factors-bridging-loan

What factors do bridging loan lenders consider when approving a loan?

If you are considering making a bridging loan application, (typically because you are looking for funds to help bridge the gap between selling and the completion of an existing property that you have, and having the money in order to facilitate the brand new home) then it is worth making sure you are completely clued up as to the lending criteria bridging loan lenders will be assessing you on when deciding to approve or decline your application.

As one of the leading bridge finance brokers in the country, we have decided to put together a clear, concise guide to this criteria, in order for you to make the best application possible and therefore improve your chances of being accepted for this type of line.

Do you have an exit strategy?

When you make an application for a bridging loan, you will have to provide the loan provider with an exit strategy, which will be assessed. What we mean by exit strategy is when and how you will be able to make prompt repayments on the loan that may potentially be granted to you, this will also be dependent on the type of bridging loan that you have applied for too. For example, if you are looking to get access to an open bridging loan, then it will not be a requirement for you to provide an exact repayment date to the lender, however, do keep in mind that you will need to repay this loan back usually within a three year time period, and you must assure the lender that it is financially viable for you to do so. On the other hand, if you apply for a closed bridging loan, you will need to provide an exact repayment date for the lender, this will typically be when you have managed to sell your property and it has reached completion.

The type of property

Another factor that loan providers will be assessing when deciding to approve or decline you for a bridging loan is the kind of property you are intending to use the loan for. Whilst most property types (whether it be flats, houses, shops, office, parking spaces, hotels, guesthouses, bars) can all be taken into consideration for a bridging loan, you may find that it is the case that the interest rate and charges are better for those which are secured against residential property. The type of information that the lender will also require on a building you are intending to buy, or if you are using the loan for refinancing purposes include:

  • The tenure of the property - whether it is freehold or leasehold
  • The purchase price of the property
  • The value of the property
  • The cost of works (if you are intending to buy and then refurbish the property in or to sell on as an investment)
  • The estimated value of the house once these refurbishment works have been carried out
  • The proposed works that are to be carried out

Age of the applicant

As is the case with almost every type of loan on the market, the age of the applicant will be taken into account, and this will be a minimum applicant age of 18 years old and could be higher than this dependent on the lender. In some cases, there can also be a maximum age limit for one to be able to apply for a bridging loan.

Employment status

Another factor that will be considered by a bridging loan lender will be your employment status. Generally speaking, bridging loan applicants tend to be property developers, so a lender may be assessing their previous projects in order to determine how likely it is that they would be able to make prompt repayments at the end of the term for the bridging loan. If you aren't a property developer and are applying for a bridging loan for the very first time, then the loan provider will be wanting to make sure that you have sufficient funds and a stable enough income in order to pay the loan back when the time comes. For example, if you are constantly applying for payday loans to maintain your finances, you are far less likely to receive an approval for your bridging loan application.

Sufficient collateral

One of the main advantages of bridging loans is the fact that lenders do not necessarily always take into consideration your credit history (however, this is not necessarily the case with all bridging loan lenders, so you should definitely check with the lender in question prior to making an application if you feel that your credit score may be an issue).

This can be a huge plus when so many other types of loans available on the market tend to focus very heavily on whether or not your credit history is good or bad, and can often be the deciding factor as to if your loan application is approved or declined.

On the other hand, what most bridging loan lenders do require you to have is to have sufficient collateral in order to make sure that you will be able to make repayments at the end of the term. The collateral that you will have will be usually the property assets that you have, and these can be secured against different property types including commercial, residential and in certain cases land and building plots.


tips-for-getting-new-home-christmas

Tips for getting in your new home by Christmas

As a bridging loan lender, we understand how long the process can be of trying to sell your existing home and being able to quickly move into your new home.

Many people struggle with being able to get a mortgage in place quickly enough in order to purchase the home of the dreams they have just discovered, which is why it is becoming increasingly popular to opt for a bridging loan, which can provide you with the funds you need to secure the property.

There are a number of other ways in which you can take steps to get more organised when it comes to the moving process, and it could very well be possible that you can sell your existing property now and still get moved in by Christmas, providing that there aren't any huge complications along the way. But how exactly do you go about achieving this? Look no further, we are here to help. Take a look at our guide that will get you on your way.

Make sure your home is sale ready

One of the key aspects of making sure that your home can be sold as quickly as it possibly can be is ensuring that is is definitely 100% ready for being sold. This is particularly important as there are certain things when it comes to the buying and selling process that takes time and which you have no control over, therefore it is key to take charge of the things you can sort out yourself quickly and efficiently.

