Property Frequently Asked Questions
There may be some things that you are unsure about, we have covered our most asked questions below.
Buying property: Why do I need to pay for searches?
At the outset of any purchase we need to make check with various organisations to ensure there are no onerous matters on record which may affect your decision to purchase or affect a mortgage lender’s decision to accept the property as valuable security for any loan. Therefore, we will make searches of the local authority, water and sewage undertakers, coal authority and environmental agencies. These searches will highlight important information such as whether the access road to the property is public highway, if works to the property are compliant with planning and building regulation requirements, if the property benefits from mains water and public sewers, that there are no mine entries within or near the boundaries, or if there are land contamination issues, flood risks and proximity to wind turbines and telephone masts.
Buying property: I have a Help to Buy ISA. When do I get my bonus?
If you are purchasing with the assistance of a Help to Buy ISA bonus you must make your solicitor aware of this at the outset. There are formalities the solicitor must comply with to ensure the bonus is available for completion. If the solicitor is only made aware of this late in the transaction there could be delays in completing the purchase. Once a completion date is known the solicitor will ask you to close your Help to Buy ISA account. The bank will provide you with a closing statement. You need to hand this to your solicitor as soon as possible. They will prepare a declaration for you to sign confirming you are eligible for the bonus. Both closing statement and declaration are then submitted by your solicitor to the government agency requesting the bonus is released prior to completion. This bonus will not be paid direct to you but to your solicitor to use for the purchase. Your solicitor will provide you with a completion statement setting out how much they will need from you in order to complete the purchase. The statement will take into account the fact the bonus will be received by them therefore reducing the amount required from you.
Buying property: What is exchange of contracts?
Once we have received the results of all the searches and satisfactory replies to any enquiries we may have raised with the seller’s solicitors, we will report to you on the results and arrange a time to sign the contract papers and discuss completion dates. You will not be contractually bound to buy or sell a property when you sign the contract. This takes place between the respective solicitors and is done when everyone in the transaction, and chain of there is one, is ready to proceed and has agreed a completion date. When you exchange contracts on a purchase you will be required to pay a deposit, usually 10% of the purchase price. You do not exchange until you are ready and able to complete as if you try to withdraw from the purchase after exchange you will forfeit the deposit paid.
Buying or selling property: What is completion?
When contracts are exchanged a completion date is set. If you are selling, this is the date you must vacate the property and hand the keys over to the buyers. You usually have until about 1,00pm to do this. You will usually take final meter reading to enable you to close your utility company accounts. Keys are dropped off at the estate agents for collection by the buyers. If you are purchasing, completion is when you take possession of the property. Once the seller’s solicitor has confirmed receipt of the purchase money they will authorise the estate agents to hand the keys to you. This is called “key release”. Completion is also the day your mortgage commences, if you are having one. You will need to liaise direct with your lender as to when the first mortgage payment is taken.
Buying or selling property: What are title deeds?
Title deeds demonstrate ownership of land or property, as well as highlighting personal and restrictive covenants and setting out registered charges, such as a mortgage.
The record is kept at the Land Registry and a search of the register can be carried out and copies of the register and title plan can be downloaded at a small cost, in a matter of a few minutes.
Some people have title deeds in their homes, or perhaps stored with the bank holding the mortgage. Frequently, these deeds are pre-registration deeds and documents because, further to compulsory registration from the 1990’s, all records became electronic. You should pass any such documents to your solicitor when buying or selling property, even if you consider these deeds and documents to be obsolete.
However, there remains a small pocket of land ownership in the UK which is known as ‘unregistered’ land or property. The owners may have escaped compulsory registration if the property has been in their ownership for an extended number of years. Quite often, it is not until somebody has died that we find such unregistered land or properties.
The title deeds for unregistered land are of vital importance, as they record the chain of ownership from which the property can be sold or transferred (and registered with the Land Registry). You should ensure that your solicitor has all of these deeds and documents when giving instructions to sell or transfer the property.
If you are selling, buying or re-mortgaging residential property, or need advice about other residential property transactions, speak to our property law specialist, David Williams, on 01630 652405 or email David at email@example.com
Buying or selling property: When do I get the deeds to the property?
