CITYSTAY
PROPERTY AGENTS

BUYERS GUIDE

Buying Property in Cambridge

Cambridge has its own ‘micro-climate’ when it comes to the property market and it is therefore helpful to have local insight into the things you need to know if you are thinking of purchasing a property in our beautiful city.

We trust the following guide is helpful.

Buying Your First Property

Citystay Property Agents know that buying your first property can be a daunting prospect; so, we have put together the following guide to help you through. With this guide and our local knowledge we are confident that you will be able to retain the excitement that buying your first home brings.

The first step is often to get to know about mortgages:

Mortgage: A loan taken out to buy property or land. The money borrowed is the capital and the lender will charge interest on it until it’s repaid.

The loan is secured against the value of your property until it’s fully repaid. This means a mortgage provider can sell your property to recover the monies owed if repayments are not kept up.

It is therefore important for you and your lender to be satisfied that you are able to keep up repayments throughout the term of the mortgage. To this end potential lenders will undertake financial, employment and credit checks among others, on anyone wishing to set up a mortgage.

Help For First Time Buyers

Government backed loans can provide a useful “leg up” onto the first rung of the property ladder. https://www.gov.uk/first-homes-scheme

Other types of mortgages are available to help first time buyers. Talking to a mortgage consultant with access to a comprehensive range of products from across the market will help you understand all available options. Citystay Property agents work closely with specialist mortgage consultants who have access to the wide range of mortgage products including some not readily available elsewhere. Ask Citystay property Agents to put you in touch and you will be able to choose a mortgage and lender that are right for you.

Other costs on top of the deposit and mortgage repayments to consider; mortgage set-up fees; solicitors’ fees and Stamp Duty Land Tax (SDLT).

Tips For First Time Buyers in Cambridge

Be Solvent

The Cambridge property market can move very fast, so to save disappointment have your finances in order and a mortgage offer in place

This means keeping up repayments on any credit cards and loans and paying off any outstanding debt. Good money management will attract a wider choice of potential mortgage providers which you can then choose from to set up a mortgage offer in principal.

Budget for a Deposit

The usual minimum deposit required is between 5-10% of the cost of a property.

Use a monthly budgeting tool to assess your current spending and which items are essential and which can be cut back on to save each month for your deposit.

Build Your Credit History

Check your credit score with via such as companies as Experian and Equifax, with the aim of being able to demonstrate to potential lenders your ability to manage money. Keeping up with credit card payments is a good way to show this. So make sure you are ding so and that your credit score is good.

Gifted Deposit

You may be fortunate enough to have a parent / relative assistance gifting you the monies for a deposit. This will require an accompanying letter from the givers confirming it is a gift. Proof of the source of such funds should be requested.

Guarantors

Should parents be prepared to take on some of the risk of the mortgage, they can act as guarantors, ensuring that repayments will be made even if their child is unable to make them.

Other Arrangements Include

Relatives to offer their own homes as collateral against first time buyers mortgage.

Parents setting up a savings account from which mortgage repayments will be made if their child is unable to make them. In an ideal scenario, the child will make all the required payments and when a set amount (say 75% of the mortgage is paid off), the parents can withdraw their savings, which may have accrued interest.

Instruct a Solicitor Early

Instructing a good solicitor when buying a property is vitally important and doing this early on will help the transaction to move as quickly as possible.

The solicitor will help you to take care of all the legal and administrative details so it is key that you use a solicitor that you trust and feel comfortable with. Citystay Property Agents work closely with trusted solicitors who we feel will give our clients a very good service. Ask your Citystay Property Agent for details

Get Your Paperwork Sorted

Send all the requested paperwork in the form of ID, payslips and bank statements to your mortgage broker and solicitor as soon as you can. This will speed up the process once you have had an offer accepted.

Having your paperwork pre-organised can set you in a favourable position if competing with other bidders who have not done so and therefore appear as less serious buyers.

The Buying Process

Financial Planning & Budgeting

Any large project requires planning. Before you start looking at properties, you need to know how much you can spend. If you are not buying a property outright for cash, you are likely to need a mortgage, but which type?

Mortgages are loans offered by banks, building societies and other lending institutions, which typically take many years to repay. The repayment term is partly determined by the size of the mortgage and what you can afford to repay each month.

