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Tuesday, 26 May 2015

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First-time buyers can avoid chain reaction

BUYING a house for the first time is a daunting experience.

Being a home owner is a big responsibility to take on – there are mortgage repayments, maintenance costs, council tax and utility bills to consider.

But, when you decide to take the plunge, property ownership is the best investment you could make.

And first-time buyers are in a good position in the housing market.

The fact that there is no chain involved can knock thousands off the price of your new house.

Once you have decided that you are ready to take the first step on to the property ladder, where do you start?

Firstly, when you decide you want to buy a house or flat, you need to decide where you want to buy property.

You should list what sort of amenities you need nearby and what your requirements are from the property.

You must tot up all the money you have at your disposal for use as a deposit. Don’t forget to account for house purchasing and set-up costs.

At the same time, contact a good mortgage broker or mortgage advisor for mortgage advice. They will help you choose the right mortgage and assist with your application, leading to you receiving a ‘decision in principle’ on the amount you can borrow to buy a house or flat.

Search on line on the property portals covering UK property and also register with estate agents in the area you want to live.

Locate a property solicitor to carry out the legal aspects of the house-buying process – this is known as conveyancing. Your solicitor can also draw up any agreements if you are buying a house with a friend. This is vital – never leave it to chance whether you are buying with a friend or partner.

If you are buying with a civil partner or spouse, there are automatic agreements in place which will give rights to each partner in the event of a split. However unromantic it sounds, always make sure you are aware of your legal situation now, should you split up in future.

Start looking at properties that fit the bill and are within your budget. Don’t waste time looking at properties that don’t meet your basic needs or you can’t afford.

Make an offer to buy the property based on what you have seen and information contained in the home information pack.

The estate agent will arrange the home information pack (HIP) on behalf of the vendor. A property cannot be marketed until the HIP is ready.

If the person or house-builder accepts your offer and conditions, ask the estate agent (if there is one) to take the property off the market.

Instruct your solicitor to act on your behalf and give him the details of the property location, and the vendor’s estate agent.

Your conveyancing solicitor will contact the vendor’s property solicitor requesting title deeds to the property. He will start contractual proceedings.

Find a surveyor and ask for a home-buyers' report or a survey to be carried out. A full structural survey will give more information, but is not a legal requirement and it is up to you whether you consider it a good use of money. Remember, however, that if you do not have a full structural survey you will have no comeback should problems like asbestos, dry rot or subsidence be found later.

The mortgage lender will carry out an independent valuation of the property, and you will be required to pay for a mortgage survey.

Your mortgage lender, on sight of the property valuation and data backing up your application, will then agree to lend you the money for the property.

You should also send a copy of your survey report to your solicitor. He will give you his view on it and you may want to discuss his findings. Depending on the contents of the report you may be able to ask for a slight reduction on the price or some remedial work to be carried out pre-sale.

The solicitor will check the property, carry out his local authority searches – which you may want to add to – and find out if any alterations to the property have been made. This would be the time to negotiate a price for fixtures and fittings.

Your solicitor will finalise the details in the contract of sale/purchase with the vendors' solicitor and confirm mortgage details with your mortgage lender.

You then pay a deposit into your solicitor’s account. He holds it there until exchange of contracts.

On the day of exchange of contracts, your solicitor exchanges contracts with the seller’s solicitor and sends your deposit to the vendors' solicitor. A date for completion (when you can accept the key and move in), which will have been proposed beforehand, is agreed upon.

If you buy a new house, there is no chain and this step of agreeing a date is much easier than when a chain is involved.

Your solicitor will liaise with your mortgage lender to ensure the mortgage is available for the completion date.

Your solicitor will prepare the property transfer deed, which is signed by you and the seller and lodged with the seller’s solicitor until completion.

The mortgage lender transfers the money into your solicitor’s account ready for completion.

On completion day, the day you can move in, your solicitor transfers the money to the seller's solicitor in return for the transfer deed, Land Registry certificate and the keys. The sale is then completed.

Your solicitor arranges for the transfer deed to be stamped, pays the stamp duty and sends the transfer deed to the Land Registry to record you as the owner.

Your solicitor passes the deed to your mortgage lender to act as security for the loan and then he will send you the bill for his services and costs.