Buying A House

1. HOW DO I KNOW IF I'M READY TO BUY A HOME?
You can find out by asking yourself some questions: Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years?
Do I have a good record of paying my bills?
Do I have few outstanding long-term debts, like car payments?
Do I have money saved for a down payment?
Do I have the ability to pay a mortgage every month, plus additional costs?
If you can answer "yes" to these questions, you are probably ready to buy your own home.

2. HOW DO I BEGIN THE PROCESS OF BUYING A HOME?
Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment How much space do you need? What areas of town do you like? After you answer these questions, make a 'To Do" list and start doing casual research. Talk to friends and family, drive through neighborhoods, and look in the "Homes" section of the newspaper.

3. HOW DOES PURCHASING A HOME COMPARE WITH RENTING?
The two don't really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing. Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that's an investment.

How Much Can I Borrow?
Before looking at properties, you should consult a lender or mortgage adviser as to what your maximum possible loan would be. This will be based on the size of your deposit and how much you earn. All buyers need to put down a deposit on the property – a mortgage lender will rarely pay the whole price of the property. You should try to put down at least 5 per cent of the value of the home as a deposit, and more if possible. The smaller the deposit you put down, the more your lender will charge you for the extra risk. Most mortgage lenders charge a 'mortgage indemnity guarantee fee' (MIG), or a fee for loaning a higher percentage of the value, on bigger loans. If you do not have enough money for the deposit, for example if your house is not sold yet, it is possible to get a 'bridging loan' from your bank, which will be repayable on the sale of your house.

Lenders will usually lend up to three times the size of your annual income, though some will lend up to four times your income. If you are buying as a couple, this increases to either three times the first income plus one year of the second income, or two-and-a-half times your joint income. Work out which way would allow you a higher loan and find a mortgage with which you can get a joint income allowance which suits you. Your lender will contact your employer to confirm your income, or if you are self-employed you will have to supply proof of your income.

5 HOW CAN I DETERMINE MY HOUSING NEEDS BEFORE I BEGIN THE SEARCH?
Your home should fit the way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes, make a list of your priorities - things like location and size. Should the house be close to certain schools? your job? to public transportation? How large should the house be? What type do you prefer? What kind of amenities are you looking for? Establish a set of minimum requirements and a "wish list." Minimum requirements are things that a house must have for you to consider it, while a "wish list" covers things that you'd like to have but aren't essential.

Survey
It is strongly advised that you have your own independent, more detailed survey carried out to check for any defects. There are two types of survey, the Homebuyer's Report which costs between £250 and £500, and the more comprehensive Buildings Survey (Structural Survey) which can cost anything up to £1,000 plus. VAT, depending on the value of the house. Allow extra if you need more specialist checks, for example on old properties.

Legal/Conveyancing Fees
You will need to hire a solicitor to deal with the legal aspects of buying a property. There is no standard fee so it is a good idea to shop around for the best rate. Some solicitors charge a flat rate while others charge a percentage of the property price, normally up to 1 per cent. As well as the price of your house, the fee will take into account factors such as the amount of paperwork involved, how much skill is required and how complicated the transaction is.
You will also have to pay for the legal work done by your lender's solicitor. Again, prices vary so ask your lender how much they charge. If you use the same solicitor as the lender to do your conveyancing this may save you money, but compare charges with other firms.

Stamp Duty
This is a government tax, charged for properties above £60,000. If your new home is priced between £60,000 and £250,000, you will pay 1% of the property price. From £250,000 to £500,000, it will be 3% and over £500,000 it will be 4%. So, for example, if you are paying £100,000 for your home you pay £1,000 in stamp duty.

Land Registry Fee
The Land Registry is a government department which looks after the registers of all registered properties in England and Wales. It charges a fee for transferring the register to the new owner. This fee is charged according to property price. Price (£) Fee (£)
up to 40,000 40
40,001 – 70,000 60
70,001 – 100,000 100
100,001 – 200,000 200
200,001 – 500,000 300
500,001 – 1,000,000 500
1,000,001 and over 800

Local Authority Search Fees
Local searches will be carried out by your solicitor/conveyancer to ensure that there are no potential problems such as planning permission on neighbouring properties or plans for new roads nearby. Allow at least £60, or more in London boroughs.

Other Search Fees and Disbursements
These include index map, commons, the coal authority, land charge, company searches, bank transfer fees. Allow about £70 to cover an average house purchase.

Estate Agent's Commission
If you're selling your property as well as buying one, the sum charged by your estate agent has to be taken into account. Usually this is charged as a percentage of the property price, around 1.5 – 2 per cent on average. If you are selling it yourself, you will need to pay for advertisements.

MIG Fees (mortgage indemnity guarantee)
This is an insurance premium charged by some lenders where your loan amount is more than 75% of the price of the property – in other words, where the loan to value (LTV) is greater than 75%. Other lenders do not charge an MIG, while some only charge when the LTV is more than 80 or 90%.
This is charged in case you default on your mortgage repayments and the mortgage lender cannot recover its money. Note that this protects the lender, not you.
Costs vary from lender to lender but typical MIG premiums are:
4 per cent of the amount borrowed above 75 on a loan of up to 90 per cent of the purchase price
6 per cent of the amount borrowed above 75 per cent on a loan of up to 90-95 per cent of the purchase price
8 per cent of the amount borrowed above 75 per cent on a loan of up to 95-100 per cent of the purchase price

Other Costs
A few more to bear in mind:
Buildings insurance premiums
Contents insurance premiums
Additional removal insurance
Disconnection of services (water, gas, electricity, telephone)
Reconnection of services
Installation of new equipment
Carpet laying
Kennelling of animals
Mail redirection
Change of address notices

Contingency Fund
Leave a decent-sized contingency fund for emergencies. You do not want to be left completely penniless in case you have unexpected extra costs.

Viewing The Property
Once you have found a property you feel you like, make sure you learn as much as possible about it. Even if it seems perfect at first glance, try to think about it from all angles. And write everything down - the best house-hunters take notes on each property they view which they can compare later.

Top Tip
Make at least 2 visits. View the house in the daylight and at night. Come at rush hour, as you could get a nasty surprise - is the road used as a short-cut by motorists?

General Condition
Check what fixtures and fittings will be left by the previous owner
Consider the layout of the house – are there any unusual shaped rooms that it would be difficult to fit furniture or appliances into? Are there are enough power points?
Don't be put off by the seller's choice of décor – try to imagine the house with your own furniture and style

Leasehold Or Freehold
All the properties in England and Wales are either freehold or leasehold.

Freehold
This means that you fully own the property. As a freeholder you will have the full responsibility for the maintenance and repairs of the property.

Leasehold
This means that you own the property for as long as is specified in the lease; you are granted the right ot live there by the freeholder. At the end of the lease the property again becomes the possession of the freeholder. Many leases are originally granted for up to 999 years, but existing leases on properties are usually shorter. The majority of leasehold properties are flats although some houses are leasehold.