MY CHATEAU

Some Basic Advice

 

After finding a home you like, which can take anything from a few days to many months, the process from having your offer accepted to completion of the sale takes about 12 weeks. This is about twice as long as in many other countries - home-buying in Britain is a notoriously drawn-out business. Making certain you are protected as a buyer is crucial. Knowing where to find that help is why we are here.

 

Once you have found a property you feel you like, make sure you learn as much as possible about it. Even if it seems perfect at first glance, try to think about it from all angles. And write everything down - the best house-hunters take notes on each property they view which they can compare later. Make two or more visits to the house. View the house in the daylight and at night. I would also suggest making certain you see the neighborhood and parking situation on a weekend. You may find there is limited or no reasonable parking period. Come at rush hour, as you could get a nasty surprise - is the road used as a short-cut by motorists?

 

General Condition

Knowing every detail about a house is probably impossible to discover up front but the key elements that one must pay attention to is a first priority in making a final determination on ‘if the house you choose is worthy of the purchase price’.

 

Keep in mind England is an Island. A large one, but a land mass that does receive much precipitation throughout any given year. You may find mold could be an issue just as it is in the U.S. You need to know if the structure will potentially cause health problems especially in the case of mold. Other considerations include;

 

• Check what fixtures and fittings will be left by the previous owner

• Consider the layout of the house - are there any unusual shaped rooms that it would be difficult to fit furniture or appliances into?

• Are there are enough power points, meaning electrical outlets?

• Don't be put off by the seller's choice of decor - try to imagine the house with your own furniture and style

 

State of Repair

• Insulation: is the roof well-insulated? Go into the loft and turn off the light - you shouldn't be able to see any patches of day-light. Is there wall-cavity insulation?

• Central Heating: is the central heating system efficient? How old is it? Is it gas or electricity-powered? Ask to see a winter heating bill as this can help give an idea about the quality of insulation

• Plumbing: Are the pipes and the boiler lagged? How old is the piping? Lead piping will need replacing

• Plug sockets: How old are they? If they are the old-fashioned, round-pin type, re-wiring will probably be required

 

Structural Problems - Inside: look for cracks in ceilings and walls, doors that stick or don't hang correctly

• Damp: You can smell damp, so use your nose. Mold, walls which are damp to the touch, flaking paintwork or wallpaper which is peeling off are also signs of damp. Be wary of new paint or wallpaper which could be hiding problems underneath

• Condensation problems: rotting window frames can be a sign of this. If they are very soft to the touch this means they are rotten. Make sure the bathrooms and kitchen are well ventilatedWoodworm: indicates by holes in woodwork

 

Structural Problems - Outside: look for big cracks in the walls, a bent chimney stack, or an uneven roofline

• Damp: examine for missing roof tiles, and check the brickwork and mortar as cracks can let in damp

• Root damage to foundations: if there are any big trees nearby this could cause problems

 

Important Notice - Inspecting the property yourself does NOT avoid the need for a professional survey. This is a necessary expense though completely optional and not mandatory. You will however be totally irresponsible for not paying your due-diligence at this important purchase opportunity.

 

Do you want a new or an older house? If you are buying a very old one make sure you have looked into what this can entail. Old houses can look lovely but cost a lot to keep up in terms of maintenance and heating bills. Newly-built homes can also have drawbacks, such as higher prices than 'secondhand' ones, and the requirement to buy before they are fully built, but advantages include less maintenance and decoration costs, and often complimentary extras thrown in by the builders such as carpets, curtains and fitted kitchens (though you will not necessarily get to choose your own decorations).

 

Remember new builds can be poorly built too, and you should consider a proper survey. There are additional guarantees for newly built homes under the NHBC guarantee scheme, but you do not want to have to call on these guarantees. It is far better to have any outstanding works (or 'snagging') dealt with before you move in.

 

Do you want a terraced, semi-detached or detached house, or a flat? If you want a flat, do you want a purpose-built one or a conversion? All have their advantages and disadvantages: consider space, privacy, noise, parking and character. How much does each one matter to you? How much decorating or improvement do you wish to make to a property? Do you want a leasehold or freehold property?

 

Freehold

This means that you fully own the property. As a freeholder you will have full responsibility for the maintenance and repairs of the property.

 

Leasehold

This means that you own the property for as long as is specified in the lease; you are granted the right to live there by the freeholder. At the end of the lease the property again becomes the possession of the freeholder. Many leases are originally granted for up to 999 years, but existing leases on properties are usually shorter.

