Steps to buying

To produce a clear overview of the home buying process, we have provided a step by step guide to how the mortgage process works and what exactly a mortgage is.

A mortgage is a loan, which is secured on the property you wish to buy. The mortgage deed is a legal contract between the Mortgagee (the borrower) and the Mortgagor (the lender). Like any other contract, if any terms of the mortgage are broken, the lender is legally allowed to apply to the courts and could take possession of the property to recover the debt. However, such action is only taken as a last resort and any genuine financial problems will be dealt with by alternative solutions. Indeed lenders are now under obligation to seek all reasonable alternatives before applying for re-possession of your property.

1 The amount you can borrow
In order to avoid disappointment, you should find out how much you can borrow before you make an offer for a property. The amount you can borrow is based on your income, your status, and your existing commitments and affordability. Your mortgage adviser will be able to go through this with you.

2 The deposit
You will need to provide a deposit for the purchase of the property. The deposit does not need to be paid until the contracts are exchanged; you may however need to prove that you have the funds at the outset. When considering the amount of deposit you have available, you should bear in mind additional costs associated with buying a property. It is also worth mentioning that the bigger the deposit you provide the better the deal you are likely to get.

3 Making the offer
Prepared with the knowledge of how much you can borrow, it will be easier for you to choose a property in your price range. When you have chosen a property,(usually through the estate agent), a formal offer needs to be made to the vendor confirming the price you are willing to pay. Once the vendor accepts your offer, you can move on to the next stage.

4 Which mortgage?
Return to your mortgage adviser to talk more in depth about the mortgage repayment type and the products you wish to go with. Your financial circumstances, objectives and your ability to pay the loan are discussed with your adviser and you will be presented with recommendations.

Once a suitable product has been selected and the repayment options have been discussed, you are now able to proceed with your application.

5 The valuation
A valuation must be carried out by a qualified surveyor who acts on behalf of the lender and will normally take place once the application has been accepted by the lender.

6 Conveyancing
This is the legal process that transfers the property from the existing owner to you. On acceptance of the offer, the conveyancing work will begin. You will need to appoint a solicitor or a licensed conveyancer to carry out the legal procedure on your behalf.

It is the role of the solicitor or conveyancer to ensure that all the legal aspects of the transaction – including the title deeds, which are proof of ownership – are in order.

We would advise that you speak with your solicitor to find out exactly what they will be doing for you and how the process will take place.

7 The mortgage offer
Once your application has been underwritten, and agreed, the valuation has shown the property to be acceptable security for mortgage purposes and the lender has received all of the documentation it requires, a formal mortgage offer will be issued.

You need to make sure that you read and understand the mortgage offer and that the terms and conditions are acceptable to you. Your solicitor will also receive a copy of the mortgage offer and will be able to explain anything detailed on the offer which is unclear. You will need to tell your adviser if there are any mistakes or you want to change any of the details on the offer. Your adviser will organise an amended offer as necessary.

8 Exchanging Contracts
This is where the deposit will be paid to the vendor’s solicitor and you are legally committed to purchasing the property. After this point, if you wish to withdraw your offer, you could forfeit your deposit and you will incur major costs. You should never commit financially until a formal mortgage offer has been offered in writing and you are happy with it.

We also advise that all relevant insurances are put in place at this point, because if anything happens to your property after this date, it will be your responsibility. For example you ought to have placed on risk buildings insurance and life insurance.

9 Completion
This is the point where the property finally changes ownership. An agreed date is decided by you and the vendor at the exchange of contracts. Your solicitor will have contacted your mortgage lender to request that the mortgage be “drawn down” (transferred from the mortgage company to the solicitor’s client bank account). On the same day your solicitor will arrange for the mortgage and deposit monies to be paid to the vendor and complete the legal documentation. You will need to collect the keys, in most situations these will be held by the estate agent.

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By Amar Dhanota
Senior Mortgage Consultant
Mortgages For Professionals
T: 020 7553 3251
E: ad@mortgagesforprofessionals.com
W: www.mortgagesforprofessionals.com

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Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice, the precise amount of the fee will depend upon your circumstances but we estimate that it will be 1% of the loan amount.

Mortgages for Professionals is a trading style of Expertinfo Ltd, which is an Appointed Representative of Bond Finance Ltd.