10 steps to buying your home - harris begley by step guide.pdf · finding the right mortgage p.12...

the regent chapel street penzance cornwall TR18 4AE

ph +44(0)1736-366-550 fx +44(0)1736-331-444 em [email protected]

Harris Begley Ltd is an Appointed Representative of Personal Touch Financial Services Limited which is authorised and regulated by the Financial Services Authority.

10 steps to buying your home

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE



ContentsAbout us p.3

Introduction p.4

Step 1How much can you afford? p.5 Budget Planner p.6

Step 2 Finding somewhere to buy p.7 Needs and wants check list p.8 How to look for a home p.9 Handy check list p.10

Step 3 Making an offer p.11

Step 4 Finding the right mortgage p.12 Repayment methods p.13 Benefits of overpaying p.15 Types of mortgage p.16 Fees Payable p.17 Hidden fees–Stamp Duty p.18

Step 5Protecting your home p.19Step 6 Finding a solicitor p.2 0

Step 7 Valuation and Surveys p.21

Step 8 Your mortgage offer p.22

Step 9 Completing your purchase p.23

Step 10 Congratulations–moving in p.24

*YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

**We normally charge a fee for mortgage advice, however this will be dependent on your circumstances. Our typical fee is £195.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

We may charge a fee for mortgage advice, however this will be dependent on your circumstances. Our typical fee is £195.

**We normally charge a fee for mortgage advice, however this will be dependent on your circumstances.Our typical fee is £395



Step One how much can you afford ?

Your dream of buying and owning your own place costs money. Before you begin trawling the estate agents and property pages it pays to know what size mortgage you can afford. You need to be sure you can keep up repayments on a mortgage or other loan secured on it.How much you can borrow is roughly related to how much you earn, less

any loan or credit card repayments that still have 6 months or more to run and whether you are buying on your own or with someone else.

reassure yourself you won’t be overstretched

If your mortgage repayments go up and down when interest rates change, budget for a 2% increase in rates.

One rule of thumb is not to spend more than a third of your disposable income on your mortgage. If your mortgage is costing you more than half your spare income you may find that you have little room for manoeuvre.

www.harrisbegley.co.uk



About UsWe are a firm of financial advisers based in Penzance in the far west of Cornwall. Privately owned and independently run we extend highly qualified and unbiased financial advice. The fact that we have no allegiance or association with, any product provider, enables our clients to feel secure in the integrity of our recommendations. Whether advising individuals or businesses, each and every client can be confident in our

professionalism and care. Our philosophy is to give client focused advice, only recommending products which we would be prepared to purchase ourselves. The majority of our business comes from personal recommendation.

TrustWe aim to gain the trust of our clients by following three simple rules. First, we explain the advice process fully before we commence work; second, we make the benefits and risks of our

recommendations understood; finally, we do what we say we will. This may not be rocket science, but if you are able to trust your adviser, it makes financial decisions easier and you get to sleep at night.

Joined Up ThinkingWe have reliable and local contact with Solicitors, Accountants and Surveyors who can complete the picture to create a financial solution tailored to your requirements.



We want to help. That’s why we’ve put together this straight talking straight forward step by step guide to buying your home.

...we don’t bite,Getting a foot onto the property ladder for the first time is a big step, but it doesn’t have to be a difficult one. We hope you find this guide useful on the pathway to owning your own home.



Budget planner...use this to calculate how much you can afford on a mortgage each monthOutgoings Amountgas £

electric £

council tax £

water £

telephone £

food £

car expenses £

savings £

life policies £

loans £

other £

Total outgoings per month £

Income Amount (1) Amount (2)wages £ £

tax credits £ £

child benefit £ £

pension £ £

rental £ £

2nd job £ £

Total per month £ £

Total net household income £

Total Net household Income £

Total outgoings per month £

Total disposable income per month £



Step two finding somewhere to buy

Once you have worked out how much you can afford to spend, it’s time to look for somewhere that meets your needs.

ask yourself a few simple questions such as:

•areyoulookingtostartafamily

•doyouwanttobeinthemiddleofa town or city or outside it?

•whatsortofahomedoyouactually need?

•whichfeaturesare‘musthave’andwhich are simply ’nice to have’

Use the check list on the next page to help you to decide the type of home you want.