There are different steps you can take to ensure that your property is ready to be sold. This includes perhaps giving tired and slightly mucky walls or ceilings a lick of paint in a neutral colour, having a huge clear out through the entirety of the property to ensure that you have freed up some space (space is regularly highlighted as a selling point by both estate agents and buyers themselves) and sort out any problems regarding mould or broken taps and other small issues.

Is the price right?

It can often be the case that a property remains on the market for a considerable amount of time purely because it has been priced wrongly. Therefore, if you are keen to get your house sold speedily, don't make the mistake of overestimating the value of your property. Ways in which you can avoid doing this include making sure that you consult the advice of a number of different agents - we recommend at least three or four- to provide you with a valuation of your home. Remember to not get wooed simply by the agent who provides you with the highest value of your property, as if you want it to sell quickly, it must be in line with prices on the market at the time.

From the comfort of your own home, you can also get an estimate of the valuation of your home by checking out Zoopla's house prices tool.

Research surveyors

So perhaps you have found your dream home, but you are aware that you need a survey carried out before you can go ahead with the property buying process (the only exception is if it is a new build which is under an NHBC guarantee). Usually, this can be quite a time-consuming process, but there are ways you can cut corners without compromising on the quality of the survey. We recommending contacting several reputable surveyors beforehand and check their availability in order to ensure they can survey the house quickly so you can move onto the next step.

Is your paperwork in order?

When it comes to both the buying and selling process relating to property, you can guarantee that it will involve a considerable amount of paperwork. Get ahead of things and make sure that if you need to reapply for an existing mortgage deal as you are considering taking the loan with you to the new property, you have the paperwork all ready. That will mean that you need to ensure that you have all the details ready for this application, including:

  • Bank statements
  • Employment contracts
  • Tax returns
  • Payslips

Quick turnaround for completion

You should try to agree on a quick turnaround for completion if you want to get the keys to your new home before Christmas. That means ensuring that you outline when you would ideally like your completion date from the very beginning of the process so that it means that both you and the buyer completely understand the date you are working too.

Generally speaking, completion will occur around two weeks after the exchange has taken place, but it is definitely possible for this to take place far sooner. Depending on the circumstances, it may even possible for keys to be exchanged on the very same day!

Sign up for a good selling agent

To get your home snapped up as quickly as possible, make it one of your top priorities to research selling agents in your local area and make sure they are signed up to the major property portals. This is a very important point, as it is estimated that over 90% of all prospective buyers start their property search online. As a result, if you want to get your house sold and move into a new property during the festive season, then check the selling agents is signed up on sites such as Rightmove and Zoopla.


tips-moving-town-to-country

Tips for relocating from city to country

You may well have decided that now is the time to up sticks and move out of the city and reside in a more tranquil environment in the countryside. Perhaps this is why you have applied for a bridging loan, or are considering applying for one in the not-too-distant future in order to bridge the gap between receiving the funds for the city property you are currently living in up for sale, and so you can still be able to put down a deposit and buy that much-longed-for home in the country. If you are still in the process of looking for a brand new home in a quieter place elsewhere, we've put together a guide things you should take into consideration when looking for a place in the country, as the last thing you want to do is to make a very costly mistake.

 

Know what you can afford

Don't get too caught up in the excitement of leaving the chaos of the city- the ram-packed commute, high pollution levels and extremely busy streets- and forget what it is you can actually afford elsewhere. After all, the point of leaving the city life is surely to improve your quality of life. Consequently, be clear before starting the house hunt on what it is exactly you can afford to buy. It is recommended that you consult the services of estate agents of the home you currently have in order to get accurate valuations of your home.

You should also look at speaking with other mortgage brokers (from different companies) about what you can buy in the country realistically speaking, by taking into account not only your household earnings but also what you would also make from the sale of your existing home. If you find yourself in a situation where you think you may not be able to receive your mortgage in time (for example, you have found a dream home at auction, and your current house has as of yet not been sold) then this is also the time to look at respectable bridging loan companies who may be able to help you in the short-term.

Be practical

It goes without saying that whatever town or village you decide to pick, it is one that is practical for you. This means taking into consideration things as whether or not the place has good transport connections so that you can easily get to work, whether it has good shopping facilities, as well as how well it does for social activities (think gym, restaurants or pubs). Another thing to remember is to check how good broadband connection is. As so many of us are increasingly reliant on all things technology, it could end up becoming a nightmare staying connected in a small desolate village.

Research the schools

Perhaps one of the main reasons that you are considering moving is because you have children, and some of the local schools you have looked at in the countryside have wowed you with their amazing Ofsted inspection reviews. This is all well and good, but you should verify with the individual schools in question or contact the local council in order to make sure it is actually possible for your kids to be enrolled there. Don't assume automatically that it will be the case that they will be able to go there purely because of where you will be situated, this is because not all counties across the UK will have exactly the same catchment-area requirements.

