Buying a property can be stressful. However, it does not have to be difficult.

How-Does-A-Mortgage-Work

Buying a property or a home is a long and complex process. Typically, it will involve the following steps:

 

  1. Borrowing

 

You should get in touch with a mortgage broker and see how much you can actually borrow. They will help you scour the market for the best deals available and show you how to maximise your borrowing power.

 

  1. Define Your Criteria

 

The next step involves deciding the exact kind of property you are looking for. Think about how many bedrooms are required and whether you need a garden and parking. If you are buying a flat, decide whether you want a leasehold or a freehold. You should also pick areas you want to live in. Also consider the property tax banding.

 

  1. Start Searching

 

Scan local newspapers and the internet. You can also register with professional estate agents. In case you spot a property you are interested in, arrange a viewing through your agent.

 

  1. Visit Properties

 

Go out of your way to check out some properties. It is unlikely that you will find the best home straight away. However, keep going and wait until you find something that is worth your investment.

 

  1. Make an Offer

 

Once you come across something you love, make an offer. However, first ask your estate agent to find out as much as they can about the property. Most buyers make offers that are below the initial asking price. Therefore, start low and use your agent to negotiate until you reach a satisfactory price. If the property is worth the price the seller is asking, you can offer the full amount.

 

  1. Acceptance

 

In case the seller accepts your offer, ask your agent to get the home off the market. Then, hire a trustworthy solicitor.

 

  1. Arrange the Mortgage

 

At this stage, you need to sort out your mortgage application. Here, you need to provide a lot of paperwork detailing your outgoings and income.

 

  1. Paperwork

 

Ask your solicitor to draw up a contract. The solicitor will also send a list of questions to the seller, including questionnaires asking the fittings and fixtures they will leave on vacating the property.

 

  1. Surveys

 

After you agree to the mortgage in principle, your lender will contract a surveyor to check out the property and value it. You can also hire your own surveyor for a more comprehensive look.

Go through the survey and find out everything you can about the property. Renegotiate the price with the seller if a lot of work has to be done to fit up the place. If it is too problematic, pull out of the deal before you incur more costs. However, if you are happy with the new home, arrange with your estate agent to gain access to the property.

 

  1. Exchange of Contracts

 

When your conveyer completes all necessary checks, you will sign a contract that will legally commit you to the purchase. It is at this point that you will be required to pay a deposit on the property (which is usually between 5 to 10 percent of the agreed upon price).

 

  1. Plan to Move In

 

Once everything is finalised, get a removal van and start planning to move into your new home.

Stamp Duty Overhaul in Autumn Statement

There are many examples of hyperbole in uk property news stories, but none more bandied about than the ‘sweeping’ or ‘grand’ reforms of stamp duty that were outlined in the Autumn Statement, the last before the general election. So what exactly do these reforms mean for the man on the street? Are they really so ‘sweeping’ or ‘grand’? 

new budget 2014

Impact of the new system

The surprising truth is that the talk of how impactful these changes are is, for once, not overstated. The fact of the matter is that for 98% of house buyers, stamp duty will be less than it was under the old system.

The new system:

Buyers of houses below the threshold of £125,000 will not have to pay any stamp duty at all. Between £125,000 and £250,000 the rate will be 2%, rising to 5% for purchases of between £250,000 and £925,000. From £925,000 to £1.5M the stamp duty rises to 10%, and above £1.5M the rate is 12%. 

Benefits of the new stamp duty system:

First of all, the new system is said to be fairer: it is a graduated system much like that used to calculate income tax, and gets rid of the distortion to the market created by having huge jumps up from one band to the next. 
This new system is designed to help those at the lower end of the system and first time buyers to buy a house in an age when it is difficult to even raise a deposit. The lack of stamp duty on purchases under £125K will go some way towards helping those buyers, and thereby reducing the unfairness within the current housing market.
This new system also reflects the dramatic change in house prices since the last system was established, and it is said that it will stop uncertainty at the top end of the market after discussion of Labour’s proposed ‘Mansion Tax’ unsettled the top-tier property business.

Criticism of new stamp duty system

Many have said that George Osborne was simply spiking Labour’s guns, with this helping hand to ordinary middle class families and swingeing cuts to the super-rich, and that this is just a cynical pre-election pandering to the electorate. These policies have been attacked from both sides of the fence. On one side are the rich, who are annoyed by the huge extra payments they have to make in stamp duty in order to fund, in effect, the cuts to stamp duty further down the tree. This also goes against the core conservative and free-market values of a lot of the Conservative party, who believe in the sort of ‘trickle down’ economics that, arguably, have just succeeded in making the rich richer and the poor poorer. 
On the other side of the fence, while they welcome the help for first time buyers and the bottom end of the property market, many feel that the stamp duty tax on the super-rich is not enough. Those in favour of further redistribution of wealth, and equality, feel that tax on the obscenely wealthy should be higher across the board, and not linked just to property. The fact is that due to the crazy inflation of house prices in London and other economic centres, even £2.5 million will no longer buy a property as large as one might imagine. Sometimes, it will buy no more than a one or two bedroom flat.
Other critics have stated that this stamp duty reform will boost the market, and could cause an unsustainable rise in house prices. This would in fact have the opposite effect than that intended for ordinary buyers across the country. George Osborne has denied these claims.

Wherever your political allegiances lie, it is clear that stamp duty reform will have a big impact on house buyers.