If you are buying a property for the first time the whole process can be somewhat daunting. It is very often the case that first time buyers end up spending more on the ‘extras’ than they had budgeted for.
This article is intended to help first time buyers get an idea of what to expect during the conveyancing process in terms of finances.
If you are buying with the assistance of a mortgage, you will find that lenders have tightened up their lending criteria and have made it harder for first time buyers to secure a mortgage in the current economic climate. First time Buyers will find that they will have to save up for a larger deposit these days since it has become much harder to get a mortgage with only a 10 to 15% as was the case a few years ago.
Note that you must also pay for the mortgage lender’s valuation of the property which can cost approximately £250.
It is strongly recommended that you commission a Survey on the property unless you are buying a new build which should benefit from a Builder’s Warranty. Costs of surveys vary depending on the type you go for. Click here for a Home Buyers Survey quote and more details about what you need to consider before moving ahead with your offer. .
Searches on the Property
Now that HIPs have been suspended the costs of local searches are borne by the Buyer. Local searches cost a few hundred pounds depending on whether personal search agents are used or whether the searches are applied for directly with the Local Authority or Water company (for a Water and Drainage search).
The usual two searches are a Local Authority search and a Water and Drainage search. However, if it transpires that there are unusual aspects about the surrounding area or the property itself then special searches will need to be carried out. For example, if the property is situated in a coal mining area than your conveyancer should commission a coal mining search or if the property borders greenbelt land then a Commons Registration Search may need to be carried out. These searches will increase costs.
Stamp duty currently stands at £250, 000 for first time buyers. This has been a welcome change and has helped first time buyers on to the property market. If the property is worth more than this then stamp duty will have to paid. Click here to view the rates on the HM Revenue and Customs website. (If you have owned a property at any stage before you will have to pay stamp duty at the usual rates. )
Conveyancers usually ask for an initial payment on account to cover the costs of searches. The balance to complete is requested just prior to completion so you must budget accordingly.
Your conveyancer will review the managing agent’s pack once it is received from the seller’s solicitor. It will contain information about annual service charge and ground rent and whether you will be liable to contribute towards any major works that are anticipated. You must have a note of this information in good time before you exchange so you can check to make sure you can afford these payments.