Last week we looked at the initial stages of finding a property and negotiating the very best price for your purchase. This week we take a look at the next steps and what happens next.
5. APPLICATION. Having agreed on the best mortgage for your needs, the full application will then be submitted to the lender. This is usually done on line and generally within 10 minutes or so your broker will have the initial stage complete and a Decision in Principle (with the figures nicely redacted of course!) can be forwarded to the Estate Agent for their files. The rest of the application can then be completed and the lender will issue the broker with a ‘shopping list’ of documentation they require sight of. Much of this will be amongst the initial documents that your broker requested at stage 1.
6. SOLICITORS. The process of house buying is referred to as Conveyancing of Title…basically the transfer of the legal ownership of a property from one person to another. A good broker will have many contacts in both local and National legal practices and if you do not have a preferred firm they should be able to offer a choice. The Conveyancer will be working for you and will also through, what is known as dual representation, will be working for the lender.
7. UNDERWRITING. Once the application has been submitted to the lender it will undergo initial checks to ensure that you are who you say you are and will then check through all your documentation to ensure that everything is in order. If you are a First Time Buyer, with a saved deposit, the underwriters will expect to see evidence of a build up of funds. If your deposit is being gifted by a family member, then it will be necessary to evidence where the money has come from and again showing the build up of funds. This may seem overkill, but is necessary to evidence that moneys being used are not the proceeds of any criminal activity and to comply with Money Laundering regulations. Your Whole of Market Mortgage Broker should already have explained this area to you. The lender will instruct a valuation that is purely for the lenders reference to ensure that the property is a suitable property to lend against. If you feel that you need a survey carried out which will give you a ‘warts and all’ picture of your proposed purchase then you will need to appoint a local Chartered Surveyor who is an RICS member.
8. OFFER LETTER. Whilst all of this has been going on the underwriters are making certain that everything fits inside their criteria and assuming that the valuation comes back clean then the application will go to Offer. This is the document that the Solicitor will base the financial side of the conveyance around so it is vital that both you and your broker check through the offer together. At this meeting it is also a good idea to consider various Insurances, including Life Insurance, Income Protection Insurance, Critical Illness Cover and the one insurance that is ALWAYS mandatory, Buildings Insurance. As a rule of thumb, if Buildings Insurance is not DeFaqto 5 star rated and does not have Trace and Access cover included, then it is probably not worth taking out!
As with all insurance policies, conditions and exclusions will apply.