Contacting a Mortgage Consultant

At your earliest opportunity you should take time to speak to a professional mortgage consultant. Citystay Property Agents work closely with specialist mortgage consultants who have access to the wide range of mortgage products including some not readily available elsewhere. Ask Citystay property Agents to put you in touch and you will be able to choose a mortgage and lender that are right for you.

Your mortgage consultation will consider all of the following:-

  • Your maximum borrowing limit and which lender is likely to agree to it.
  • Discuss acquiring an Agreement in Principle (AIP), subject to I.D. and Credit checks ,be careful not to negatively affect your credit rating. Your mortgage consultant will be able to explain this in more detail.
  • Assess the affordability by going through a detailed budget planner with you.
  • Which type of mortgage suits you, i.e, a Fixed Rate or a Variable Rate.

Fixed Rate

With a fixed rate you know exactly how much you will have to pay each month. It does mean ,however, that your monthly payment will stay the same during the fixed period, even if other interest rates decrease.

Fixed terms are typically for two, three or five years and in some cases longer. Most lenders charge a penalty fee, an ”early repayment charge” (ERC) if you repay the mortgage before the term ends.

Interest on fixed rates tends to be slightly higher than variable rate mortgages.

Variable Rate

The main types of variable rate mortgage are Standard, Variable Rate (SVR),Tracker and Discount.

SVR interest rates tend to be higher than other variable rates but can be advantageous if you are looking for flexibility in the short term. There is not usually an early repayment charge. When a fixed, tracker or discount arrangement comes to an end, you are usually transferred to your lenders SVR so this can be a good time to review your options.

Tracker variable rate mortgages are tracked to a rate such as the Bank of England base rate and move in line with their changes. So, if the Bank of England puts the base rate up by 0.25%, your mortgage rate will rise by the same amount.

Discount Variable mortgages are linked to the lender’s SVR, rather than the Bank of England base rate. SVRs are set by each lender and therefore can change even if there has been no change in the Bank of England rate.

Variable rate mortgages can offer the lowest initial interest rates but can fluctuate hence monthly repayments payments can go up and down and are thus more difficult to budget for.

Some lenders combine different types of mortgages, e.g. a fixed and a tracker.

Remember that your home may be repossessed if you do not keep up repayments on your mortgage.

Documentation

Having your paperwork organised and available will help the process move quicker once you have identified a lender. You will need to provide:

  • Proof of ID such as a passport or driving licence
  • Proof of address
  • Evidence of your income
  • Bank & Credit card statements

Deposits

This is the amount of money you are putting in from your own sources, whether that is your savings and investments, equity from the sale of a property or from parental assistance in the form of a cash gift. Proof of the source of all funds for a deposit is required.

The amount of deposit you put down will determine the amount of your mortgage. the Loan to Value percentage (LTV) is the amount of money you borrow against the value of the property. The more you have as a deposit, the less you will need to borrow. The lower the LTV the lower the interest rates. However high arrangement fees or having to revert to a higher interest rate during the deal period should also be taken into account.

Other Costs

Solicitor’s fees, valuation and survey fees, lender product/mortgage arrangement fees and Stamp Duty Land Tax (SDLT) which can be checked on a stamp duty calculator, buildings insurance, contents insurance, and if you are living in the property the council tax rates and utility bills

Establishing Requirements

Whether you are looking to move into your first property, upsizing, downsizing or simply relocating, you will need to establish the area you want to move to and what your specific requirements are. This is where Citystay Property Agents come into our own. As local agents with local knowledge there are none better to advise you on both the property itself and the area, making your search easier.

Your Citystay Property agent will help you think through:-

  • What you can afford?
  • Where in Cambridge you want to live?
  • What the local amenities are – e.g. schools, shops, transport links, medical centres, parks, gyms, and restaurants etc.
  • What you require from the property itself – e.g. period or modern, outside space, parking, accessibility etc.

There are many reasons for buying a property in Cambridge and each individual’s requirements vary. Citystay property agents are adept at helping individual purchasers to balance their budget, location and size of a Cambridge property enabling you to find the right property for you.