Be realistic

This relates reasonably strongly to the practicality category. If you are addicted to the urban life and are obsessed with all the things associated with it, then don't fool yourself that you are going to be super happy deciding to move to the middle of nowhere, as you are going to sorely miss all the things you have become accustomed to. Nevertheless, if you are still dead set on moving outside the city take into consideration the following:

  • Where exactly do your friends and family live, do you want to live near them and see them regularly? If you do, would this be feasible in the area that you have chosen, or would it be easy for others to reach you?
  • Where do you work, and how long are you willing to commute for? take into account not just the long summer days and nights, but also the freezing cold winter months too
  • What are your hobbies? Will you still be able to do those things in the area that you have chosen?

Think about others

If it is not just you who will be making the move from the city to the country, then you should take into consideration your partner or children into these plans for the future.

Try before you buy

Perhaps despite considering all of the above points, a part of you (or potentially others who would be settling for life in the country with you too) is a little hesitant still about upping sticks, but yet you still can't let the idea go. In this scenario, it may well be worth trying before you buy. What we mean by that is, is deciding to rent a house in the area you are looking at purchasing a property in for a few weeks, maybe months, and then making your final decision afterwards. Or you could decide to get an Airbnb for just a week. Whichever choice you make, it may help to quell fears and make you far surer about the ultimate decision you make.


how-brexit-has-affected-house-prices

How has Brexit has affected house prices?

As the day when Britain officially leaves the European Union growing ever closer (this will take place on 29th March 2019), and with uncertainty as to what the outcome of this will be (talks of a no-deal Brexit continue to permeate) what exactly will become of house prices in the UK as a result of Brexit? As a bridging loan lender, we understand just how important it is to you as a property developer or potential homeowner the impact of house prices can be, so we have taken a look at what the effect has been on property prices across the country since the EU referendum result and what is predicted to happen too.

 

UK house growth in July

The Guardian reported earlier this summer that UK house prices had grown at the slowest rate recorded in the last five years. London was the most affected, as a result of not only economic uncertainty provoked by the Brexit referendum, but also many households feeling the financial strain.

According to Nationwide's monthly report, annual price growth had slowed to just 2% in June, from 2.4% in May. This has been the lowest recorded rate of growth since the same month in 2013 when house prices rose by just 1.9%.

In London, the average price of a home in the capital had fallen by 1.9%, to £468,845. Nevertheless, it still remains by far the most expensive area in the UK to purchase property. It isn't only the uncertainty of Brexit that has caused problems for the London housing market, for it has been hit harder than other regions due to a number of different factors, including much stricter mortgage criteria that is in force, weak wage growth as well as the higher rate of stamp duty that has been implemented since 2016, which has impacted a far higher number of sales in the capital than in other regions of the UK.

Overall, it is anticipated that house prices will rise in 2018 by about 1%, which is a decrease from 2017's total over 2.6%.

In terms of longer-term predictions, PWC has estimated that house prices will rise by about 3% until 2025, with this being partly provoked by Brexit uncertainty.

 

Will there be a London house price crash?

Housing market specialists have warned that in the next coming months it could very well be possible that the capital will end up having a house price crash, driven by the fear that Britain could end up leaving the European Union next march without a deal.

In a poll conducted by Reuters in August, surveying over 30 analysts it was estimated that prices will fall in London by 1.6% this year, and 0.1% in 2019. This has been largely attributed by the prediction that international buyers typically attracted to buying property in the capital are going to be put off purchasing houses, due to the lack of decision making as it stands when it comes to Brexit negotiations.

What's more, analysts have stated that they believe there was a one in three chance of there being a 'significant correction' or even worse, a full-blown crash if there was a no-deal Brexit in 2019, which could cause serious trouble for UK homeowners. The problem is, the odds of the UK leaving the UK without a deal are on the rise, due to growing opposition to Theresa May's Chequers plan. Adding to this high inflation rates, rising interest rates and ever increasingly stretched household finances, this may be a recipe for disaster.

The chief executive of specialist home loans company Octane Capital, Jonathan Samuels, stated in an interview with Homes and Property earlier this year that: “A no-deal Brexit could make international business and overseas buyers extremely nervous, at least in the short term”.

“Given that the London property market is heavily exposed to big business and international buyers, if both begin to retreat in the event of a no-deal Brexit, prices in the capital could suffer disproportionately.