Type of home Want NeedDetached house

Semi-detached house

Flat

bungalow

Property that needs work

InteriorNumber of bedrooms

Number of bathrooms

Number of toilets

Number of living areas

Separate kitchen

Study

Type of heating

Double glazing

Exterior Want NeedGarden

Garage

Off-road parking

Privacy

Space for pets

Double glazing

LocationAccess to public transport

Access to shops

Close to Schools/nurseries

Access to main Roads

Check List

Hot Tip

Get hints and ideas from

other buyers who have been

there got the ‘T’ shirt

OFT Guide



How to look for a home• Register your details with estate

agents.

•Regularly telephone to find if they have any new properties.

• Visit your chosen area at different times of the day.

• When you view a property take someone with you. They may notice thing you miss.

• Visit the property for a second time.

What to find out about• doesthepropertylooklikeit’singood

condition?

• wouldyoufeelsafeandsecureliving there?

• isparkingeasy?

• whatisthetrafficlike?

• istheareaquiet?

•whichdirectiondoesthegardenface?

• whataretheneighbourslike?

• howmuchlightdoesthehouseget–especially in winter.

• havetherebeenanystructuralproblems?

• havetheownersalreadygotsomewhereto move to and if so are they looking a quick sale?

• isthereabuyers‘chain’andwhatwouldthe sellers do if the chain broke.

• ifthinkingofstartingafamilyaskaboutlocal school catchment areas.

see house viewing checklist next page



Interior Commentshallway

lounge/dining room

kitchen/utility room

study/conservatory

main bedroom

bedroom 2

bedroom 3

storage

telephone/broadband

tv/aerials/satellite/cable TV

doctor/dentist/clinics

roof/cavity wall insulation

Services Commentsparking availability/garage /shed

gas electricity/wood burner/other

mains water/metered/septic tank

central heating

House Viewing check list... make copies and use this checklist as a handy reminder when viewing properties Exterior Commentswalls/window frames

paint work

front/back doors

security/fences/burglar alarm

drainpipes/gutters

garden/courtyard/access

Proximity to:local shops

public transport

schools/nurseries/childcare

doctor/dentist/clinics

parks and leisure amenities

Add your own comments



Step three Making an offer?You’ve found your perfect dream home it’s within your budget so what do you do now?Check out the prices that are being asked for similar properties in the area beforehand

Your estate agent can provide you with a lot of good information such as:

How long the house has been for sale?

Are they the sole agent? If not it may mean the house has been for sale for a while?

How may people have viewed the property and have any previous offers been made?

Have surveys shown there to be problems with the property?

How to make an offer:Make an offer to the estate agent based on the mortgage you can afford with the deposit you have.

If you can move quickly, be prepared to negotiate–make a lower offer if you think the sellers may accept less.

If you haven’t already done so contact Harris Begley who will help you arrange your mortgage.

Appoint a solicitor–we can make recommendations.



Step fourFinding the right mortgage for you!

Faithfulness is harmful when it comes to your mortgage lender and other financial products. Different lenders offer different products to suit your individual requirements.

At Harris Begley we can assist you finding the correct mortgage to suit your individual requirements. Remember as a whole of Market Broker we have access to the most competitive rates at all times.

Hot Tip

Become a ‘rate tart’–finding a

better deal whenever you can

without incurring penalties and

save tens of thousands of

pounds over the life of your

mortgage.This is part of what

we do at Harris Begley.



Finding the right mortgage for you continued...

Repayment methods:

Interest only

Repayment

Repayment mortgage–works the same way as most types of loan. You make a regular monthly payment to the lender, which is made up of both capital (i.e. the sum you borrowed) and interest. So provided you always keep up the correct payments, at the end of the term you will have repaid the loan in full.

Interest Only–you pay only the interest to the lender. This means you will need to make a separate payment to some form of savings plan, so you can build up a lump sum to pay off the mortgage at the end of the term. There are three main types of savings plans, for example: endowment policies, ISAs or pension plans.

It’s important to remember that it is your responsibility to ensure that an adequate repayment method is in place.

Your advisor at Harris Begley will help you decide which one is right for you.




The benefits of over-paying!

Taxpayers who save money in taxable savings accounts have to pay tax on their interest. The UK has three million high rate tax payers. A gross (pre-tax) rate of 5%, would fall to 4% after tax is deducted. On the other hand, if you overpay your mortgage, you effectively ‘earn’taxfreeinterestatyourmortgage

rate. Therefore if your mortgage rate is for example: 6.75%, your tax-free return is also 6.75%.To earn 6.75% in a taxed savings account, you’d need to earn 8.44% before tax (11.25% if your a high rate tax payer). Since no safe investment offers this kind of return, ‘saving’intoamortgagecanbeagoodidea. What’s more a, borrower with a £100,000 repayment mortgage paying a discounted rate of 4.75%, could cut his/her interest bill by £11,396 by overpaying £50 a month, making the mortgage term shorter.