Location

Selecting a location is arguably the most important decision and when doing so it is advisable to consider the following:-

The Neighbourhood

  • Safety – understanding the local crime rates. You can view a local crime map here.
  • Local Schools – check OFSTED, the Independent Schools Council and the Good School Guide.
  • Other Amenities – look at shops, restaurants, parks and recreation in the area.
  • Transport Links – is the property close to arterials road, public transport, stations, airports etc.?
  • Council Tax Band – find out what the different Council Tax bands are and which band the property is in here.
  • Proximity to Work/Family – is the property close to where you need to be?

Environmental & Exterior Issues

  • Flood risk – visit the GOV.UK Flood Map for Planning Service site to find flood risk information on the property.
  • Development plans – visit the Greater Cambridge Shared Planning site to see if there developments planned that may positively or negatively affect the area.
  • Noise – check whether the property is near busy roads, trainlines, factories, etc., or is under a flight path. If you can, visit at different times of the day, when noise levels may be more evident – especially at rush hour!

Choosing the Right Property

The following points should be considered to help you choose the right property for you: –

  • Type of property – what is the best type of property for you – a new build or period property, a detached house, apartment, bungalow, etc.?
  • Accessibility – do you need to consider any mobility difficulties, e.g. is there a lift or only stairs?
  • Size – is the property going to be big enough if your family grows?
  • Freehold or leasehold -leasehold properties restrict the number of years you are able to occupy a property. They are more popular in apartment blocks and thus bought by first time buyers who are likely to be younger, rendering the restriction less impactful.

There is reform is afoot to make it easier to extend a lease.  With freehold, you own the entirety of the property, including the land it sits on. When you buy a flat with share of freehold, the lease on the property comes with a share of ownership of the building. Leaseholders in a block with several properties often choose to buy the freehold between them and so share of freehold gives them more control over the management of the property.

Instructing the Solicitor

Selecting a solicitor that you feel comfortable with is very important and it is advisable to begin your search early on in the process. Citystay Property Agents work closely with local, trusted solicitors who we are confident will give our clients the best service. Please ask your Citystay Property Agent for details.

Your solicitor will: –

  • Receive your formal instruction and verify your identity.
  • Check that the seller’s contract bundle details match your (the buyer’s) expectations. The contract bundle received by your solicitor from the seller’s solicitor will include: draft contract, official copies of Land Registry Title documents, lease (if applicable), management information pack (if applicable), the seller’s property information and fixtures forms, building regulation documents etc.
  • Check property boundaries, access and any restrictions.
  • Advise you of their assessment of the results of any survey report.
  • Undertake searches, assessing results and raising additional enquiries if necessary. Searches include: the Local Authority planning department for future plans or preservation orders affecting the property, the surrounding environment to check for contamination, church repair (chancel) liability; the water and drainage connections and any location specific searches such as a coal mining search.
  • Raise enquiries / request clarification on aspects of the property / transaction, e.g. building regulations or planning permission documentation for works completed on the property.
  • Act for your mortgage lender making sure all their financial and administrative requirements are fulfilled.
  • Negotiate exchange and completion dates.
  • Manage the transfer of monies to all relevant parties, including land registry & stamp duty.
  • Register you (the new buyer) with the Land Registry
  • Undertake post-exchange searches to ensure the property is clear of any legal charge
  • Any other legal work that may be required, e.g. a declaration of trust if there is to be a distribution of shares in a property for example.

Shortlisting Properties

So, you’ve established your criteria, including your budget, the size and type of property you would like and the location you wish it to be in; it’s now time to start your search. A thorough search would include all the major property portals including Rightmove and On the Market, as well as other online and high street estate agents.

Citystay Property Agents provide the ability for you to search for properties by various criteria and will contact you when new properties come to market that match your requirements. On our website you can search for properties in a variety of ways, access a plethora of useful information about properties and the process of buying a property in Cambridge. Having a database of potential buyers, Citystay Property Agents are able to match properties to buyers, sometimes prior to fully marketing the properties online.

Keep in touch with us in order to make sure you hear about properties at the earliest opportunity, prior to others.  (CALL TO ACTION BUTTON HERE?)