 

The majority of leasehold properties are flats, although some houses are leasehold. The lease stipulates who is responsible for maintaining and repairing different parts of the property and any conditions you must meet as a resident. Check these if you are considering buying a leasehold.

 

You must also pay a ground rent to the owner of the land (the freeholder), usually a small amount paid each year. Your solicitor should check that the seller is up to date with ground rent payments before you sign the contract. You should not buy a property with a lease of less than 60 years, and anyway mortgage lenders are very unlikely to lend for a lease as a short as this. Lenders normally want at least 20 years left on the lease after the end of the mortgage term.

 

As a leaseholder you have the right to extend the lease for 90 years or even to buy the freehold if certain criteria are met, though the application process is expensive and takes a long time. Contact the Leasehold Enfranchisement Advisory Service for more information.

                                    http://www.home.co.uk/guides/buying/contacts.htm#leas

 

Registered or Unregistered

In England and Wales, property can either be 'registered' or 'unregistered'.  If property is registered, the title to the property is registered at the Land Registry and is guaranteed by the state.  The owner has a 'Land Certificate' instead of the usual title deeds. Buying registered property is more straightforward than buying unregistered property.

 

If property is unregistered, ownership is not guaranteed by the state. The title can only be proved by a copy of the title deeds, and your solicitor will check back the property's documentation over at least 15 years to certify it. With unregistered property, disputes over title are not uncommon. When you buy unregistered property, it must now be registered for the first time with the Land Registry. This will take some time so the buying process will take longer than if you are buying registered property. Your solicitor/conveyancer's fees will probably also be higher.

 

What is Conveyancing?

The term 'Conveyancing' refers to all the legal and administrative work associated with transferring the ownership of land or buildings from one owner to another. The conveyancing process starts after an offer has been made and accepted for a property, and solicitors' details have been exchanged by the two parties.

 

Who Does The Conveyancing?

Most people hire a solicitor or licensed conveyancer to undertake the legal side of buying their home. It is possible to do the conveyancing yourself, but this is a time-consuming business and also risky if you lack the necessary expertise. Although professional services are expensive, they have become cheaper in recent years and it is well worth the cost to successfully complete the purchase and to resolve any possible problems. This part of the process is crucial.

 

DIY Conveyancing: Pros and Cons

DIY-conveyancing is possible. If you are sharp, not put off by legal jargon and willing to deal with the large amounts of paper-work involved then it might be safe not to hire a professional conveyancer or solicitor. However, it is advisable to think about this very carefully as it is a complex and time-consuming business. If it is not carried out properly you could, for example, find yourself involved in costly legal disputes over boundaries, discover that there is a new road planned to be built opposite your home, or even that the seller did not have the legal right to sell the home.

 

In reality very few home-buyers undertake the conveyancing themselves, for three main reasons:

• Many mortgage lenders will insist on employing a solicitor to protect their interests. They do not want to risk having shoddy conveyancing work.

• There is a higher risk of things going disastrously wrong The other people involved may not be happy with you doing your own conveyancing, and may even reject your offer on this basis

• There are some cases in which DIY-conveyancing is particularly inadvisable, for example: if the property is being sold by a divorcing or separating couple (this requires specialist skill or knowledge) if the property is not a freeholdif the property is unregistered if the property is not a house

 

When a property is being sold an 'energy performance certificate' will need to be provided. Get a Conveyancing Quote.  http://www.home.co.uk/services/conveyancing_quotes.htm

You can also select from a directory of Conveyancing Services provided by the UK Government. http://www.home.co.uk/services/conveyancing_services.htm

 

Pre-Offer Checklist

Before making an offer, there are a few things you should check: Keep an eye on the local and national housing market. Check that the house is worth the price you are willing to pay. Have a look at Land Registry reports for houses that have sold in the same area and compare asking prices with actual sale prices. The direction asking prices are heading is a good indicator of the local and national market. For more information about asking prices look at Home.co.uk's Asking Price Index http://www.home.co.uk/asking_price_index/

 

When making comparisons between houses, bear in mind that its value can be increased by factors such as extensions, loft conversions, fitted kitchens, being in a good location, or being a brand new house. Similarly, the value can decrease, for example, because of extensions that fill the whole garden or being in a bad location.

