There is a lot of choice when it comes to arranging your mortgage: which lender to choose, how to repay it, how the interest is calculated and so on. You should do plenty of research online if possible before choosing a lender to meet with. Whichever lender you choose they will require a valuation and survey of the property you intend to purchase before formally offering you a mortgage on the property. We need to check your identity when we start working with you to comply with anti-money laundering regulations, but we are also required by your lender to obtain proof of your identity on their behalf.
If you are buying a property with a mortgage
- You must tell your lender the full purchase price of the property
- You must also tell your lender the details of any incentives that may have been offered to you by the seller. For example, some developers offer a discount on the purchase price for a quick completion
- If you fail to tell your lender about any discounts offered this can constitute a criminal offence and could result in any mortgage offer made being revoked
- Ensure that you also let your conveyancer / solicitor know about any possible discounts that may have been agreed so that these can be confirmed with the seller’s conveyancer / solicitor and the correct procedures can be followed
- You must tell your lender and your conveyancer / solicitor if any part of the balance of the purchase price is being provided by a third party, either by way of gift or loan•If by way of loan, both you and the third party will need to confirm whether it is intended that the third party have the benefit of a charge registered against the property. The mortgage lender may object to such an arrangement but, even if they agree it, they are likely to require your conveyancer / solicitor to ensure that the charge in favour of the third party ranks second to their own mortgage. This would mean that, if you were unable to maintain the mortgage repayments and your lender took possession proceedings, the lender’s mortgage would be repaid before the money owing to the third party
- If by way of gift, your conveyancer / solicitor would need to obtain from the third party written confirmation that they intend the money to be a gift, and to provide a copy of such confirmation to your lender
- Once you have received an offer of mortgage from your lender your conveyancer / solicitor must also receive written instructions from your mortgage lender detailing the offer they have made to you and any special conditions that they may have imposed. It is not enough for you to tell your conveyancer / solicitor about your offer. They will not be able to exchange contracts until they have received your lender’s written instructions
Special Conditions: Examples of special conditions that your lender may place on their mortgage offer to you are that an existing mortgage or other loan must be repaid before the mortgage can be completed, that the buyer cannot let out the property without consent or that additional surveys have to be carried out before completion.
Your conveyancer / solicitor will need to satisfy themselves that any special conditions imposed by the lender either have been complied with or will be prior to your completion date.
Your conveyancer / solicitor will obtain your mortgage advance from your lender to complete your property transaction. You will then need to start paying your lender in accordance with the instructions they will give you directly.
Insurance: Your lender will usually discuss property insurance with you. However, you should be aware that as soon as contracts are exchanged the buyer should insure the property (unless the property is leasehold). If a property burns down, for example, between exchange of contracts and completion the buyer still has to pay for the property.
Deeds: Until recently, if you had a mortgage then your lender would keep the title deeds until the mortgage was paid off. However, recent changes at the Land Registry mean that titles are now stored electronically. This reduces the need for mortgage lenders to hold deeds as security as their charge is also registered in electronic format. Because Registration of Title is now compulsory throughout the UK this results in old deeds having no legal value and so they may be kept by you. Any other documents relating to the property (for example the lease) can also be sent to you.
We have put together a Guide to Moving Home, a PDF copy of which you can download by clicking here. The Guide covers everything you need to know about the buying and selling process. Alternatively contact us here or email movinghome@tsplegal.com to request your free, no obligation, quotation.
