Find an attractive property, secure the mortgage, get the keys, move in, put the kettle on and relax. Wouldn’t it be nice if it were that easy?
Instead, it’s likely that someone is actually living in the property already, and not only that, hard-earned money that has probably taken a decade to save needs to be handed over when they are asked to move along. If that weren’t enough, someone’s got to ensure the property is structurally sound and that all the big, bright and bold things to fill that new house are affordable. Not forgetting the taxman; he’ll want paying too.
Many of us have been there and experienced that it can be a bit of ‘pain for pleasure’. So as the lender, how can you help your customers when they purchase their new home? Can you make the process smoother or faster? How can you ensure that they get the right mortgage for their needs and means?
Coming up, we’ll look at the property purchase journey in some depth. Firstly, let’s cover some basics.
Having decided that moving is right for them, it’s time to work out what they can afford. They may start by looking for mortgage deals online, which could involve a price comparison website or money advice service. Whilst they may book an appointment with their bank first, mortgage brokers are increasingly popular source for home loans. As part of this, they’ll have to go through an affordability check to see what they can afford. This will involve supplying reams of paper-based information including photographic ID, payslips, and bank statements – hardly the most automated or satisfying of experiences.
Getting a good deal is very rewarding, but even a good deal is no good if you can’t afford the mortgage throughout the life of the loan. For example, for an interest-only mortgage, it’s critical for finances to be ready ahead of time, in order to clear the balance at the end of the term. Recent research from the Citizens Advice Bureau shows around 934,000 homeowners with interest-only mortgages are nearing the end of the term and have no way to pay the balance. So it pays to plan, and to help consumers to plan, the advice you can offer is invaluable.
Closing the deal
Having found a suitable property, the next step is to have it surveyed, and lender requirements as well as the type of property will determine just how detailed the survey needs to be. Prices can then range from around £250 for the most basic to upwards of £600 for a more thorough structural survey.
By now, a solicitor will have been instructed for the conveyancing work to check whether anyone else has rights over the property or if any unexpected legal nasties could rear their head. On behalf of the buyer, the solicitor will also register the land and transfer the funds on completion of all checks and after the exchange of contracts – so it’s easy to see how the process becomes an object lesson in spinning plates.
Oh, right, the cost
Buyers sometimes feel ambushed by the stamp duty on homes over £125,000, which is most of them. Legal fees will add £500–£1,500 (with £250 on top for search fees), and the cost of any CHAPS banking transfers, usually under £50, has to be covered. In addition, there could be extra costs associated with the mortgage including booking and arrangement fees, and possibly an account fee. Additional costs all need to be factored into the consumer’s budget, and as a good lender you will keep them properly informed of this. In general, responsible lenders will help borrowers arrive at the sort of arrangements that maintain peace of mind over the life of the mortgage, making for healthy, loyal customers.
The first sleep
After all the hoops that they have jumped through as a homebuyer, they’ll never forget the moment when they were handed the keys. It’s well worth the first night’s sleep, even with boxes filling every room.