KEEPING YOU STRAIGHT
A step-by-step guide to buying a house
by Norman Geddes
IN these times of rising house prices, the first step in buying
a house is to review your financial situation and work out what
price you can afford to pay for your new property. Not just how
much you can afford now, but how much taking into account the
further increases in interest rates that are likely to take place
in the coming year.
What you can afford to spend on buying a home depends firstly
on your savings (for that part of the house price not covered
by a mortgage), and secondly on your earnings (for the monthly
mortgage repayments). Remember you may also have to find money
for repairs and maintenance.
There are also some one-off house-buying costs:
Stamp duty: 1 per cent government tax on any property over £60,000
(and higher rates for properties over £250,000).
Mortgage arrangement fees: charged by the lender to organise your
Valuation and survey fees. You will need to allow for the possibility
of not getting the first (or even the second) property that you
go after, and budget for the cost of several surveys. A new scheme
under which the seller will be responsible for providing one single
survey to all interested parties is about to be piloted in certain
parts of Scotland, but even if it is successful, it will probably
be a year or two before it is rolled out nationally.
Solicitors’ fees: these include the cost of “conveyancing”
– the legal transfer of ownership of the property from the
seller to you. This will include exhaustive searches to ensure
that the seller has a valid ownership of the property to sell,
that he is not bankrupt, that there are no local authority planning
proposals that might affect the property, and that any alterations
to the property (an added conservatory or double glazing, for
instance) have been carried out with all the necessary permissions
and carry the appropriate certificates of completion.
Before you start looking for a house, you will probably need to
look for a mortgage. There are many different kinds of loan available,
and most solicitors can provide independent financial advice that
will help you to choose the one that is most suitable for you,
and advise you on the best methods of repayment.
When you have found a house that you want to buy, the mortgage
lender will arrange a valuation survey. This valuation is a basic
inspection of the property. It helps the lender decide whether
the property is structurally sound, how much it is valued at,
and how much they will lend you to buy it. Your solicitor will
read the valuation and inform you of any major problems.
Remember, this valuation is not a survey. It is not a detailed
inspection of the property, and only major visible defects will
be noted. You may want to consider in addition a Homebuyers Survey
and Valuation, which provides more detailed information about
the condition of the property. This type of survey typically costs
You should ask your solicitor whether it is advisable to get a
fuller survey done on the property before making an offer for
it, whether there is any potential repair problem like old roofing,
subsidence, poor general maintenance, and whether there is anything
else he notices in the survey that might cause problems later.
When the mortgage lenders are happy with the valuation, they will
issue you an ‘offer of advance’. You can then make
an offer on the property. On a fixed price property, the seller
will take the first offer received for the fixed amount. However
most sellers ask for ‘offers over’ a certain amount
and set a ‘closing date’ by which offers have to be
made. How much over the asking price is it practical to offer?
The solicitor should know roughly what is the going rate for your
chosen property. Your solicitor will next prepare a letter setting
out your offer and will send it to the seller’s solicitor.
On the closing date the sealed offers are opened by the seller’s
solicitor or estate agent. If your offer is accepted, the seller’s
solicitor will send your solicitor a written acceptance letter,
probably with the title deeds, so that he can advise you before
concluding the contract.Before things are formalised, your solicitors
must first “conclude the missives”.
Though this sounds mysterious, concluding the missives is actually
a bit like finalising the contracts in England. The two solicitors
exchange letters and iron out any of the finer details that were
not explicitly mentioned in the original offer. This may include
such things as details of any fixtures and fittings that are actually
staying, or perhaps a slight alteration to the entry date.
Once both parties are agreed on all of the details of the offer,
the missives are said to be ‘concluded’. This means
that both parties have now entered into a legally biding contract.
Your solicitor now has to check over the title deeds of the property
and draw up the new title deed transferring the property into
your name, as well as the security deed that you will have to
grant to your bank or building society in order to get your mortgage
Most homeowners now get a Land Certificate rather than title deeds.
A Land Certificate is a copy of the title sheet held by Registers
of Scotland and contains a description of the property, together
with any rights and responsibilities.
The contract will specify the ‘date of entry’, which
is the date when the price has to be paid to the seller in exchange
for the title deeds and the keys. By this time, your solicitor
will have carried out all the technical conveyancing work, and
all you will have to do is sign the loan documents, pay the balance
of the purchase price to your solicitor, and get ready to move
It is important that you contact your solicitor as soon as you
decide you want to purchase a flat or a house. Your solicitor
is the only person who can guide you through all the problems
such as arranging mortgages, instructing surveys, submitting offers
and settling the purchase. So the best advice is - see your solicitor
Norman Geddes is senior director of Ayr-based solicitors Frazer Coogans.