Buying your first home
So you are buying your first home and you need to find yourself a good conveyancing lawyer who is an expert in their field. Buying your first home is a big undertaking and can be daunting and exciting in equal measure.
Which lawyer shall I choose?
It is important that you choose the right lawyer to help you with your purchase. There are different types of qualification of conveyancing lawyer such as solicitor, Chartered Legal Executive and Licensed Conveyancer. Lawyers that bear these titles have spent considerable time studying and passing their respective qualifications.
It is also important to check their level of experience. Some may be newly qualified and less experienced than those who have been practising for a number of years.
Check out any recommendations that may be made to you by estate agents/mortgage brokers and query their qualifications and experience before instructing them to carry out your conveyancing.
When do I need to pay funds for my conveyancing
There are three times during the transaction when it is necessary to pay funds to your lawyer. The first of these will be an up-front payment on account of searches at the beginning of the transaction. These will be to cover the cost of paying third parties for the searches/anti-money laundering search fees.
Next, you may be asked to pay a deposit over just prior to exchange of contracts. The level of the deposit may be between 5% (if you are borrowing 95% mortgage) and 10% of the property price. The deposit will be used as a part-payment towards the purchase price unless you fail to complete on the completion date.
The final time funds will be paid will be just prior to completion. A completion statement showing all the funds required to complete (less any mortgage and deposit funds already paid) will be prepared and the funds will be paid over by CHAPS bank transfer the day before completion.
First Time Buyer Schemes
There are a number of schemes designed to help First Time Buyers such as:
Help to Buy ISA
This scheme has now come to an end but some First Time Buyers may still have this type of ISA account. The Government pays a bonus of £50 for every £200 saved. To use this type of ISA you must be purchasing a property with a maximum price of £250000 outside London or £400000 within London. It can only be used towards the completion monies and not the deposit.
Help to Buy
This is a loan from the Government at 20% of the purchase price. A 5% deposit is payable and a first mortgage of 75% can be used with a normal lender. The downside of this type of loan is that when it is repaid the 20% is on the value at the time which may have increased so more is repayable.
Lifetime ISA (LISA)
This scheme pays 25% on your savings and is available to 18-39 year-olds. On maturity, it can be used towards the deposit funds. You can contribute £4000 per annum until the age of 50 but you will need to have saved for a minimum of 12 months before purchasing a property. Early withdrawal of funds will attract a penalty.
Do I have to pay stamp duty?
As a first time buyer, stamp duty is not payable on the first £300000 but the figure increases to 5% above that on the figure between £300,001 and the purchase price. You will see need to complete a Land Transaction Return Form and your lawyer will submit this to the Inland Revenue within 14 days of completion.
How long will the purchase take?
The average purchase takes between 8-12 weeks. The lawyer has a lot of interaction with third parties such as search providers, mortgage lenders, managing agents and other solicitors and other parties within the chain of transactions. A chain can only go as fast as its slowest member so you may find that we are ready but have to wait for other parties in the chain to catch up as we all need to be at the same stage to be ready to exchange.
What exactly does the conveyancer do?
The conveyancer will take your instructions as to the property you are buying, the purchase price and how you will be financing the transaction. They will also check your identity and where your funds are coming from. In addition, they will check out the identity of the Seller’s solicitors. The lawyer may also carry out ID verification searches against your ID documents and electronic checks against the seller’s lawyer.
Once you have completed all the initial forms, provided your ID and had this verified and evidenced your source of funds, the solicitor will receive the contract pack from the Seller’s Solicitors. This will be checked and any questions raised on the papers supplied. Searches will also be raised against the property and results checked. Your mortgage offer will be received from your Lender and checked and reported on. If you are buying a leasehold property, they will also receive leasehold maintenance information from the managing agents as to future maintenance, insurance, fees payable and so on. Once all the enquiries are dealt with the conveyancer will report to you on the papers and ask you to sign the legal paperwork.
Once everyone in the chain is ready to exchange, completion dates are agreed and contracts are exchanged. The completion date then becomes fixed. Mortgage monies are requested and any funds you need to pay are requested. Pre-completion searches are requested and checked. Mortgage monies are received the day before completion to ensure no delays on the completion day.
Purchase monies are sent across to the Seller’s Solicitors and on receipt the keys are release with the estate agents. Stamp Duty is sent to the Inland Revenue. Confirmation of the discharge of the seller’s mortgage over the property is received and you and your Lender’s mortgage is registered at the Land Registry. Any leasehold notices are served on the Landlord/Managing Agent. You are then advised when registration is completed.
At Owen Kenny, our experienced lawyers can help you with your purchase and take the hassle out of buying your first home. Please contact us for a chat about your purchase and we can provide you with a quote.