An organised, optimal shortlist will include the following: –

  • Further information from estate agents on each shortlisted property.
  • Being dynamic: removing sold or ruled out properties and adding new properties matching your criteria as they come to market.
  • Prompts to arrange viewings, as this is the ultimate test of if you will like a property. Brochures and website pictures and floor plans are nice, but are no substitute for seeing the property itself within its environment, without such things as staged, wide angled photography that can be deceptive.
  • A checklist of questions for a viewing (see later).
  • Comments after viewing of house and neighbourhood.
  • Second viewings: As favourites begin emerge, arrange second viewings to see these properties at a different time of day to your first visit, providing  you a fuller understanding of the property and the area.

Ready to Make an Offer?

Still interested following a second viewing? Then find out what similar properties have sold for in the area, and how long they were on the market for. This will help you pitch your offer price where it is likely to be accepted. As long as you have the funds or a mortgage offer in place you can make an offer. See “making an offer” (link) or later.

Getting the Most out of Your Viewings

To get the most out of a viewing, there are a number of checks you should make yourself and a number of questions you should ask. The following checklist, we trust, will be helpful as a guide: –

  • If the lights are on in the daytime, turn them off to see how much natural light there is.
  • What is the shape of the room/ how will your furniture fit?
  • Is the floor level? If not, is this due to the age of the property or is it something more sinister such as subsidence?
  • Check mobile phone reception in all rooms.
  • Is there enough space to cook in the kitchen?
  • Are there any rooms that can only be accessed by walking through others?
  • Parking: if it’s off-road, are parking permits required? Are there excessive parked cars due to locality, e.g. near a station or tourist attraction?
  • If there is a garden, is it private or overlooked ?
  • Utilities: are all taps, drainage and hot water working ok?
  • Can the heating and oven be demonstrated as working?
  • Are light switches and power points sensibly located and working?
  • Are all timber frames in good repair (see loft if possible)?
  • Are external walls cracked or discoloured?
  • Roof: are there any slipped tiles, or crooked or damaged chimney?
  • Are any ceilings cracked or stained?
  • Is all double glazing intact?
  • Are all external doors secure and working?
  • Are any floor or walls behind furniture or under rugs discoloured or damaged?
  • Is there any woodchip wallpaper or Artex ceilings, as these can be difficult to remove.
  • Are there any signs of damp, such as smell, peeling wallpaper or stains?
  • Which parts of the garden and which rooms get the most sunlight and when?
  • Is there any noise from busy roads, bus routes, trains, flight path, etc.? Remember this can differ vastly at different times of the day and week.
  • If you can, speak to other residents in the area, not just immediate neighbours, to gain a balanced view.
  • Use some local amenities, including restaurants, shops and the park.

Questions you may wish to ask during a viewing

  • How long has the property been on the market?
  • Have there been many viewings?
  • Have there been any offers? If so, have any been withdrawn and why?
  • Is there a chain?
  • How long has the current owner lived here? Why are they moving?
  • Will any furnishing or appliances be left behind?
  • Have the current owners had any disputes with the neighbours?
  • Can I see electrical/gas installation reports?

Making an Offer

The more competition there is within the area you wish to buy, the more likely that other potential buyers will offer the asking price. Local knowledge of the property market is, therefore, key in helping you to decide what to offer. Citystay Property Agents will be glad to share our local knowledge and experience to assist you in this.

When you make an offer, the vendor will consider the following: –

  • Does your schedule fit with theirs? Do you wish to proceed slowly or quickly?
  • Size of any chain, does your ability to proceed depend on the sale of your property?
  • Proof of funds available
  • A written agreement in principle from your lender is advisable.

Price

Estate agents should tell you if there have been other offers, but not what they are. You may wish to offer less than the asking price due to similar properties being sold for less, work being needed on the property, and / or it has been on the market for a long time. In such cases your offer has to reflect what you think the true value is in order to be taken seriously and avoid drawn-out negotiations, by the end of which other offers may come in.

Cambridge is a price-sensitive market and an honest and transparent agent such as Citystay Property Agents will advise on if it is prudent to offer the asking price or exceed the asking price to secure the property you are seeking. Typically, offering above the asking price would only be prudent when the market is buoyant, properties are attracting many offers and are being purchased quickly.

Sealed Bids

Short-term let rentals can be more lucrative than longer term rentals. Landlords can benefit from a higher rental return and the flexibility of extending tenancy contracts on a weekly or monthly basis at your discretion. Short-term lets can also come with increased periods of vacancy, which is why it is recommended landlords also consider long term tenants.