He also added that “the London market is already reeling after a period of overexuberant growth, and a chaotic exit from the EU has the potential to accentuate this.”

Could Brexit help first-time buyers?

On the other hand, if there was a London house price crash, it could work to the advantage of first-time buyers. With house prices having continuously risen way above household incomes, making it impossible for many first-time buyers to be able to purchase a house in the capital, a crash could make it far easier for this to happen.

 


why-londoners-are-quitting-the-capital

Why are so many Londoners quitting the capital?

Where you aware that in the last decade, the number of people deciding to pack their bags and leave the capital to head north has increased dramatically? in fact, it is estimated that it has more than tripled in the last ten years. According to Hamptons International, over 30,000 people in London decided to purchase a house outside of the city in the first six months of 2018. That equates to a rise of more than 16% compared to the year previously, and overall house price growth has led to a 61% increase in the number of people based in London deciding to leave and go elsewhere since 2008. So what has led to this growth? We take a look at the different factors contributing to the rise.

 

Where are Londoners moving to?

It was reported in The Guardian in December last year that nearly every single part of England and Wales last year saw an ex-Londoner move there to start a brand new life, up 14% from the decade previous and at its highest overall level since 2006. The research by agents Hamptons International has revealed that city dwellers are increasingly using the profits they have made in London to spend on much larger properties up north as well as in the Midlands, as they are able to get much more for their money compared to what they would receive in London. It is thought that compared to just one in 17 in 2008 deciding to leave the city for the north or the Midlands, this has now risen to almost one in five.

For example, it is estimated that the average property buyer from London leaving the capital will spend around £424,610 for a new property elsewhere, often through using bridging finance. According to The Guardian, this is the equivalent of paying for a large detached house in a pleasant area of Birmingham, compared to just being able to purchase a two-bed flat above a supermarket in east London.

However, whilst there has been an influx in terms of the number of buyers in the north and Midlands in the last decades, it is still the case that the majority of Londoners decide to move somewhere close to the city. Over 38% of leavers decided to move to the south East, and 30% to the East.

Why are Londoners moving?

There are a number of different factors that all seem to be leading buyers to decide to up sticks and move from the capital. Here are some of the main reasons why:

The cost of property

As most of us are aware, the price of property in the capital is extremely high compared to elsewhere in the country, and this has been widely stated as the main reason so many people are leaving London to buy property elsewhere, especially when salaries have not been rising in accordance to inflated property prices. According to Zoopla, the average homebuyer can expect to pay a staggering £477,000 for a property in London, far higher than in other parts of the UK such as the north and in the Midlands. With affordability being such a huge problem, it comes as no surprise that other areas of the UK have become more appealing to home buyers.

Stamp duty charges

Another reason that has been led a number of people to leave the capital has been the heavy costs of stamp duty for second-movers. Hamptons revealed that they have seen more people decide to upscale and buy a larger home much quicker than they would usually do in order to avoid having to pay more stamp duty on further moves as they trade up. This has then led more homeowners to look at heading up north due to the lower prices of stamp duty. For example, if buying a detached home in the south of England, a prospective buyer could end up paying around £14,780 in stamp duty costs, whereas if they were purchasing property in the north, this would be around £5,358, a considerable drop in price.

Difficulties for first-time buyers

It has also been revealed that the number of first-time buyers who live in London deciding to then purchase a property outside the capital has doubled in the last five years, rising from 16% in 2013, to now over 31%. This is largely due to the issues first-time buyers have faced being able to afford to purchase a home in the capital, with over one in three young adults in the city finding it impossible to be able to buy their own property in London.

Who will this end up affecting?

Of course, lower house prices and better value for money in other parts of the country makes the move from London to elsewhere advantageous for city dwellers. But what effect does this have on those, not from the city? Experts are concerned that this rise in demand elsewhere in the UK is going to then lead to a spike in property values in these areas, with people having less disposable income than those coming from London.

Take for example the fact that the typical Londoner buying a property outside of London spends on average 1.6 more than homebuyers from other regions in the country. Furthermore, in more than seven local authorities that are on the border of Greater London, it was now the case that more homes were bought by leavers than local residents, and around one in six homes in the East is now estimated to be bought an ex-Londoner.

In terms of the exact effect this will have on the property market value in these areas, only time will tell.


what-is-mortgage-refinancing

How does mortgage refinancing work?

When deciding to take out a bridging loan or not, it can be common for property developers to decide as a strategy to refinance their bridging loans once they have reached the end of the loan term. But what exactly does this mean when it comes to mortgage refinancing? We explain in further detail everything you need to know about this strategy.