 

Check whether the property is freehold or leasehold.  Agree what fixtures and fittings will be included. Draw up a list of all items with the seller as this will avoid later confusion. You can also check things like planning permission, whether there are plans for new developments nearby (roads, new houses etc), and covenants, though these should be looked at by your solicitor later on during conveyancing.

 

How Much Should I Offer?

This is a key reason you should have an Estate Agent represent you. They are knowledgable with the local market and will know best if a property is overpriced. Remember that properties do not have fixed price tags - you can make substantial savings with a little skilled haggling over the price. It is important to get the opening offer right, as this will play a big part in determining the amount you eventually pay.

 

Normally, the opening is offer is about 5-10% lower than the asking price, and the two parties take this as a starting point for further offers and reductions in asking price until an agreement is reached. Be aware that the asking price is often set high in order to encourage a higher opening offer than would be given with a lower asking price, and you are expected to negotiate.

 

The negotiation will be affected by various factors, and you will do better if you take these into account:

• How many other people are interested in the same property. If you are the only one, you are in a strong negotiating position and the seller is likely to accept a lower price. If there are two or more parties making offers, the seller and their agent will be far tougher during negotiations and you may be sensible to offer the asking price.

• How quickly the seller needs to sell.  If they need to sell quickly, they will be more likely to accept a lower sum than the asking price.

• How long the house has been on the market. If the seller is having difficulty selling the house, they are more likely to accept a lower price.

• Check whether the asking price has dropped since it went on the market.

• What season it is. Demand for houses is higher in spring and summer so prices will be slightly higher at these times of year.

• Your own position will also affect the negotiation. A couple of factors could be to your advantage:

  • Are you part of a chain of sales? If not, the seller can be more certain that everything will be completed on time.

  • First time buyers, people who have already sold or exchanged contracts on their own property and people who have nothing to sell all have this advantage.

  • Can you show the seller that you can borrow enough money to buy the property? It is a good idea to get a written agreement in principle from a mortgage lender to show the seller that you will have enough money to pay them. This demonstrates that you are serious about buying and that the process will be able to take place quickly once you have both agreed on the sale.

• Remember, if you don't think the property is worth as much as is being asked, you can introduce this into negotiations. For example, if some repair work is needed and you think this should bring the price down, you can try to persuade the seller that the property is overpriced.

 

Once your offer has been accepted, it must be made formally, in writing, and subject to certain terms and conditions. Ensure that the agent and seller understand the terms of your offer. Your offer must be "subject to contract and to survey". This means that you are not legally bound to proceed until a survey has been satisfactorily completed and signed contracts have been exchanged. This is very important.

 

Specify what fixtures and fittings you want to be included, and what work on the property you want to be undertaken before the sale has gone through.It is a good idea to demand that the property be taken off the market as soon as your offer has been accepted, to avoid the danger of gazumping. Putting down a deposit as an act of good will can help to show your good intentions.

 

What Is Gazumping?

'Gazumping' is the term used to refer to when a seller accepts an offer from one potential buyer, but then accepts a higher offer from someone else. The first buyer is left in the lurch, and either has to offer a higher price or accept that they have lost that home and continue looking. This practice tends to occur in a market when house prices are rising are there are more buyers around than sellers. The problem is that until contracts have been exchanged the sale agreement is not legally binding.

 

Once your offer has been accepted, either you or the seller can pull out at any time until the exchange of contracts. Unfortunately agents are legally obliged to inform sellers of all offers made on their property, even after one offer has been accepted. But during this period between the acceptance of your offer and exchange, you as the buyer spend a considerable amount of money on surveys, solicitor's fees, and confirmation of your mortgage offer. If the sale falls through you do not get this money back, and have to fork out all over again next time round - that is, unless you have been put off the idea of buying a new home. If you are part of a chain of sales, you could even be affected by someone else being gazumped.

 

The Scottish system of conveyancing has effectively eradicated most cases of gazumping. In Scotland a seller must provide written acceptance of a successful bid. This is legally binding and is further supported by Scottish solicitors' code of practice, which forbids working for a client who is seeking other offers after a written acceptance has been made.

 

How Can I Avoid Being Gazumped? If it does happen there is nothing you can do, but there are some ways in which you can minimise the risk of it happening. Help speed up the sale - the faster it is, the less opportunity there is for the seller to pull out.