To make the offer, contact the seller’s estate agent, who will manage the process. The offer you submit will be subject to satisfactory survey reports, the terms of the contract and your ability to proceed, including a pre-arranged mortgage offer in principle.

If your offer is accepted in principle, you should to ask for the property in question to be removed from the market and not shown to any other potential buyers. It is worth noting, however, that the seller is not obliged to agree to this.

Other things to consider when making an offer

  • Be quick to respond to any correspondence and have your mortgage approved in principle; the seller and their agent will view you as a favourable purchaser.
  • Note that the survey is in-depth and provides a clear indication of the state and value of the property. Knowing this can ease a lot of anxiety and stress.
  • Once the offer has been accepted, your estate agent will confirm this to you in writing and your solicitor will begin to prepare the contract ahead of the next phase of the process: exchange and completion.

Sale Agreed

Sale agreed is the stage at which your offer has been accepted (subject to contract). Both parties have up until the exchange of contracts to pull out of the agreement, should they wish to do so before the contract becomes legally binding.

At sale agreed your solicitor will begin work on all the legal aspects of the sale and will receive the memorandum of sale from the vendor’s estate agent to confirm acceptance of the offer. You / your mortgage adviser will begin your formal mortgage application.

Exchange of contracts

The formal exchange of contracts agrees the terms of the sale and makes them legally binding to both you and the seller.

For this to take place you will have already: –

  • received a final report from your solicitor
  • finalised and signed your mortgage documents
  • sent your deposit to your solicitor
  • made sure you understand the terms of the contract and asked your solicitor if you were unsure about anything within the contract.
  • made sure that you understand which fittings, fixtures and appliances will be included in the sale
  • signed your copy of the contract

The terms of the sale are now legally binding, which means that your deposit is non-refundable if you change your mind. The vendor is obliged also to sell to you the property at the price you have agreed.

Exchange has now taken place and you can await the completion date with excitement!

Completion

The date of completion is the date the money is transferred from you to the vendor, completing the sale, and the property legally changes hands.

Completion is often four weeks after exchange although it can be mutually agreed to suit all parties.

Your solicitor will transfer all necessary funds to the seller’s solicitor, after which you are the legal owner of your property.

Once funds have transferred, you can collect your keys, usually left with the estate agent. Keys can only be released upon confirmation from the seller’s solicitor that they are in receipt of agreed funds. Photo ID will be required in order to collect your keys.

Moving Day

At Citystay Property Agents we understand that although exciting, moving properties can be very stressful. The more prepared you are, the less stressful it will be. We are pleased, therefore, to offer the following tips on how to prepare for the day to minimise any anxiety involved.

Planning your move

  • As soon as you know the date of the move, book a removal company, if applicable. Citystay Property Agents have secured favourable rates with reputable local removal services. Contact us to find out more.
  • Arrange for children and pets to be looked after if necessary.
  • Book any necessary time off work, both for the move and a brief settling-in period if possible.
  • Although not always possible, having the luxury of moving over the course of a few days can make things easier at each end and provides a good opportunity to decorate or clean your new home while it is empty.

Prior to move day

  • Clear out opportunity: throw away, recycle or donate everything you don’t want or haven’t used in years, leaving you less to move and stress about.
  • Pack up: don’t overload boxes as they will be harder to transport. Label each box carefully with its contents, the destination room in the new home and if  it is fragile.
  • Dismantle furniture: bag up screws and label accurately.
  • Have an “essentials” box, containing bed linen, towels, toiletries, mobile phone chargers, a small toolkit and any medicines required on your first night in your new home.
  • Plan remaining meals: use up the food in your fridge and freezer in the week before the move.
  • Prepare a handover for the new homeowner: include such things as location of white goods manuals, heating instructions, location of fuse board and stopcock, your new address and phone number for forwarding post. A welcome card and a bottle of wine are a nice touch!
  • Contact relevant service providers and regular deliveries.
  • You may also wish to set up a redirect service via the Post Office.
  • Bills: cancel any standing orders or direct debits you have set up for services you will no longer be using, and make sure that all accounts are settled.
  • Insurance: ensure you have home and contents insurance in place for your new home. This should have been in place from the date of the exchange.
  • Storage: if it is necessary for you to move anything into temporary storage, it may be best to do this during the week building up to the move.
  • Update documents: contact the DVLA and UKPA to update the details of your driving licence and passport.
  • Change of address: inform your friends and family your new address, and consider arranging for post to be forwarded to your new address by Royal Mail.
  • Arrange for internet access at the new property. If you leave this until you have moved in, you may have to wait several days to enable internet access in the new property.

