Accords Buyers Guide and Jargon Buster

These Guides are given in good faith and without any future liability. It is recommended that aprofessional advice is sort before any financial transaction is undertaken and any information gained from this publication is checked as its nature is only in general terms. Any information is at best an overview and is not intended to be relied on.

Exchange
The contracts signed by the buyer and the seller are physically exchanged and a date is set for completion. On exchange, the buyer pays the deposit, usually around 10 per cent of the purchase price.

Freehold
The ownership of a property and the land it stands on.

Gazumping
The buyer’s nightmare. After you’ve agreed a price for a property, the seller accepts a higher offer from another buyer. A Estate Agent has the responsibility to follow the sellers instructions with regard to this and has a legal duty to inform its clint of any offer received.

Ground rent
If you own a leasehold property, you’ll normally have to pay a small annual ground rent to a freeholder.

Land Registry
The Government body that records land ownership in England and Wales and transfers ownership from one person to another.

Lease

Where there is more than one property on the same piece of land (i.e. in a block of flats), the title of the property is held under a lease which sets out the rights and
responsibilities of the person owning it. In these circumstances, the property is sold leasehold.

Loan-to-Value (LTV)
The amount of a mortgage as a percentage of the lower of the purchase price or bank’s valuation. For example, if your mortgage is ?100,000, the purchase price is ?149,000 and the bank’s valuation is ?150,000, the Loan-to-Value is 100,000 divided by 149,000 then multiplied by 100 = 67.1 per cent.
Mortgage Indemnity Guarantee (MIG) or Higher Percentage Advance Fee An insurance a lender takes out for their own benefit which you may be required to
pay for when you ask for a mortgage above a set Loan-to-Value, usually 75 per cent or 80 per cent. If you default on your mortgage and are unable to repay it
from other money or assets or from the sale proceeds, the lender may subsequently claim on the insurer. Some lenders will pay the MIG premium on your behalf, usually up to a maximum LTV or 90 per cent.

Stamp duty
A Government tax the buyer pays. Currently this is one per cent levied on properties costing over ?60,000, rising to three per cent for properties above ?250,000 and four per cent above ?500,000.

Title deeds
These show who owns a property and give details of any other legal matters, such as restrictions in use of the property and rights of way.

 

YOUR STEP-BY-STEP GUIDE TO BUYING A HOME

Buying a home will be the biggest purchase you’ve ever made but it needn’t be frightening.
Just take one step at a time.

1. Find out how much you can borrow….
…before looking for a property. That way you won’t fall in love with something that’s out of
reach. A mortgage adviser will tell you how much you can borrow and help you choose a
mortgage. They will also give you an idea of what your monthly repayments will be. It is
important that you don’t go over your budget as you’ll need money for solicitor’s fees, moving
and stamp duty. Check whether the mortgage policy commits you to buying other products
i.e. buildings and contents insurance or a mortgage indemnity guarantee. If you’re happy with
what you’ve been offered, you can pre-apply for a mortgage and get an agreement in
principle to borrow up to a certain sum.

2. Choose where to live
Before heading off to see estate agents, decide where you want to live and what type of
property you want. Work out what’s most important to you – do you want bars, restaurants
and cinemas or close to work? Is transport a factor – how easily can you get to work?
You’ll save yourself a lot of effort by being specific about your requirements – parking, outdoor
space concierge service, canal side view etc. If you can, go online to view properties.
Remember to ask about the Council tax rate, service charges.

3. Make an offer
Tell the estate agent once you have found a property you want to buy. If you’re not prepared
to pay the asking price, make an offer to the estate agent, who will relay it to the seller. If your
first offer is rejected, you can go back with an improved figure if you can afford to and you
think the property is worth it.

4. If your offer is accepted
Make sure you get it confirmed in writing. Now’s the time to instruct a solicitor, if you haven’t
already.

5. Apply for a mortgage and arrange a survey
At the same time as you instruct a solicitor you should apply formally for a mortgage (or
confirm your mortgage in principle) and book a survey. Your mortgage lender will insist that
you have a basic valuation to ensure the property is adequate security against the loan, but
after that it’s up to you how thoroughly you have it examined. The survey report may give you
grounds to renegotiate the price.

6. Local authority searches
Your solicitor will carry out various searches and check any history of disputes with
neighbours.

7. Exchanging contracts and completion
Your solicitor will finalise the contract details with the seller’s solicitor, confirm your mortgage
details and prepare a transfer deed. You’re now ready to exchange contracts and pay your
deposit. You should complete within a few weeks of exchanging: your solicitor will transfer
the mortgage funds to the seller’s solicitor in return for the transfer deed, Land Registry
certificate and keys. The transfer deed will be filed with the Land Registry and the title deeds
will be sent to your lender.

8. Pick up the keys.
Congratulations! You’ve bought your home.

JARGON BUSTER
This is the most commonly used jargon you’ll come across when buying.

Capital Gains Tax (CGT)
Tax that’s payable on profits from the sale of
certain assets, such as property. Any profit
from the sale of your main residence is likely
to be exempt from CGT, but you may pay
CGT if you sell a second home or a home
that you’ve been letting.

Completion
The day when the seller receives the money
from the sale and legal ownership passes to
the buyer.

Contract
Sets out the terms on which the property is
being sold, including the price. The buyer
and seller each sign a copy and these are
exchanged to form a binding contract.

Early redemption or repayment charge
If you repay your mortgage during
the period of, for example, a fixed or
discounted rate, or switch mortgage
providers when you have one of these
rates, your lender may make an
early redemption or repayment charge.
This can be substantial; you should read
and understand the terms and
conditions before you sign up for one of
these rates.