 

Choose a seller whose agent has a policy on gazumping, if at all possible. Some agents insist that the seller signs an agreement to turn down any offers after one has been accepted. Keep in regular contact with the seller's agent - tell them when you have completed the survey and received a formal mortgage offer. This way they can be sure that the sale is progressing and are less likely to be tempted to consider any other offers.Make a pre-contract deposit agreement. This involves both parties paying a deposit of 1.5% of the agreed purchase price to a stakeholder, and signing an agreement saying that contracts will be exchanged within four weeks. If one side withdraws from the sale, the other party receives both deposits.

 

If you are a gazumped buyer you therefore get some compensation. This is not a water-tight agreement as either party can pull out if they are willing to lose the deposit, but it definitely reduces the risk. Draw up an exclusivity agreement with the seller after your offer has been accepted. In return for a fee, this gives you exclusive rights to the house as long as contracts are exchanged within a certain period.

 

Few people make such an agreement as it involves hiring a solicitor, but it is worth considering.Take out insurance cover to protect you if your deal falls through. This is yet another expense, but you might be glad of it if things do go wrong.Insist that the house be taken off the market once your offer has been accepted.

 

Check that the board outside the house has a 'Sold' sign on it, and contact the agent if it does not. Top Tip: If you are gazumped, emphasise to the agent and seller how keen you are on the property. If the buyer whose offer they have accepted pulls out, they may contact you to ask if you are still interested.

 

Other Potential Problems To Look Out For There are a few other situations which you may find yourself involved in which it is worth thinking about as you may need to take extra care.

 

The Chain Situation

This is where there is a whole chain of buyers and sellers: for example, you are buying a house but you can't complete the purchase until your own house is sold; in turn, the buyer of your house can't buy until they have sold their own house; and so on and so forth. If you are part of a chain, your own purchase may be affected if someone a few links down the line pulls out of their sale or purchase, or if someone else is gazumped. If you are not part of a chain, this could encourage a seller to accept your offer over someone else's as there is less risk of the sale being delayed.

 

Contract Races

If there are two or more potential buyers for a house, the seller may send out contracts to more than one set of buyers. The buyers then have to race each other to send a deposit and the signed contract gets the home. Solicitors are legally obliged to inform any buyers involved that they are in a contract race. Contract races normally only happen when there is a shortage of houses or rising prices. Be careful - you may win, but if not you could lose a lot of money from all costs you have in the period before exchange of contracts, so only get involved if you have a very good chance of winning.

 

Negotiating In A Housing Price Boom

When prices rocket so does the power of the home seller in the housing market. At its peak a house price boom can mean offers are accepted on properties within hours of coming onto the market. It is a time when asking prices are not just met but often exceeded in the best areas. It is a time buyers dread.

 

These tips will help buyers make the best of negotiating during a house price boom:Analyze the local market or allow the Estate Agent who will represent you provide this anaysis. The house price boom could be mixed. While in some areas, certain properties could be flying off estate agents' shelves, in other areas buyers could still find trouble selling.

 

Find out the areas where prices are still low. Perhaps there are too many flats for sale. If so consider a flat instead of a house. Avoid sealed envelopes and bidding wars. During a sellers' market estate agents will try a number of tricks to make sure their clients gain the maximum benefit from a house price boom.  These include joint viewings to heighten the atmosphere of competition. The worst case scenario is a sealed envelope process, where a number of buyers make an offer that they think will seal the deal. This can often end up way over the asking price.

 

Build relationships. In a sellers' market a buyer has to stand out. Not just in terms of being able to meet an asking price, but to appear more favourable to the seller. First time buyers and those who have already sold a home are attractive to a seller. They speed up a sale and by not being in a chain the risk of a deal falling through is reduced. Be prepared for disappointment. It is important not to pin your hopes on one property. Stick to your guns. Don't be tempted to borrow more than you can afford. Set yourself a maximum figure you can go to and stick to it. During a house price boom many people can take on too much debt.

 

Consider buying at an auction, where prices can be cheaper. However Be prepared to carry out a good deal of work on a home bought at an auction, as homes that come up are often in need of renovation.Remember, prices will not go up forever.

 

Valuation And Surveys - Introduction

Both you and your mortgage lender need to know whether the property is actually worth the amount of money you have agreed to fork out for it. As well as what is known as the basic valuation, there are two main types of survey: the homebuyer's report and the buildings survey (also known as the full structural survey). All lenders require a basic valuation, but is strongly advised that you also have an independent, more detailed survey carried out as the basic valuation will only show up any obvious problems that you will probably have noticed yourself. The level of survey you need depends a lot on the individual property you are buying.

 

Is a Survey Really Necessary? ABSOLUTELY!