The day of the move: as you leave

  • Check and double check: carefully check your existing home before you leave for anything left behind. Check the attic and every cupboard in every room.
  • Essentials kit: your bag of essentials should be packed and to hand. Keep this with you throughout the move.
  • Clear the fridge: take any food that is worth keeping in a cool box and eat or dispose of the rest.
  • Removal company: if you are using one, double check the removal company has two correct addresses and your phone number.
  • Shut down: switch off all appliances and the heating.
  • Meter readings: check and make a note of your meter readings.
  • Keys: lock up your old house and leave the keys wherever specified, usually with your estate agent.

Moving day: arriving at your new property

  • Collect your keys: your estate agent can only release the keys upon confirmation from the seller’s solicitor that they are in receipt of funds. You will need to bring photo ID with you to collect your new keys.
  • Account for every box: check with the removal company that each box, bag and item of furniture is unloaded and placed in the allocated room, and that nothing has been damaged in transit.
  • Removal lorry: double-check the removal vehicle before it leaves to make sure that nothing is left inside.
  • Power and water: check all your utilities are working. Make sure you have electricity and hot water.
  • Stock up on essentials: put any food you have brought with you into the fridge or freezer, and make a trip to the local shop to stock up any essentials, such as milk and bread.
  • Do not rush: take your time unpacking to avoid damage.
  • Take a logical approach: get the larger items of furniture in place first, and focus on the most important tasks first, such as building your bed.
  • Tidy as you go: flat-pack boxes and stack them neatly as you empty them.
  • Meet the neighbours: introduce yourself to any neighbours you see on the day.
  • Meter readings: take meter readings and make a note of these.

How to avoid potential problems

Citystay Property Agents are here to help you through each step of what could otherwise seem like a very complicated buying process. We work closely with trusted solicitors and mortgage brokers who we are confident will serve our clients well, thus helping to minimise any major problems.

Being well prepared is key to avoiding delays, which can happen especially when many people are involved, a lot of money is exchanging hands, and multiple documents require sourcing and checking.

Common Issues

Delays getting a mortgage
  • Buyers need to be prepared for what they must provide to a lender well in advance of the application. It is necessary for buyers to evidence their income, their expenditure and their affordability, both now and in the future. You should speak to a mortgage and protection consultant to fully understand what is required so you have time to collate all the necessary documentation and avoid unnecessary delays.
  • Citystay Property Agents work closely with trusted mortgage consultants who can help you  establish how much you can borrow, what all the costs are likely to be, including Stamp Duty, and how much it will cost you on a monthly basis.
Estate agent and solicitor
  • Choosing an experienced and recommended solicitor, not just the cheapest, can help avoid any problems.
  • The estate agent you are working with when buying a property will have been chosen by the seller and will be working on the seller’s behalf. Courtesy and professionalism will help to keep the process running smoothly. If you are beginning to feel pressured, then let your solicitor know.
  • In extreme cases, where you feel you have a genuine complaint to make against your solicitor or the estate agent, you can raise it with the relevant ombudsman.
Seller and other buyers
  • Even if you have met the seller and have a good relationship with them, they can still change their mind without notice. They may suddenly decide not to sell, or your offer may be gazumped by a higher bid from another interested buyer.
  • Buying a property can be very emotional, but you cannot force the seller into a decision. Likewise, you may not want to enter a bidding war.
The lender’s valuation is less than the price agreed
  • The property is deemed to be worth less than you are intending to pay for it, the lender may decide not to lend you the money you have asked for. In such a circumstance, the first thing you should do is to talk to the seller’s estate agent, and try to negotiate a lower price in line with the valuation.
  • If your revised offer is rejected and you still want to buy the property at the agreed price, you will either have to come up with the extra money as part of the deposit or you may need to find a different lender. However, any new mortgage provider may agree with the initial lender’s valuation and the same outcome could reoccur. You then need to decide whether you want to proceed with the purchase. There may be good reason that the property is said to be worth less.
Getting caught in a chain
  • In lengthy chains, a sale several links up or down the chain may need to be finalised before everything else can begin to fall into place.  Although not always feasible, there are solutions:
    • A seller within the chain may move into temporary accommodation so their buyer can proceed with their purchase and the chain is not broken. Our sister company, Citystay Ltd, are the leading providers of such accommodation within Cambridge.
    • Another option to keep the chain going may be for a buyer in the chain taking out a bridging loan so they can buy their new property before selling their current one.
    • These solutions are not always feasible, and chains can sometimes reach an impasse, resulting in the whole process needing to begin afresh.
Damage to the property
  • Buyers property insurance can be taken out from the date of exchange of contracts from which time, the seller should alert you to any damage that occurs, and claims can be made on the policy.
Survey issues
  • A detailed survey may bring up significant issues that could affect the value of the property. These then will have to be discussed with your solicitor prior to any progression taking place. Such issues may not be insurmountable but will require addressing.