Mortgage refinancing explained

In the simplest of terms, refinancing your mortgage is when a borrower who has taken out an old loan (this may be a mortgage or a bridging loan) to then exchange this for a brand new mortgage term, interest rate as well as also potentially a new mortgage term too. Some may decide to get a new mortgage with their existing lender or decide to refinance their mortgage with a new lender entirely.

You can also refinance bridging loans to help with your mortgage. A property developer may decide to opt for a second charge bridging loan in order to secure it against a property already has a mortgage outstanding. This is an option for those who are perhaps interested in raising funds in order to help carry out a renovation project (for example, to build an extension, create a loft conversion or other property improvement projects). This is because your main mortgage isn't being repaid, and you do not need to worry about early repayment charges that could be incurred due to the second charge bridging loan take out which is enabling you to raise the required funds.

 

How do I find the best mortgage refinancing deals?

If you are interested in the possibility of mortgage refinancing, then it is worth making sure that you are fully aware of:

  • The percentage value of the home that you want to borrow against (the LTV ratio)
  • What the current estimated value of your property is
  • The annual income that you or anyone else who will be named on the new mortgage will be

You should also figure out what type of mortgage you would like to compare when it comes to mortgage refinancing. For example, consider the following:

  • Tracker mortgages: this type of mortgage means that the mortgage rate that you pay is set a percentage above the base rate that has been created by the Bank of England (or your lender's standard variable rate). What this means for you is that if interest rates increase or decrease, the same will go for your mortgage repayments too
  • Offset mortgages: that means your savings account and mortgage are combined together. In this scenario, that means the money which is in your savings account is counted as an overpayment (on a temporary basis) for your mortgage. This has the potential to save you a considerable amount of money over time when it comes to interest paid.
  • Fixed rate mortgages: with this kind of mortgage, the interest rate is fixed for a period of time. In the majority of cases, this will be for a period of between two and five years in total. This can be a great option for you if you want to have the comfort of knowing exactly what your repayments will be costing you each month, without changing as a result of interest rates going up or down.

 

Is refinancing the right option for you?

It is worth noting that making the decision of mortgage refinancing is not the best decision for all homeowners. Some may consider mortgage refinancing to:

  • To cut down on costs: some homeowners may choose to refinance their mortgage in order to benefit from lower interest rates overall or lower monthly repayments. It is estimated that almost half of all borrowers in the UK are in fact paying more than they need to on their mortgage
  • Raising money: it can help to release equity in your home which can be particularly usefully if you are looking to consolidate existing debts or alternative release money for home improvements.

Who can consider mortgage refinancing?

Providing that you already have an existing mortgage, and meet the criteria set by the mortgage lender, you can be eligible for remortgaging. It may be particularly pertinent to you to consider mortgage refinancing if you are coming to the end of a discounted deal you were receiving, or are coming to the end of a fixed rate period on a mortgage.

 


selling-property-this-autumn

How to get the best price for your house this autumn

When it comes to the property selling market, it has traditionally been the case that it tends to be considerably less busy over the summer months. However, as we approach nearer the end of the warmer season, it is now the best time as a seller to get your property prepared for being sold as we approach the commonly popular time to sell a house: autumn. But what can you do to ensure that despite current economic uncertainty, your house still manages to be sold at a decent price? For example, according to property experts Rightmove, overall asking prices in August this year had dropped by 2.3%, with the biggest decreases in price being in the South East of England and London. Keeping these statistics in mind, we give you the very latest news on everything you need to know about selling a property this autumn.

Concerned now isn't the time to sell?

The previous statistics provided by Rightmove may have you concerned that your wish to sell a house this autumn might end up being scuppered, however, there is no need to be alarmed.  Take into consideration the fact that transaction levels have remained steady throughout the summer months in the UK this year (HMRC recorded a transaction level of drop at just 0.8% between the months of June and July) taking into account the fact it has also been a record-breaking year for summer sunshine. The reason this matter is that typically over the summer, transaction levels drop and then increase once more as the temperature falls. In fact, according to the HMRC, in 2017 the most popular months for sales was September, October and November, as people return from their summer holidays and go back to work. Consequently, putting your house on the market during this time is one of the best things you can do if you want to get your house sold.

The time it takes to sell a home

When it comes to prospective buyers, and it is common for them to be particularly eager to speedily complete on new property purchases once autumn begins, as a way of getting in on purchases prior to the festive season starts. What this means in reality in terms of the time it takes to sell your home, is an estimated eight weeks to receive an offer, then once the offer has been accepted you can expect that the completion of the sale will take a further 12-14 weeks.