Surveys are expensive. You already have to pay for a basic valuation for your lender, and you may be tempted to risk not to bother with any closer examination of the property by professionals. Certainly you can look it over yourself and this can give you some idea of its condition, but there is no doubt that a trained eye will show you all the problems which you would not pick up on.

 

A survey might seem to cost a lot at the time, but you will kick yourself if you have to pay out thousands of pounds later on for major repairs of faults you didn't know about when you bought it. If major defects are uncovered you might even think again about your purchase, or you could be in a position to renegotiate the price. 

 

A home is a massive investment and it is worth paying a few hundred pounds for a survey at this stage as it could save you much bigger sums, and lots of hassle, later on. If problems do appear later on which the surveyor did not point out, you may be able to claim compensation (see our Making Complaints section).

 

Survey and Valuation Types

1) Basic Valuation: All lenders require a basic valuation. They need to know that they are not lending you more than the property is worth, and that if you sell it off you will get at least as much money back as you paid for it. Although this is often referred to as a survey, it is really too superficial to merit this title. The valuer arrives at a value by comparing the property with similar ones, taking factors such as age, condition and location into account. The valuation also points out any very obvious major faults which could affect the property's value, but is very brief and is not nearly as detailed as a real survey.

 

The basic valuation is commissioned by your mortgage lender, and is for their benefit, but unfortunately it is you who must pay for it. If the house is valued lower than the purchase price then your mortgage offer may be withdrawn, or offered on the condition that specified work is carried out on it first. If it does reveal that the house is worth less than the price you have agreed to pay for it, you may be able to renegotiate the price, but first double-check with the surveyor how the value given was reached, and that he or she is certain you are paying too much. The basic valuation takes about half an hour, and costs between around £100 and £300, depending on the price of the house. Some mortgage lenders waive the fee for the basic valuation as part of a package to attract your custom.

 

2) Homebuyer's Report: The RICS (Royal Institution of Chartered Surveyors) introduced the new RICS HomeBuyer Report (HBR) in July 2009. Initially this ran alongside the previous RICS Homebuyer Survey and Valuation (HSV) which had been in use for a number of years. The HSV was phased out in March 2010 and the new HomeBuyer Report became the only one that was licensed by the RICS. The report was quite a radical departure from earlier formats and was developed following considerable market research and feedback from the general public. It was designed to be a user-friendly report with the minimum of technical jargon. The most significant change was the introduction of colour coded Condition Ratings usually referred to as the 'Traffic Lights System'.

 

The surveyor must rate each element of the property using one of the following Condition Ratings.

Condition Rating 1 (green)

- No repair is currently needed. The property must be maintained in the normal way.

Condition Rating 2 (amber)

- Defects that need repairing or replacing but are not considered to be either serious or urgent. The property must be maintained in the normal way.

Condition Rating 3 (red)

- Defects that are serious and/or need to be repaired, replaced or investigated urgently. The report is now quite lengthy, usually in the region of 25 pages, but it is divided into easily readable and logical sections as follows:

A. Introduction to the report

B. About the inspection

C. Overall opinion and summary of the condition ratings

D. About the property

E. Outside the property

F. Inside the property

G. Services

H. Grounds (including shared areas for flats)

I. Issues for your legal advisers

J. Risks

K. Valuation

L. Surveyor's declaration

 

The report will also include a number of appendices which provide useful information about what the purchaser needs to do next and, particularly in the case of leasehold properties, any enquiries that legal advisers need to make prior to exchange of contracts. The new format also allows the surveyor to add photographs to the report.

 

Section C is particularly useful to the buyer as it gives an overview of the Condition Ratings for each element of the building and includes a fairly concise section giving the surveyor's overall opinion of the property. This will include a comment as to whether or not the surveyor considers the agreed purchase price to be reasonable. Normally this will be the section that the client turns to first.

 

Section D includes a brief section related to energy efficiency and will include reference to the Energy Performance Certificate that must be prepared before a property is marketed.

 

Section G will give an overview of the condition of the services based on a visual inspection. However, the surveyor will not test the services. If the property is vacant the services may have been turned off or disconnected. The surveyor will generally not be able to turn services on unless the vendor is present and is able to turn them on for him/her. The surveyor will recommend further investigations if these are considered appropriate. Often it will be necessary to have the gas, electric and central heating systems tested in older properties.

