No question is a stupid question for a first time buyer
Ally Higgins provides a simplified summary of the conveyancing process and deals with common questions raised by First Time Buyers.
Buying your first home can be a daunting prospect but choosing the right conveyancer will reduce the stress levels and ensure the transaction moves quickly and smoothly. This blog provides a simplified summary of the process and is designed to answers the most commonly asked questions.
The transaction starts once your conveyancer has been formally instructed by you. The first stage of the process is reviewing and investigating the title and documents (contract papers) relating to the property you intend buying.
Searches are ordered and it takes a few weeks for results to be returned. Your conveyancer will consider the contract papers as they are received, send copies of the documents and search results to you and raise specific enquiries about the property with the sellers’ conveyancer. The enquiries often relate to planning permissions, building regulation approvals and completion certificates e.g. alterations or additions made to the property, gas and electrical certificates as well as title restrictions, rights or covenants (binding promises) which are relevant to the property.
Additional enquiries may need to be made to ensure there are no hidden surprises when you finally take ownership of your new home. Your conveyancer will also be negotiating the contract for sale and transfer deed as well as reporting to your lender and preparing the Stamp Duty Land Tax return (also known as a Land Transaction Return).
Once satisfactory replies to all enquiries have been received from the sellers’ conveyancer, your conveyancer will be able to prepare a full report on your property setting out all the information your conveyancer has considered. The contract will be sent to you together with the report. Once you have considered the report and are happy to proceed with the purchase you should sign and return the contract to your conveyancer. At this point, you will also need to send your conveyancer the deposit, usually 10% of the purchase price, as it is required to exchange contracts.
How are contracts exchanged and what does this mean for you? When is a completion date set?
Your conveyancer will need to be in possession of your signed contract and deposit monies in order to exchange contracts. Exchange is a formal procedure which takes place over the telephone between your conveyancer and your sellers’ conveyancer. The completion date will be set and written into the contract as part of the exchange process. It is necessary for the parties in the chain to come to an agreement as to the preferred date for completion prior to exchange of contracts.
Your conveyancer will contact you to let you know once exchange has taken place. You will be contractually bound to proceed with your purchase and complete on the agreed date noted in the contract once exchange has taken place. Your conveyancer will send you a completion statement showing the amount required from you to complete and will request mortgage funds from your lender.
What is the difference between the 10% deposit required to exchange contracts and the deposit you have saved?
The deposit required for exchange is usually 10% of the full purchase price, so if you are purchasing a property for £250,000 you will be required to send a deposit of £25,000 to your conveyancer so they can exchange contracts on your behalf. If, for any reason, you fail to complete the purchase on the agreed completion date, you may forfeit your deposit – this means the seller is entitled to keep it on the basis that you did not complete.
The full deposit you have saved is the amount your lender requires you to contribute to fund the purchase and the balance is made up by way of a mortgage which will be secured over the property.
When do we need to put buildings insurance in place?
If you are purchasing a freehold property and not obtaining buildings insurance through your lender, you must ensure buildings insurance is put in place from the date contracts have been exchanged – this is a contractual obligation. It is advisable to obtain a quote for the policy which best suits your requirements in advance of exchange of contracts.
Once exchange has taken place, you should contact your insurer to put your policy on risk. Your insurance should cover the full reinstatement value of the property (this information can be found on your lender’s valuation report) and your lender’s interest should be noted on the policy.
Final stages of the process
On the day of completion, your conveyancer sends the balance purchase monies to the sellers’ conveyancer. Contractually, completion takes place by 1 or 2pm. You will be able to collect the keys from the selling agent once your conveyancer has called you to let you know you are the proud owner of your fist home.
For your conveyancer, the work doesn’t stop here. An application to register your ownership at the Land Registry is submitted following completion and your conveyancer will be in contact with you at later stage to confirm you are registered as the new owners.
The process can be smooth and stress-free if you have an experienced conveyancer acting on your behalf. Ally Higgins is Senior Conveyancer and manages the Residential Property team in Newbury. Ally has 30+ years experience in dealing with a wide range of property matters and can be contacted by email (firstname.lastname@example.org) or telephone (01635 917303 or 07388 944792).
Find out more on our Residential Conveyancing page.