| Index »Buying A Home - Process |
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| Buying A Home - Process |
| The UK's mortgage market is one of the most competitive and complex in the world. With hundreds of lenders offering literally thousands of deals, it can be difficult for borrowers to make an informed decision about the right product for their circumstances. So to help people make the right choice there are a number of ways to get advice about your mortgage.
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| But while some advises will scour the whole of the mortgage market to find the right product for you, others will only check out a limited number of lenders. Equally some will charge you directly for their services while others rely solely on commission generated by selling products. Choosing the right mortgage adviser can be almost as
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| Choosing A Mortgage Advisor
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| The UK's mortgage market is one of the most competitive and complex in the world. With hundreds of lenders offering literally thousands of deals, it can be difficult for borrowers to make an informed decision about the right product for their circumstances. So to help people make the right choice there are a number of ways to get advice about your mortgage.
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| But while some advises will scour the whole of the mortgage market to find the right product for you, others will only check out a limited number of lenders. Equally some will charge you directly for their services while others rely solely on commission generated by selling products. Choosing the right mortgage adviser can be almost as important as selecting the right loan. The steps involved in buying your house
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Decide where you want to live and what type of property you want to buy. |
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Register with several estate agents in the area you want to search.
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Choose a mortgage and get an offer in principle.
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Find a solicitor so they are ready to act once you've made an offer
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Estate agent -Takes you out to show you properties.
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Find a property you want and make an offer through the estate agent
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If your offer is accepted you instruct your solicitor to act who will contact the seller's solicitor requesting title deeds to the property and initiates contract negotiations.
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Mortgage lender- will ask to carry out a valuation on the property.Find a surveyor and ask for a survey or homebuyer's report to be carried out on your property.These days however the lender instruct the valuation after receiving payment from you upfront)
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Mortgage lender - Accepts the mortgage valuation and agrees to lend you the money.
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Surveyor - sends you the survey report (These days surveyor deals with the lender directly).
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Send your survey report through to the solicitor.
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Solicitor - reads the survey and gives you comments.
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Solicitor -carries out a local-authority search and finds out if any alterations have been made. This is the time to negotiate on fixtures and fittings.
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Solicitor - finalises the contracts details with the seller's solicitor and confirms mortgage details with your lender.
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Pay a deposit and other costs which is held until the exchange date.
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Solicitor - Exchanges contracts with the seller's solicitor and sends over the deposit. A date for completion is agreed.
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Solicitor - liaises with the lender and to make sure your mortgage funds are available for the completion date
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Solicitor - prepares the transfer deed, which is signed by you and the seller and lodged with the seller's solicitor until the completion date.
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Mortgage lender- Transfers money to your solicitor's account in time for completion.
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Solicitor - sends the money to the seller's solicitor on the completion date in return for the transfer deed. Land Registry certificate and keys. The sale is completed.
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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 owner.
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Solicitor- Passes the title deed to your mortgage lender as security for the loan and sends you the bill.
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| What Is A Mortgage? |
| A mortgage is a loan you take out to buy property. Most banks and building societies offer mortgages, as well as specialist mortgage lending companies. If you change lenders but don't move home it's referred to as a 'remortgage'. |
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| Choosing A Mortgage - Where To Start |
| You can get a mortgage direct from the lender (banks, building societies and specialist mortgage lenders), or you can use a mortgage broker. You can buy based on 'information' only or get advice and recommendation on a mortgage that suits your particular needs. |
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| Repayment Methods |
| The two main ways to repay your mortgage are 'repayment' and 'interest only'. With a repayment mortgage you make monthly repayments for an agreed period (the 'term') until you've paid back the loan and the interest. With an interest only mortgage you make monthly repayments for an agreed period but these will only cover the interest on your loan. You'll normally also have to pay into another savings or investment plan that'll hopefully pay off the loan at the end of the term. |
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| Flexible Features |
| Some mortgages offer you options to vary your monthly payments, or to combine your mortgage account with savings and other income - these are called flexible, current account and 'offset' mortgages. |
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| Interest Rates |
| You'll also find a range of interest rates to choose from. For example, 'variable' and 'tracker' rates change in line with Bank of England rates, 'fixed' rates are fixed for a set number of years, and 'capped' rates have a variable interest rate with a ceiling so your payments won't go above a set amount. |
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| Insurance |
| A lender may require you to take out life insurance to pay off your mortgage should you die. You can also get insurance to protect your income or just your mortgage payments if you become ill or disabled, or lose your job. |
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| Mortgage Application Process |
| Once you know roughly how much you want to borrow and have identified your preferred lender, there are key steps to follow to get a mortgage. These are the same whether you're borrowing for the first time or changing lender. |
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| Key Steps In The Mortgage Application Process |
| If you understand the application process you can be ready with everything the lender needs. This can help speed up your mortgage application. |
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| Get A Decision In Principle |
| You can get a 'decision in principle' (DIP) from a lender even before you've chosen your final property. This shows whether they're prepared to lend to you and how much. The decision's based on information you give about: |
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Your income
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Your employment status
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The sort of property you want to buy
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| Most lenders can give you a decision in principle online as well as through the post. (DIPs trigger a credit check, which show on your credit record. Too many may affect your chances of getting a mortgage so only ask for one when you've settled on your lender.)Never be tempted to overstate your income. You could end up with a mortgage your can't afford. |
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| Choose A Solicitor Or Licensed Conveyancer |
| You'll need someone to carry out the legal side of things - local searches, drawing up contracts and other legal paperwork. You could use a conveyancing solicitor or a licensed conveyancer - or even do part of it yourself (but make sure you know exactly what you're taking on). Some lenders have preferred solicitors, or you may be able to get a personal recommendation. You can also search online or in the phone book. (The lender will insist on a professional conveyancer to carry out the valuation.) |
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| Make A Full Mortgage Application |
| When you've decided to buy a property, you make a full mortgage application by completing and returning the lender's form (you can sometimes do this over the phone). They'll usually also want to see evidence of your income, your identity, your current address and (where relevant) a previous lender or landlord's reference. They may also want a non-refundable fee to cover their costs and perhaps to pay for a valuation.
If you can't prove you've got a regular income (maybe because you're self-employed and don't have enough accounts) you may be able to get a 'self-certification' mortgage. This requires a larger deposit as you often won't be able to borrow more than 75 to 85 per cent of the property's value. The lender may still want some evidence of your ability to pay. |
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| Reference Checks |
| Your lender may get written references from your employer and bank (or accountant if you're self-employed) and your current lender or landlord. They'll also run credit checks to make sure you've paid off your debts in the past. |
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| Property Valuation |
| Your lender will usually have the property valued to make sure it's worth the price you've agreed to pay. If it's not, it could affect how much they'll lend you. It's advisable to get your own survey done too -or to 'upgrade' the lender's valuation survey to a more detailed one. |
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| The Mortgage Offer |
| If the lender is happy with the valuation and references, you'll be made a formal offer - usually sent to you and your solicitor. Once you (or your solicitor on your behalf) have signed and returned the offer documents, your lender is committed to providing the money. The mortgage offer usually requires you to take out buildings insurance, in case something happens to the property before you've paid off the mortgage. |
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| Exchange And Completion |
| If you're buying, once you've got a formal mortgage offer, your solicitor can agree a date for 'exchanging contracts' with the seller's solicitor. At this time you usually pay a percentage of the purchase price as a non-refundable deposit and commit to paying the rest on the agreed completion date (when the property becomes yours). |
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| Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. This is a general guide and should not be taken as any recommendation. Suitability of a mortgage will depend on your personal circumstances. Please seek appropriate Expert advice before relying on them. They are subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK. |
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