 

Section J is a new element of the report and is used to identify risks to the building, grounds or occupants. This could cover such problems as potential flooding, the presence of asbestos based materials, an unprotected pond that could be a danger to small children or lack of safety glazing to doors.

 

The feedback received to date indicates that the new Homebuyer Report has been well received by the general public and that the Condition Rating System, in particular, is considered to be very helpful to potential purchasers.

 

The RICS also offer a product called a 'Condition Report'. This is a simplified version of the Homebuyer Report and includes many of the elements discussed above, including the 'Traffic Lights System' for flagging up defects.

 

The Condition Report does not, however, include a Valuation or advice on future repairs and maintenance. The Condition Report can be commissioned by vendors, prior to putting their property on the market, to prevent unforeseen issues cropping up when their potential purchaser has a mortgage valuation or survey carried out.

 

3) Building Survey (formerly known as 'Structural Survey'):

This is the most comprehensive - and the most costly - type of survey. It is suitable for any building, but is especially recommended for older buildings (75 years and upwards); those constructed out of unconventional materials such as timber or thatch; and properties which have had lots of alterations or extensions, or which you intend to alter or renovate. The surveyor will check the property thoroughly, looking at everything that is visible or easily accessible to examine the soundness of the structure, its general condition and all major or minor faults. More specialist surveys can also be carried out on aspects such as foundations, damp proofing, or tree roots, either by a specialist within the firm of surveyors or by an independent specialist surveyor.

 

The report you receive will be extremely thorough and very long, as surveyors are legally obliged to inform you of all the findings of the survey. Don't necessarily be put off if it seems that endless defects are listed - every house has some defects and surveyors tend to show the worst-case scenario for anything they discover. You should be provided with a list of prices for repairs and maintenance work, which will also tend to over- rather than under-estimate prices.

 

A full structural survey normally takes much longer than the one or two hours required for the homebuyer's report. The survey report can also take a long time to produce, so this is a much lengthier process than for a homebuyer's report. You will probably have to wait up to two weeks after the inspection for the report, for which there is no standardised reporting format. A buildings survey costs anything up to £1,000, again, depending on the price of the house.

 

Life Assurance & Mortgage Protection

Why Life Assurance?  Your mortgage is the biggest financial commitment that your family will ever have. If the unthinkable were to happen to you, how would they cope with a large debt and a reduced income? Not a nice thought, we're sure you'll agree. Home.co.uk stress the vital importance of having life assurance to protect your mortgage. For a relatively small monthly premium your dependants won't have to worry about paying the mortgage, or even worse, losing the house at such a difficult time - giving you complete peace of mind.

 

But What Is Life Assurance? Life Assurance is the simplest type of protection policy available.It has a specific amount of cover, known as the Sum Assured, which is chosen to suit your own needs. You decide how long you need the protection for, known as the Term.In the event of a claim during the Term the Life Assurance company will pay to you, or your beneficiaries (or dependants) the Sum Assured as a tax free lump sum. When you survive the term the policy ceases. There is never a surrender value at any time, so if you no longer require the cover you simply stop paying the premiums without any penalty.

 

What Cover Do You Need? There are different types of Life Assurance and you may wish to discuss them with one of our advisers to help you decide which is most suitable for your needs. The following is a simple look at of the various options that you may want to consider.

 

Under certain circumstances we would also recommend that you consider the option of putting your policy under Trust, and are happy to offer advice to you as to the suitability in your own personal circumstances.

 

Option 1 - Mortgage Protection

This is specially designed to protect a normal repayment mortgage. The level of cover is set to match the original mortgage amount, and reduces over the years as you pay your mortgage. It is sometimes known as a decreasing term assurance policy and usually guarantees to pay off the outstanding Mortgage, assuming the mortgage interest rate payable does not exceed a certain rate. As the level of cover is always decreasing the policy premiums will be lower than an equivalent Level Term, but they will remain fixed throughout the term.Important Note: If you have taken out a flexible style mortgage this policy may be unsuitable for your needs, please seek advice before finalising your policy.