Following completion there is nothing else for you to do other than move in to your new home. However, your solicitor will still have tasks to complete including payment of any stamp duty and registering your purchase with HM Land Registry. Once the application to HM Land registry has been completed a new version of the registers will be produced showing you as the new owners and, if you have one, confirming your lender’s mortgage against the property. Your solicitor will then send you a copy of these register together with any original documents supplied by the seller’s solicitor on completion e.g. building regulation certificates, gas service reports and guarantees. It is rare that any old deeds will be provided as most properties are registered and the deeds will have been destroyed.
Buying or selling property: Do I have to use a solicitor?
If you are selling a house subject to a mortgage or buying with the assistance of a mortgage you will have to use a solicitor. The mortgage lender and solicitor for the other party will insist on this. If there is no mortgage involvement then technically you can act in person. However, we would advise in the strongest possible terms that you do not do this and that you instruct a solicitor, especially if purchasing. The purchase of a property is made on the basis of Caveat Emptor (or “let the buyer beware”). It is incumbent upon the purchaser to make all enquires, searches and investigations that would be made by any prudent purchaser. Unless the seller has made any direct misrepresentations you will have no redress against them should any detrimental issue come to light following completion. The legal process for the purchase of a property is complex and should be handled by a competent professional. The cost of using a solicitor is small compared to the potential financial losses that can be incurred if an important point is missed.
Mortgages: What are the different types of mortgages?
- Repayment – where your monthly payment is part of the interest and part repayment of the capital. To begin with, most of the repayments go towards paying the interest but later on, your payments will reduce the capital.
- Interest only – where all your payments are to cover the interest but not the capital. In order to make sure that the capital is repaid at the end of the mortgage term or on your death, you will need to take out some form of life policy (sometimes called an endowment) or put in place an investment such as a pension or ISA.
Mortgages: What incentives do lenders offer?
Different lenders offer particular incentives to encourage you to borrow from them rather than an alternative lender. Some examples of these are:
- Fixed-Rate Mortgages: The interest rates are fixed for a set period, providing certainty on monthly repayments regardless of changes in the Bank of England's base rate. While these can be beneficial if interest rates are likely to rise but if they fall, you can end up paying more than the going rate. They are, however, good for budgeting since you know how much your repayments are going to be over a certain period.
- Variable Rate Mortgages: The interest rate can fluctuate, meaning monthly payments may increase or decrease over time.
- Tracker Mortgages: These follow the movements of a nominated interest rate (usually the Bank of England base rate), meaning your monthly repayments could vary.
- Discount Mortgages: Initially offers a discount on the lender's standard variable rate for a certain period of time. Payments can fluctuate in line with changes to the standard variable rate.
- Capped Rate Mortgages: A type of variable mortgage but the interest rate won't go above a set "cap".
- Offset Mortgages: These mortgages link your savings to your mortgage debt. By forfeiting interest on the savings, you only pay mortgage interest on the balance.
- Cashback Mortgages: The lender provides a cashback reward upon mortgage completion. However, these often come with higher interest rates and longer tie-in periods.
- First-Time Buyer Mortgages: Usually have lower fees or incentives like cashback, specifically designed to assist individuals in purchasing their first home.
- Buy-to-Let Mortgages: Designed for property investors, the loan amount is typically based on the property’s potential rental income rather than the borrower's income.
Seeking specialist mortgage advice is always advisable to ensure the mortgage loan is suitable for your circumstances.
Quite often, if you try to remortgage or move house within a certain period, while you have a mortgage with incentives such as these, you may have to pay a penalty. This may be waived if you go back to the same lender for a new mortgage on a related purchase or remortgage.
© 2018 Onions & Davies. Onions & Davies Solicitors is the trading name of Onions & Davies Ltd, Company Reg. No. 8322297, Registered Office address: 91 Cheshire Street, Market Drayton, Shropshire, TF9 3AF. Onions & Davies is authorised and regulated by the Solicitors Regulation Authority (SRA ID Number: 607617)