Getting the best price for your home this autumn

As it stands, the summer month's decreased transaction levels weigh in favour of the buyer as opposed to the seller. Nevertheless, there are a variety of ways in which it is possible for you to increase the likelihood of selling your home for the best price. We take a further look.

Carefully select your agent

Don't make the mistake of picking the very first agent you come across. Not all are the same, and some will have a much better chance (based on their experience) of selling your home at its optimal price. As a rule of thumb, we recommend that you speak to at least three local estate agents (based upon having read reviews and recommendations by friends or family members) prior to deciding which one you will select to help you sell your property.

It is also worth checking out online agents too, not just those on the high-street. There are a number of different advantages to using the former (such as they're tending to be significantly fewer fees, for example). So you should carefully weigh up as to whether this is the right option for you.

Avoid excessive alterations

You should always keep in mind when it comes to selling your home that it is offputting for the majority of buyers to find a property that they have difficulty considering as a blank canvas. Consequently, now is not the time, in an increasingly competitive market, to make unnecessary alterations to your home when you are considering putting it up for sale. Remember to keep it simple, and keep the space light and tidy.

Select the right buyer

Always remember to treat your buyer seriously, especially in a housing market when it is becoming ever more popular for buyers to figure out ways to knock down the property's value in order to obtain a better deal. This means paying extra attention to them and their needs. You should be making sure you know where exactly your buyers stand in their chain, as well as if they already have a mortgage arranged, or have arranged to get bridging finance. In the event that you have more than one buyer vying for the property, ask plenty of questions so you can make an informed decision as to which one has a greater chance of staying the course through to completion.

Make sure your paperwork is sorted

If you know you are going to put your house up for sale this autumn, sort out all the relevant paperwork ahead of time. For example, make sure that you have an up to date energy performance certificate read for your property, and as you are more than likely to also be moving onto a new home too, ensure that there aren't any underlying financial problems on your side of things that could prevent the property sale going through or being delayed this autumn, which could end up becoming extremely expensive to rectify at a later date.

 


what-is-classified-new-build

What is classed as a new-build?

Due to the lack of property available across the country, the UK government is currently heavily incentivising new build homes, as well stating that in the next five years it aims to build over one million more new build homes. But what exactly is meant by a new build, and what is classed as one? We take a further look so you can make a more informed decision as to whether or not purchasing a new-build property is the right step for you.

What is a new build home?

In the simplest terms, this is defined as a property that has been yet to be purchased (it can still be occupied during this time_ within the first two years of being constructed, refurbished or converted. The new-build definition also extends to properties that have been bought off plan.

What are the benefits of new build homes?

There are a number of different potential benefits when it comes to deciding to purchase a new-build home. Here are some of the main reasons:

  • The flexibility you have: as it is a new-build you do not have to worry when it comes to buying the process of being part of a chain, which can take a considerable amount of time and can also be quite stressful. It also means you have the flexibility to move at your own pace when it comes to sorting out the sale, and you have the flexibility when it comes to moving in, as you do not need to worry about waiting on buyers involved in an upward chain
  • It comes with cover: it is possible that it is registered with the National House Building Council (NHBC) which will mean that you will be provided with a 10-year warranty and protection scheme too, which can help to provide you with peace of mind. There are also other companies that can provide insurance and warranties for new build homes, such as BLP
  • Low maintenance: one of the best things about new-build homes is the fact you do not have to worry or get stressed out about maintenance, repairs or decorating when you first move in. In fact, it could mean that this kind of work will actually take place a few years down the line.
  • Security: as a result of the high building standards now in place for all new-build homes, you can be safe in the knowledge that the property is safe. For example, most new-builds come with locks on doors and windows, fire safety, security lighting and in some places entry phones
  • Getting in early: a number of housing developers and builders provide properties off plan, which means you have the potential to reserve your dream home prior to it being built. Furthermore, you could also end up potentially benefit from equity growth before you've even moved into the property if you manage to buy off plan in a location where house prices are on the rise.
  • Bills are less expensive: another positive of new build properties relates to the reason that new builds are usually built and fitted with the very latest energy efficient appliances. That means then for you as a homeowner, they will most likely be cheaper to run than older properties, and they tend to be triple glazed or well insulated.

Schemes for new build homes

As well as potentially taking out bridging loans, there are support and schemes available for buyers who are interested in purchasing a new-build property.

Help to Buy

There are two parts to the Help to Buy Scheme. This is an initiative that enables first-time buyers and existing homeowners in England to buy a new home or an older property. There are also schemes that work in a similar way in Wales, Scotland and Northern Ireland.