 

Option 2 - Level Term

This is a Life assurance where the life cover is constant throughout the specified term.For example a £50,000 level term policy taken over 10 years means that if you die within 10 years then £50,000 will be paid to your estate tax-free (although inheritance tax may need to addressed).This type of policy is most suitable for protecting your family from financial difficulties in the event of your death. (see also Family Income Benefit)It can also be used to protect an interest only mortgage, or where necessary, a flexible style mortgage. The premiums remain the same throughout the term. The benefits payable can also be index linked so that they rise with the percentage rate of inflation. If this option is chosen the premium would also increase by the same percentage. Additional BenefitsIn addition to the initial Death Benefits in the Term assurance policies you can also choose additional benefits within most of them. These additional benefits will increase the premiums accordingly. The most common of these is Critical Illness cover. Critical IllnessAs the name suggests this cover provides for a lump sum payable on the diagnosis of a serious illness or disability.If you survive the diagnosis for more than 28 days you will receive the Sum assured as a tax free lump sum. The money is yours to keep even if you make a full recovery. Some of the most common diseases covered are Cancer, Most types of Heart disease including heart attack, coronary artery bypass, angioplasty, and aorta surgery. Organ transplants are normally covered, as well as kidney failure, loss of sight or limbs, Alzheimer's disease, pre-senile dementia, coma, etc.

 

Full details of the cover will be provided at the time of your application, as the cover varies slightly between companies. Many companies automatically include cover for your children against a limited number of Illnesses. This extra cover is provided Free of Charge. Accident, Sickness, & Unemployment Payment Protection It is all very well to protect yourself from the major catastrophes of life, but how would you pay the mortgage if you were off work for several months, perhaps through sickness or injury. Worse still you could find yourself made redundant unexpectedly, and you would, of course, still be expected to pay the mortgage.Help is at hand, in the form of Accident, Sickness, & Unemployment Payment Protection policies. These pay a monthly income sufficient to cover your mortgage repayments and are a cost effective and simple solution for most people. However benefits are usually restricted to a specified level and are only payable for a maximum period, normally 12 months and sometimes 24 months.

 

Income Protection (also known as Permanent Health Insurance) We can also provide you with replacement income when you are unable to work due to long term sickness or incapacity. The benefits allowable are governed by legislation but are usually around 50% of your income (as a maximum) before deductions. The benefits are paid tax free and are in addition to any incapacity benefits that you may receive.In real terms you will be able to effectively replace most of your lost net income. Benefits are set at outset to be paid after any sick pay from your employer ceases, and continue for as long as necessary. The actual period before payments commence can range from 4 weeks to as long 2 years with lower premiums payable for the longer periods.Premiums are level throughout the term and will vary dependant upon your actual occupation and level of income required. For example you may choose to take less than the maximum benefit, and some companies offer discounted rates in this event.As with Term Assurances you can also chose to have benefits index linked to preserve their value in real terms. Please ask for details. Family Income BenefitA lesser known type of policy that addresses a specific need. Rather than paying a large lump sum to the family, that may result in unexpected difficulties, the policy pays a regular income for the remaining term of the policy. This makes the money more easily manageable and guarantees that the family are protected for a specified period. For example a policy that has been chosen for £10,000 per year with a 20 year term and the Life Assured dies in year 5 of the policy. This would pay £10,000 per year for the remaining 15 years. The premiums are lower than a similar Level Term Assurance as the amount payable upon a claim is reducing each year. The premiums remain level throughout the term.

 

Conveyancing: Stage Two

Contracts are exchanged. You hand over a deposit which is non-refundable if you pull out of the sale. Once you and your solicitor are satisfied that everything is in order, the contracts can be exchanged.

 

You sign a copy of the contract which is passed to the seller, and the seller signs a copy of the same contract which you receive. Once contracts have been exchanged (normally by the two solicitors) both parties are legally bound to follow through with the transaction.

 

You can no longer change your mind - if you pull out it is likely that you will lose your deposit, and you could be sued for breach of contract. You also now have no need to worry about gazumping.

 

At this point you hand over a non-refundable deposit as security to the seller in case the contract is not carried out. This is normally 10% per cent of the purchase price, but it is usually negotiable. If you do not have the money for the deposit at hand immediately, you can arrange for a bridging loan from your bank. Your solicitor draws up a transfer document and sends it to the seller's solicitor

 

Once contracts have been exchanged your solicitor prepares the draft transfer document (if the land is not registered it will require a special kind of transfer or 'conveyance'). This documents transfers the title of the property from the seller to the buyer.

 

Once both parties have agreed on the draft, it is signed by the buyer and the seller. Your solicitor arranges finalisation and signing of your mortgage documents Your solicitor will also deal with the finalisation and signing of documentation relating to your mortgage, and will arrange for the money to be available on completion of the sale.

 

Your solicitor carries out final searches and enquiries Land Registry checks are carried out by your solicitor, to make sure that nothing is registered against the seller (or at the Land Charges Registry if the property is not registered). Problems such as undisclosed mortgages or disputes could be uncovered at this stage.