Before setting up a standing order or dropping a lump sum into your mortgage, check with your lender to make sure you won’t be punished for doing so!




Types of Mortgage

Variable Rate–the most familiar type of loan. The interest rate charged will go up and down, broadly in line with interest rates in the economy as a whole, during the lifetime of your mortgage. This means that when the interest rate goes up, the amount you have to pay also goes up and vice versa..r \

fixed/capped rate mortgage–interest rates can go up as well as down. If you don’t fancy the interest rate roller-coaster go for a fixed or capped rate over, perhaps 2 to five years. A fixed rate is guaranteed not to change over a set period. However, a capped rate means that your rate is variable, but will not rise above a pre-set ceiling. Many borrowers take much comfort from the security of knowing exactly what their repayments will be for a while. Many first time buyers choose fixed or capped rates to guarantee their repayments in the early years, whilst adjusting to life as home owners.

Hot Tip

“All that glitters is not

gold”. Always be suspicious

a financial offer that looks to

good to be true—it’s sure to

have a sting in the tail!




Discounted Rate–some lenders offer a discount on the normal interest rate. This will usually be for a limited period and will be offered at the outset of the loan.

Base Rate Tracker–interest charged on this type of mortgage is determined byreferencetoa‘BaseRate’e.g.The Bank of England Base Rate. The interest rate chargeable will usually be calculated by adding the appropriate BaseRatetoaninterestrate‘margin’thus if the base rate was 5% and the margin was set at 2%, then the interest would be charged at 7%.

Hot TipModern flexible mortgages are

fantastically cool. Overpay,

underpay take repayment

holidays, skip repayments and

withdraw or deposit lump sums.

Making regular overpayments or

whacking in the occasional lump

sum can seriously reduce your

interest bill and shorten the life

of your mortgage.



Finding the right mortgage for you continued...Fees Payable

Remember becoming a home owner means more than just your monthly mortgage repayments. There are up front and exit costs which include,

Solicitors Fees–for legal work known as conveyancing.Arrangement Fees–also know as application or booking fees, which can be £500 or more.

Valuation and Survey Fees–from the surveyor who values and inspects your home.Sealing and Deeds Fees–which you pay up when you pay off your loan or switch to another lender.Early Repayment Charges–this normally applies to all types of mortgage when you have chosen a fixed or introductory rate. It is only payable if you choose to leave the lender within a set period. MIP–mortgage indemnity premium also know as a mortgage indemnity guarantee (MIG) or higher lending charge (HLC).

If you want to borrow more than ¾ of the value of your home, some lenders will charge you an MIP. This is an insurance premium that protects your lender if you default on your mortgage, but has absolutely no financial value to you. You pay the premium, but the policy only protects the lender. Be warned: Lenders that advertise headline rates prominently, can sometimes hide chunky charges in small print. At Harris Begley we look beyond the advertised rate to make you aware of all fees payable.









HLC - Higher Lending Charge

HLC.



Finding the right mortgage for you Fees Payable continued...

Stamp Duty 2007/08

What is Stamp Duty?

A one off payment to HMRC calculated as a percentage of the purchase price of your property.

Stamp Duty Land Tax applies to any land and buildings over £125,000*

2007/08

up to £125,000 nil

£125,001 - £250,000 1%

£250,001 - £500,000 3%

Over £500,000 4%

From 01/10/07, no stamp duty will be due onnew‘zerocarbon’homesuptoapurchaseprice of £500,000. Where the price exceeds this figure. the liability will be reduced by £15,000.

*All non residential purchases up to £150,000 in certain designated disadvantaged areas are exempt from stamp duty.

















£500,000- £1,000,000 4%

£1,000,001 - 2,000,000 5%

Over £2,000,000 7%












Stamp Duty 2007/08

What is Stamp Duty?



2007/08

up to £125,000 nil

£125,001 - £250,000 1%

£250,001 - £500,000 3%

Over £500,000 4%






Stamp Duty 2007/08

What is Stamp Duty?