It is worth noting there are two parts to the Help to Buy scheme:

  • The equity loan: this can only be taken out for new-build homes only, and requires the buyer to have a deposit minimum of 5 per cent, with the government then providing a loan equal to 20 per cent of the value of the property.
  • The mortgage guarantee: the second part of the Help to Buy scheme is where the government provides lenders with the opportunity to buy themselves a guarantee on mortgages (available for both new-build properties and older, resale homes too). That allows mortgage providers to then provide a greater number of high loan-to-value mortgages to borrowers as a result of this kind of insurance.

Starter Homes

Another government scheme pertains to the Starter Homes initiative.  This is a pledge by the government to build thousands of homes at a discount to first-time home buyers who are between the ages of 23 and 40. However, at this moment in time, there have been no properties been built.

Shared ownership scheme

With this scheme, buyers who fit the eligibility criteria are able to purchase a percentage of a property (anywhere from 25 per cent to 75 per cent in total) of a new -build house from a local housing association. Over the course of time, they then pay rent that relates to the percentage of the property you do not own. Eventually, you will end up owning all of the property.

Increasingly, developers and house builders are offering their own incentives to buyers. These may include any of the following:

  • Paid deposit
  • Part-exchange deals, where your existing home is bought from you by the developer and then sold on
  • Assisted sales, i.e. helping you to sell your existing property
  • Free fixtures or fittings
  • Paid Stamp Duty Land Tax
  • Cashback

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What does a conveyancer do?

Are you not entirely sure as to what a conveyancer is and what role they play exactly? We've broken it into steps to make it easier to understand and so you know exactly why you are paying them.

The role of the conveyancer

If you have just accepted an offer on a brand new property, the first step will usually be to ask for the help of a conveyancer in order to help you deal with the purchase. In the majority of cases, this will be a solicitor but you can also choose a property lawyer or a licensed conveyancer. Whichever you choose, you should always ensure they are regulated by either the Council for Licensed Conveyancers or the Solicitors Regulation Authority.

Opening the purchase file

The first thing a conveyancer does is open a purchase file and sends a letter to you requesting information from you such as your basic details, details of your estate agents, if you need a mortgage to purchase the property and if you do, where the deposit is coming from (perhaps through a bridging loan) and who is the lender. You might at this point also be provided on a fixed fee estimate based on the information given. However, it is worth noting that this price could be subject to change if the legal work becomes more complex further down the line.

Requesting a fee for searches

On average, you should be budgeting around £300 for Local Authority searches to be carried out by your solicitor. Local Authority searches help to detect any potential problems, like compulsory purchase orders or any outstanding enforcement notices for the property which can sometimes take a considerable amount of time to be processed.

Contacting the estate agent

Your conveyancer will be contacting the estate agents through which the property is marketed to get a memorandum of sale, otherwise known as a notification of sale. This information provides the solicitor's details for both parties involved. The next step for your solicitors is to contact the sellers in order to inform them that they will be acting on your behalf to purchase the property.

Receiving the seller's solicitors paperwork

Once the draft contract has been written by the seller's solicitor it is sent to your conveyancer alongside a copy of the 'Deeds' (also known as the tile). These will usually be electronically recorded and available online through the Land Registry, providing that the home has been sold once since 1990.

Your conveyancer will also be sent what is known as 'protocol documents' :

  • A Fittings and Contents form: starting what will be removed or left in the building
  • A Leasehold Information Form: if the property is a leasehold (a flat or an apartment are the most common types_ then it will set out things such as contact details for the management company and rent payable
  • A Seller's Property Information Form: this is any information that the seller must tell the buyer. This may include things such as when the boiler was last serviced, or if there are any neighbour disputes.

Carrying out checks

One of the most important tasks your conveyancer will carry out on your behalf is going through all of the paperwork in order to see if there are any problems or questions that should be raised with the seller's solicitor. For example, this could be to do with flood risks or a discrepancy on the Deeds. Things like this tend to be lengthy and complicated, taking a matter of weeks.

Exchange and completion

Once you have provided a deposit of 10% of the purchase price to your conveyancer, they will now arrange with you a date in which you can arrange to move into your new home which is known as completion. Before this is finalised, it has to be agreed with the seller's solicitor too, as well as any other parties along the chain. Once a date has been mutually agreed upon, the conveyancer then helps to sort out a date in which contracts can then be exchanged.

The exchange is the part where the purchase of the property now becomes legally binding, it will be up to the seller's to release their contract ready for exchange, at this point the conveyancer can help to organise the process of exchanging contracts. The deposit at this point is then paid to the seller through your conveyancer's account.

The final completion statement

One of the final stages of the property buying process, your conveyancer will now send you the final completion statement. it is at this point also that you must pay the outstanding balance due for the property.