The costs involved in buying a property

The cost of the property

The largest expense, covered by the sum of your deposit and the amount you borrow from the lender (your mortgage), unless you are buying the property outright.

Keep in mind the following additional cost before putting all your money into a deposit to keep monthly payments at a minimum.

Fees

  • Mortgage product fees can range from £0 to over £2,000 (at time of writing)
  • Mortgage broker or IFA fee
  • If you are using an independent financial adviser or a mortgage broker, there may be a fee for this service.

Legal fees

  • You will require a property solicitor or licensed conveyancer.
  • Solicitors might offer fixed fees, charged by the hour, or take a percentage of the property value so it is important to know what the fees are likely to be from the beginning.
  • Citystay Property agents work closely with trusted solicitors who are transparent with their fees from the beginning.
  • A good rule of thumb for seeking any professional service is to get three quotes.

Lender’s valuation fee

  • When you have had your offer accepted, your lender will commission a surveyor to value the property to make sure it is worth what you are paying for it. Sometimes covered in the mortgage package, but if not specified you should enquire how much it will be. Usually  hundreds of pounds.

Stamp Duty Land Tax (SDLT)

  • SDLT is a tax paid by the buyer of a UK residential property when the purchase price exceeds £250,000.
  • This is likely on most purchases in Cambridge.
  • The stamp duty rate ranges from 5% to 12% of the purchase price, depending upon the value of the property bought, the purchase date and whether you are a multiple home owner.
  • For more information on these updated rates and for help calculating the amount of SDLT you might owe on residential properties, use GOV.UK’s stamp duty calculator.

Survey and Searches

Survey

The mortgage lender’s valuation is a cursory assessment of the property’s value that assures them you are getting value for your borrowed money. For a more in-depth survey, an independent survey from a registered Chartered Surveyor should be used and cost in the region of £250 to £600 or more depending on the size, age and type of property.

  • A Condition Report is the most basic, and generally only suitable for modern properties in good condition
  • A RICS home survey level 2 is more detailed but non-intrusive, so will identify surface level issues only. A Homebuyer’s report is the most detailed survey you need when buying a leasehold property.
  • A RICS home survey level 3 is the most comprehensive survey and therefore more costly, but advisable if you are buying a freehold house, especially if the property is very old, listed, unusual or in need of repair. The structure will be thoroughly assessed including in the attic or under the floorboards.

Searches

Your solicitor or conveyancer will arrange the searches, assess the results and report on their findings to both you and your mortgage lender.

Searches are checks of: –

  • the local authority planning department for future plans or preservation orders affecting the property
  • the surrounding environment to check for contamination
  • church repair (chancel) liability
  • the water and drainage connections
  • any location specific searches such as a coal mining search.

The cost varies depending on in which local authority you are buying. You will typically pay between £250 and £300 for searches.