2007/08

up to £125,000 nil

£125,001 - £250,000 1%

£250,001 - £500,000 3%

Over £500,000 4%






Stamp Duty 2007/08

What is Stamp Duty?



2007/08

up to £125,000 nil

£125,001 - £250,000 1%

£250,001 - £500,000 3%

Over £500,000 4%



Stamp Duty: 2013



Step fiveProtecting your homeOnce you’ve bought your home it’s important to protect yourself and your home against the unexpected. Harris Begley can offer advice and arrange suitable cover for your needs.

Life and critical illnessCritical illness or death, can plunge your family into financial crisis, ensure you are adequately covered. M

Income protectionLoss of income often leads to financial

hardship and mortgage arrears. Policies are available to guard against the financial consequences of long term illness and the inability to produce an income.

Buildings and Contents InsuranceThis is essential and will provide you with cover against damage to your property and personal possessions caused by things like fire, floods, and subsidence, theft and vandalism. Shop around and ignore sales patter from the mortgage lender. Your advisor will make an appropriate recommendation to financially protect against any situation. Remember–failure to maintain mortgage repayments will result in eventual repossession.

Hot TipAre you aware of the

facts? You may be

surprised to learn that

in most cases little or no

support is given towards

your mortgage in the event

of redundancy or illness!



Step six Finding a solicitorIf you are choosing your own legal support, it’s worth getting estimates from several different law firms as the costs may vary considerably. An easier option is to let Harris Begley introduce you to a legal service.

Finding your own Law firm–some points to be aware of if you find your own solicitor before you give them work:

• ask for a complete breakdown of the costs so you can see what they are charging for the work they do.

• Check that they will be available to do the work and won’t for instance be away on holiday at the crucial times.

• Ask how often they plan to keep you updated and whether they’ll use post, the phone or email?

What they will do?Local Authority Search–This reveals anything that may affect your property such as plans to develop nearby land and roads.

Drawing up and exchanging contracts–once contracts have been exchanged, you are committed to buying the property and will have to pay your deposit.Transfer Deed and Stamp Duty–this document names you as the legal owner of the property with the Land Registry. The deed also names your mortgage lender.Completion Dates–your solicitor will agree with you a date for completion (the day when the property actually becomes yours).Title Deeds–these are official documents that prove who owns the property. This information is held electronically by Land Registry for England and Wales.



Step seven Valuation and SurveysRegardless of the type of mortgage you have, you’ll need to have a proper valuation of the property you want to buy. The survey can also uncover any problems.

Types of SurveyValuation for mortgage purposes–this is the simplest type of survey and simply assesses the value so that your lender is reassured that it is a suitable property for a mortgage

Home buyers report-this is a detailed report tailored to your needs and can include test of drains and utilities. It may be particularly useful if you’re buying an older or unusual home or are looking at building an extension. It is carried out by a private firm of surveyors and this will include a valuation for mortgage purposes.

Structural Engineers report–this is usually only required when a surveyor requests further information following a Mortgage Valuation or Homebuyers Report, where specific investigation is required.



Step eight Your mortgage offer

What happens when your mortgage lender makes you a formal offer?When the mortgage company is satisfied with all references and survey reports you will receive your mortgage offer. At this stage you will be able to go to “exchange of contracts”.

Step nine Completing your purchase

The contracts have been exchangedand‘completion’has been arranged. This means that both you and the seller are legally committed to the sale!



Once the solicitors have everything they need they will send you a contract to sign and a copy of the registered title showing you as the owner if the property. The seller’s solicitor will be carrying out the same process at the same time. As part of the process a completion date will be agreed. This is the date you can move into your new home!



Step tenMoving InCongratulations! You are now the proud owner of your new homeMany different people need to know your new address but for now just write down a list and contact them when the time is right.

Organise the essentials–moving into a property without water or electricity won’t be much fun so make sure you close down

accounts for your old place and set up new ones. Remember to take meter readings at both properties and inform service providers so you are charged only for what you use.

Completion will take place once you have exchanged contracts with the seller of the property you are buying. Remember it can only take place on a weekday, since solicitors do not work at weekends, therefore you will need to take this into account when booking removal firms or time off work. You will only be able to collect the keys once the money has been transferred from your mortgage lender to the sellers solicitor.

Remember!

* to pack kettle, tea, milk etc.

separately

* final meter readings

* re-direct post

* don’t forget the cat

COLLECT KEYS!!

10 steps to buying your home - harris begley by step guide.pdf · finding the right mortgage p.12...

Documents