This includes things such as disbursements (the charges a conveyancer pays to third parties such as management company fees or Stamp Duty on your behalf) as well as the cost of the legal work that has been undertaken, and the balance of the mortgage amount.  It is worth remembering the funds in question must have cleared in your solicitor's account prior to completion taking place. If you have paid money in advance for things such as search to be carried out, these will be deducted from the balance at this point.

Registering change of ownership

The final stage involves the conveyancer organising the change of ownership, which must be lodged with the Land Registry. After completion, the signed Deed is sent to your conveyancer who will send this to the Land Registry for this to be registered alongside the mortgage deed, usually electronically. However, if its the first registration (e.g. its a new build) then the application will have to be posted.


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How the Scottish homebuying system differs to England's

When it comes to the property buying market, gazumping unfortunately still presents itself as a big problem in England and Wales, and each year leaves potentials buyers out of pocket by the thousands, in fact, according to Zoopla it is estimated to cost potential homebuyers almost £270m each and every year as a result of failed housing transactions. According to the estate agents Countrywide, it is estimated that the practice of gazumping effects over 3.6% of all properties bought, which is a six-year high. However, the practice is far less common in Scotland due to the differences in their homebuying system. But what exactly are these differences? As one of the country's leading bridging loan lenders, we explain the fundamental differences between each of the homebuying systems.

Risk of gazumping

If you are selling a property in England or Wales, it isn't a legal requirement for sellers to stop marketing a property once they have accepted an offer from a buyer, and as the exchange of contracts can take up to eight weeks (which is when the home buying has become legally binding) it means there is a very real risk that another buyer may jump in and give a higher offer.

Whilst not illegal in Scotland, gazumping is far less common due to the homebuying system in place, as houses are usually taken off the market as soon as a price has been agreed upon. In addition, unless the original offer has ended up falling through, solicitors have to decline to act for a seller if they end up accepting a later offer from another party.

Upfront information about the property

Whereas in England and Wales the only upfront information that must be provided when it is marketed is its energy performance certificate (EPC) in Scotland, nearly all residential properties must have what is called a 'Home Report' before it can be put up for sale.

How the property is priced and who markets it

It is commonly the case for properties that are up for sale in England and Wales to be marketed by independent estate agents at an advertised price. However, this works differently compared to Scotland's practice. Here, it is rather solicitor firms as opposed to independent estate agents who are the ones who are most commonly responsible for marketing properties. The reason why this is mostly the case is that in Scotland, the majority of residential conveyancing firms also have an estate agency department too. Furthermore, there is another difference too: homes in Scotland are either marketed at a fixed price or as offers over a specified amount,

Making an offer

Another difference between home buying schemes in Scotland is how a potential buyer can make an offer for a property. When a home has been marketed in Scotland as offers over a specified price, the bidder then 'notes an interest' with the seller's agent. What this means is that the bidder will now be notified if there is a closing date for offers that is set by the property owner, and at this point, the noting of interest does not mean the bidder must put in an offer at this point.

Moreover, buyers have to submit a date of entry when they would pay for the property and collect the key, as well as provide a sealed bid, which is done through the solicitor by the closing date specified.

At this point, whoever is the successful bidder (and it isn't necessarily the case that the seller of the property has to choose the highest bid that has been put forward) then starts the negotiation process in order to finish the contract.

With Scotlands fixed price system typically used when the property market conditions are more difficult and the seller wants a quick sale, it is always the first person to provide the stated selling price who gets the property.

Whereas in England and Wales, an offer is accepted by a seller subject to contract, which is an agreement that in itself is not legally binding. That means until contracts have been exchanged (the process of which can take around two months to sort out) either party has the possibility of withdrawing without any penalty incurred. In some cases, the seller never even takes the home off the market, in the hope that there are other potential buyers who could end up making a higher bid, which in turn leads to gazumping.

Exchange and completion

As it stands in England and Wales, there exists no legally binding agreement until contracts have been signed, meaning that either party could withdraw at any point from the sale. This may happen for a number of reasons: for example, an insufficient mortgage offer, a change of heart, problems in the survey, or just simply a change in circumstances.

However, this is not the same case in Scotland. It is commonplace for the seller's solicitor to inform bidders on the same day whether or not their bid has been successful. If they are, then the buyer's solicitor will then get mortgage confirmation, agree on a date of entry and then deal with legal property enquiries.

Instead of a single contract, there are a series of 'missives' ie, formal letters that are changed between solicitors on both sides. The process can take between one day and four weeks, and the deal becomes legally binding once these missives have been concluded, with the seller having to give the legal title to the buyer.