 

There will be various matters for you to deal with in the run-up to completion. There will be some documents to be signed and payments to be made: you must pay Land Registry fees and stamp duty.

 

Before completion you need to make sure that all the terms of the contract have been fulfilled, such as any repairs. You also need to be arranging all the practical matters related to moving house.

 

Conveyancing: Stage Three

You move in! At last! On the day of completion you receive the keys and the seller is obliged to move out. You pay the seller the balance of the house through your solicitors.

 

On the day of completion you also have to pay the balance of the price on the house (the agreed price minus the deposit which you have already paid), usually through your solicitor or conveyancer.

 

You receive the transfer document and the title deeds The seller's deeds are now handed over to you, and arrangements are made for any outstanding mortgages on the property to be paid off.

 

You pay extra costs: stamp duty, Land Registry fees and solicitor fees Solicitor carries out final administration After completion the solicitor still has various details to tie up.

 

Your solicitor will: where relevant,

• inform your mortgage lender,

• life insurance company, and

• the freeholder that the sale has been completed

• register the transfer of ownership at the Land Registry.

 

They will then send the deeds to your mortgage lender who will keep them until you either sell the property or pay off your mortgagepay the stamp dutysend you a statement of completion, including a summary of the financial transactions.  If you have not already paid their fees, they will ask for these now. 

 

This valuable information has been provided by the British Government so that all are protected to the best of their ability in the purchase of a property in England.

 

Ownership of land (Further Explanation - Fees)

The two most important forms of ownership are:

Freehold

Where the property (both land and structures) is effectively owned by the buyer. A buyer may choose toownthe freehold as this gives the most control, has a capital value and will enable the grant of leases to secure an income stream. However, it should be noted that freehold ownership may still be subject to certain covenants, for example, restricting the use of the property and/or rights of others, such as rights of way for third parties across the property.

Leasehold (i.e. renting the premises)

Where the leaseholder’s ownership of the land is contractually limited in time to the length of the term of the lease. The lease will be granted out of a freehold or superior leasehold estate. Depending on the rent payable to the landlord of the lease, long leases will usually have a capital value. The lease may also allow the tenant to create underleases.

 

Land can be held by more than one person in one of two ways;

1- joint tenancy or 2- a tenancy‑in‑common.

 

The legal ownership can be held by a maximum of four owners. In the case of individuals, a joint tenancy is a form of ownership where normally, should one owner die the property will automatically vest in the surviving owner(s), regardless of the terms of the deceased’s will.

 

A tenancy‑in‑common, however, is a form of ownership where on the death of one of the joint owners, the relevant share in the property will form part of the deceased’s estate and will pass to their beneficiaries by their will (or the rules set down by law where there is no will).

 

Leasehold

i.Key elements

A lease is a contract between a landlord and tenant. It is characterised by the landlord granting the tenant exclusive possession of the property for a fixed time (i.e. for a specified term or a period which is capable of being brought to an end by notice).

ii.Main types of lease

The ground lease.

This is a (normally residential) long lease often granted for more than 99 years, usually for a one‑off sum, called a ʺpremiumʺ, with a nominal rent payable (sometimes called a ʺpeppercornʺ) throughout the rest of the term. A ground lease may be perceived to be closer in nature to a freehold, owing to its capital value. Apartments/flats are normally sold or held on a long lease.

The rack rent lease.

This is the most prevalent form of a commercial occupational lease, usually granted for around 5‑10 years. The tenant will pay a full‑market rent, often quarterly, with rent review provisions and usually with no premium.

Short term residential occupational leases

These generally take the form of an Assured Shorthold Tenancy, whereby at the end of the lease period the landlord is entitled to possession of the premises.

 

You have to pay Stamp Duty Land Tax (SDLT) if you buy a property in the UK over a certain price. This is charged on all purchases of houses, flats and other land and buildings.

 

The SDLT rate depends on:the purchase price of the propertywhether the property is residentialSDLT may also be due if you lease a property - see below.

 

Residential properties

Purchase price of property & Rate of SDLT (percentage of the total purchase price)

£0 - £125,0000                               0%

£125,001 -£250,000                     1%

£250,001 - £500,000                   3%

£500,001 -£1 million                   4%

Over £1 million -£2 million       5%

Over £2 million                              7%

Over £2 million bought by corporate bodies    15%