First time buyers
If you’re a first time buyer, the whole property process can be a bit of a minefield. Here are some tips to get ahead of the competition and to impress sellers that you have everything in place and are ready to go:
- Get a DIP (Decision in Principle). A Decision in Principle is an offer from a mortgage lender to confirm at this stage how much you are able to borrow. You should do this before you start looking at properties. Why? Firstly, you’ll know what your budget is. Secondly, if you view a property and want to make an offer, the Estate Agent will need to see your Decision in Principle before the offer is formally put forward to the owner.
- ID documents. If your offer is accepted, you’ll need to provide the office with some photo ID (ideally a passport) and proof of your current address (ideally a bank statement or utility bill in the last 3 months).
- Proof of Deposit. If you’ve decided, for example, to put a 10% deposit down on the property you want to buy, we’ll need to see proof of that.
- Details of your Mortgage Adviser. This is needed for our sales progression team so they can remain in contact with your Mortgage Adviser as the process goes on.
Selling and Buying
If you’re making the switch and selling your property, with a view to buying another, you’ll need all of the above as well as the following:
- An offer accepted on your property. This means you’re in a ‘proceedable position’. Basically, you’re ready to go. If you are relying on the sale of your property to make the move, no owner will accept an offer until yours is sold (under offer) so this is absolutely essential. In fact, it’s now becoming more common for owners to not even show people round their property unless they are in a proceedable position and have sold theirs. The reason is the market is so strong and owners want to narrow people down who they feel are in the best position.
- Proof of funds to cover stamp duty. While First Time Buyers are exempt up to £300,000, you will need to pay this frustrating tax if your purchase is above £125,000. Currently 0% up to £125,000, but 2% of the portion between £125,000 and £250,000 and 5% between £250,000 and £925,000. We’ll need to see proof of funds to show you can cover this, as well as any mortgage deposit.
Cash buyers are slightly different to the above. While ID documents are still required, there’s no need to provide a Decision in Principle, proof of a deposit or details of your mortgage adviser as you won’t need any of these. There’s also no need to show proof you’ve sold your own property as this isn’t dependent on the purchase you’re about to make. The only extra thing you’ll need is:
- Proof of funds. If the property you are buying is £120,000, you’ll need to prove you have all of this money in one or several accounts via up-to-date statements, including stamp duty (as detailed above). And don’t forget about proof of funds to cover your stamp duty, if applicable.
Buy-to-Let and Second Homes, including non-UK residents
Additional homes come with additional costs. You’ll need to think about this:
- Extra stamp duty. Currently 3% up to £125,000, 5% of the portion between £125,000 and £250,000 and 8% between £250,000 and £925,000. We’ll need to see proof of funds via bank statement to show you can cover this, as well as any deposit, Decision in Principle (if it’s mortgaged), proof of funds (if it’s cash) and ID documents.
- Even more stamp duty (if you’re a non-UK resident). If you live abroad, the fun doesn’t stop there. You will be liable for an additional 2% on top of the charges listed above. So, if the property is valued up to £125,000, you’ll need to pay 5% rather than 3% in stamp duty. Again, we’ll need to see proof of funds for this.
The advantages of being organised
The property market is currently booming and that means that all buyers are in fierce competition with each other. Put simply, if an owner gets three offers at the same price and only you’ve got everything in place and are ready to go, chances are your offer will be accepted. Being organised impresses sellers and estate agents and will help to secure your dream home.
Need any further help?
We can help with advice on all of the above and can even arrange a free, no obligation mortgage appointment for you. Please call your local office for further details.