Buying a House

The first thing you need to do before anything else is decide how much you can actually afford. You’ll need to look at how much money you have available yourself and how much you are able to borrow. There are a number of financial institutions which offer loans to people looking to buy property, e.g. building societies and banks.  For more information on this, see mortgages

Many building societies now provide buyers with a certificate that states that a loan will be available provided the property is satisfactory. You may be able to get this certificate before you start looking for a property. Building societies state that this certificate may help you to have your offer accepted by the seller.

Before deciding how much to spend on a property, you need to be sure you will have enough money to pay for the additional costs which can be substantial. These include:-

• survey fees
• valuation fees
• Stamp Duty Land Tax. From 3 September 2008, this is payable on properties costing more than £175,000 and is at least 1% of the purchase price
• land registry fee
• local authority search
• fees, if any, charged by the mortgage lender or someone who arranges the mortgage, for example, a mortgage broker
• the buyer’s solicitor’s costs
• VAT
• removal expenses
• any final bills, for example, gas and electricity, from your present home which will have to be paid when you move.

For more information about Stamp Duty Land Tax, go to the HM Revenue and Customs (HMRC) website at www.hmrc.gov.uk/so, or ring the HMRC Stamp Office enquiry line on: 0845 603 0135.

On some properties, where the seller has to provide a Home Information Pack (HIP), the seller will pay for local authority searches.

If you start the process of buying a property and then the sale falls through you may have already paid for a valuation and/or a survey. If the solicitor has started any legal work you may also have to pay for the work done.

You should also take into account the running expenses of the property you wish to buy. These may include:-

• community charge/council tax (in England and Wales)
• water rates (in England and Wales)
• ground rent, if the property is leasehold
• service charges, if the property is a leasehold flat
• insurance costs, including life insurance, buildings and contents insurance
• heating bills. An energy performance certificate can help you work out how energy efficient your property is.

You’ll have to pay a deposit on exchange of contracts a few weeks before the purchase is completed and the money is received from the mortgage lender. The deposit is usually 10% of the purchase price of the home but this can vary.