Insurance and Income Protection

  • Home insurance falls into two categories; buildings and contents. You can buy them together from one insurer or separately from different providers. Home insurance provides important cover for your buildings, contents and personal possessions against loss or damage.
  • Buildings insurance is usually a requirement when taking out a mortgage and is usually required to be in place on exchange of contracts. However, extra insurance covering items such as contents, personal possessions and family legal protection will help to meet all your home insurance needs.
    • If you are buying a leasehold property, the freeholder of the building will often be responsible for buildings insurance and will pass the premiums on to you through the service charge. You will need to check this in your lease before you buy. Specialist landlord’s building and contents insurance is available if you plan to rent your property.
  • Critical illness cover, life insurance and income protection: it is prudent to consider what will happen if you are no longer able to cover your mortgage repayments due to losing your job, suffering illness or injury / death. Citystay property Agents work closely with trusted financial advisors who can advise on this. Contact us to ask.

Ongoing Payments

  • First mortgage payment: this may be larger than the scheduled monthly payments, as you may complete mid-way through a month.
  • Utility bills and council tax: if you have moved into a larger property, your energy bills and council tax may also be larger.
  • Moving costs: hiring a professional removal company can save a lot of anxiety and hard work.
  • Citystay Property Agents can suggest good local removal firms. Call us to ask.
  • Decorating and refurbishing: the expense of buying new furniture and redecorating needs to be considered.
  • Additional costs: you may choose to professionally clean your new property before moving in, and you may want to change the locks once you have moved in. Citystay Property Agents can pass on preferential rates on both these, contact us for details.
  • If you are moving into a brand-new property you may also need to pay for connecting a telephone line.

Government and other purchase schemes

There are several schemes available that have been set up to make buying a home more achievable if you are finding it difficult to save for a deposit.

Shared ownership

  • Shared ownership schemes provide buyers the opportunity to buy part of a property from the owner, and pay a reduced rent on whatever is outstanding.
  • Under this scheme, the buyer will usually buy between 25% and 75% of the property, leaving the landlord, usually the council or a housing association, to own and collect rent on the rest. The owner’s monthly payment will partly cover this rent and partly go towards the mortgage taken out to buy their share in the property.
  • Over time, the buyer can purchase an increasingly  larger share of the property until they own it outright. At this point they will continue to pay off the mortgage, but will no longer pay any rent.

Part exchange

  • If you already own a home but are looking to purchase a new build property, you may be able to take advantage of a part exchange incentive that some developers offer. This will appeal to many people looking to move home, as it means you can buy a property even if you have not yet sold your existing one.
  • In these cases, the developer becomes the buyer of your home, for which they pay a market-related price. The price should be based on independent valuations. The developer usually then sells your old property at a later date.

Difference between leasehold and freehold

There are two fundamentally different forms of legal home ownership: freehold and leasehold. The difference can be between a home that is worth buying and one that may not be. If you own a leasehold property it is important to be aware of the time left on the lease. Short lease terms, those below 80 years, can affect the value of the property as well as a potential buyer’s ability to secure a mortgage.

Extending the lease during the sale

  • Many leasehold extensions are carried out during the sale process so a maximum sale price can be achieved. As a vendor you will need to carry out a leasehold valuation in the same way highlighted above.
  • Between the exchange and completion stages of the purchase, your solicitor will inform the landlord of the wish to extend the lease and offer a price for doing so, based on the leasehold valuation. This means that the buyer can take over the application, rather than having to wait two years before they are entitled to begin the process themselves.
  • Buyers should seek independent advice so that they can renegotiate the agreed purchase price if required.

Freehold option

  • You may also be interested in acquiring the freehold of your property, or a joint share in the freehold of your building with other owners. Since 1993 leaseholders have been entitled, with certain stipulations, to do this whether a landlord wishes to sell or not.

Leasehold and Freehold Reform Act

The new Leasehold and Freehold Reform Act is now law but yet come into effect. The current laws thus remain until the government decide when to implement which parts.

Once in effect, the Act will strengthen existing leaseholder and consumer rights by: –

  • Giving leaseholders greater transparency over their service charges .
  • Making it easier and cheaper for leaseholders to take over management of their building.
  • Extending access to redress schemes for leaseholders to challenge poor practice.
  • Speeding up the buying and selling of leasehold properties by setting a maximum time and fee for home buying and selling information.
  • Diminishing the existence of leasehold properties by banning the sale of new leasehold houses.

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