercorns were used in place of ground rent.

In order to enforce the terms of a lease a ground rent must be set, but in the past many leases had tiny ( nominal) ground rents so in some cases freeholders fixed that the rent should, instead of money, be a peppercorn (as used in pepper grinders) to save them the trouble of collecting the money. In theory the freeholder could still demand the peppercorn but in effect it means there's no ground rent to pay.

Re-Mortgage

A remortgage (refinancing) is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. Often the purpose of switching is to secure a more favourable interest rate from a different lender.

The process of remortgaging does not usually involve moving home or taking out a second mortgage on the property; it is in effect the transfer of a mortgage from one lender to another. Home owners may choose to remortgage for various reasons, generally to reduce the overall monthly mortgage payment amounts. However, other reasons may include to reduce the size of repayments, to pay off a mortgage earlier, to raise capital, or to combine other more expensive short term debts.

Redemption

When a mortgage is fully repaid by borrower.

Repayment Mortgage

A repayment mortgage is a term usually used to describe a mortgage in which the monthly repayments consist of repaying the capital amount borrowed as well as the accrued interest, so that the amount borrowed decreases throughout the term and by the end of the loan term has been fully repaid.

Repossession

Repossession is the process by which lenders can reclaim property from debtors (those that owe money) who have not kept up with their payments or default the payments.

Retention

This relates to monies withheld by lenders until certain mortgage conditions are met.

Search

A demand or investigation for information related to the property held by a local authority or by the Land Registry Office.

Semi-Detached

A house with two units sharing a common wall, a detached house has no other homes attached to it. A semi-detached house has one other house attached to it.

Service Charge

Service charges cover your share of the cost in maintaining the building you live in. Most leaseholders living in blocks of flats have to pay them because it is the only manageable way to share the costs of looking after the building. It is less common for leaseholders of converted houses to have service charges. They are normally paid annually but can sometimes be paid quarterly or half-yearly. Service charges usually cover things like repairs, cleaning and shared amenities such as porters and communal gardens, communal lighting & heating. They sometimes cover buildings insurance as well, but you may have to pay for this separately. Usually you have to pay a share of everything even if you don't use some of the services. For example, even if you live on the ground floor and never use the lift, you will probably have to pay something towards its maintenance.

Share of Freehold

There are two basic set ups for the ownership of the freehold, the first is that the freehold is owned jointly by a number (up to four) of the flat owners in their personal names and the second is where a company is the owner of the freehold and each of the tenants hold a share or membership in that company. This essentially means that you will have a lease over your flat as well as a share in the freehold of the whole building. This may be a share in a company that owns the freehold. Alternatively the freehold may be held by up to 4 individuals. It is important to understand the responsibilities involved in having a share in the freehold which may include liability with others to repair and maintain the exterior of the building and the common parts.

Title Deeds

A deed or document containing or representing evidence of ownership.

Title Insurance

An Insurance that covers the loss of an interest in a property due to legal defects and that is required if the property is under mortgage. Prior to the invention of title insurance, buyers in real estate transactions bore sole responsibility for ensuring the validity of the land title held by the seller. If the title were later deemed invalid or found to be fraudulent, the buyer will lose their investment.

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