"It is often said that buying a new house is one of the most stressful life events, and this is even more true when you are doing it all for the first time"
It is often said that buying a new house is one of the most stressful life events, and this is even more true when you are doing it all for the first time. Forms, documents, mortgage applications and technical language can all be confusing and it can be hard to know where to start, so we have put together a list of 10 steps to take to make it a little easier:
1 - Know your finances
When, where and what you can buy all comes down to affordability. So the first thing to do is to work out what you can afford. Gather together your pay slips, current and savings account statements and tax assessments. Get updated balances for any loan and credit cards and prepare a schedule of your current income and expenditure. Work out what you can realistically afford to pay each month, remembering to make some allowances for gifts, holidays and savings.
2 - Get good financial advice
Take your income and expenditure to a reputable financial adviser, mortgage broker or your bank and find out what your monthly income and expenditure means in terms of your borrowing power. Be brutally honest with yourself and your adviser - they can only help you find the right deal if they have all the information. Sometimes the best advice is not really what you want to hear. It may not be very encouraging to hear that you can’t really afford any more credit at all, but it is better to find out before you take on a major expense like a mortgage.
3 - Speak to a lawyer
Once you have a realistic idea of your borrowing power, call a lawyer and ask for a break down of the costs involved with a purchase within that price range. The break down provided should include buyer’s legal fees, local searches, stamp duty and your lender’s legal fees. Stamp duty rates vary with the value of the property you purchase, so ask for information over a range of price points. Once you have an idea of the costs you need to meet from your savings, you know how much you can spend. You should also get a positive feeling about the lawyer you choose to work with - building this important relationship begins with the first call or e-mail.
4 - Go house (or flat) hunting - part 1
Most people find this the fun part of the process, but you may also be surprised to see what your money will buy you in Jersey. That said, it is always worth looking at properties slightly above your price range - the advertised asking price is just an asking price, and sellers often accept a lower price. Look at the websites of the local estate agents, register for e-mail updates, and start to get an idea of what is available in your price range.
5 - Go house (or flat) hunting - part 2
Most of the estate agents prepare really good listings and show a variety of photographs on their websites. However, nothing beats actually visiting a property to get a real feel for the place that might be your home. Go on lots of viewings, and be flexible about the type of property and the area you are interested in - looking outside your comfort zone might bring some pleasant surprises. Don’t make an offer on the first place you see - you can always come back to it if the other viewings don’t work out well.
6 - Look at the property and the budget again
Once you have found your dream home, do a second viewing but with a more critical eye. Run the taps, look for cracks and funny smells. Take a look at the parking, access, and how busy the road is. Something you overlooked the first time could turn out to be a deal breaker if you can’t live with it every day.
If you don’t find any deal breakers on your second viewing, look at the budget again. Check the stamp duty and fees, and look at the cost of any renovations you need to carry out. While a little decorative work might not be too expensive, costs can spiral when you start adding in new kitchens and bathrooms, or major building works. Be realistic about what you can afford and when. While you may be able to live with that kitchen for a few months, you might not feel the same about keeping it for three years. Don’t be afraid to ask to take a builder or architect to a viewing if you think that it would help.
7 - Make an offer
This is the nerve-wracking bit - making the call to the agent and naming the price you are willing to pay. The agent will pass this on to the seller, who may or may not give you an answer immediately. If your first offer is rejected, you can always increase that offer, so don’t go straight to the top of your budget from the outset.
8 - Instruct your lawyer and finalise your mortgage application
Once you have agreed a price, go back to your lawyer and mortgage adviser and give them all the details. It is helpful to provide a copy of the estate agent’s details and to put all the professionals in touch with each other. Be realistic about the completion schedule - most property transactions in Jersey can be completed in four to six weeks. Although it might be tempting to try to move in the next fortnight before a holiday, your wedding or Christmas, it will be more disappointing when that can’t happen. Be flexible and work with the other parties in the chain of transactions to find something that will realistically work for everyone. Remember, your lawyer has been doing this for a long time, so trust them if they tell you that something just isn’t possible - there is usually a good reason.
9 - Get on with the paperwork
Lots and lots of paperwork. All the forms, e-mails and documents have a purpose and need to be done promptly and accurately. If you have a question about the purpose of any particular document or the meaning of a question, do ask for help, either from the person who gave you the form, or from your lawyer. Supply all the supporting documents requested (you should have all of these from step 1) and keep checking up on progress.
While your lawyer is carrying out legal checks and searches, your mortgage application should progress. Once your loan is approved in principle, a valuation or survey will be required. Your mortgage adviser will assist in arranging this, and you should review the report carefully. If the surveyor has any concerns, they may recommend that further reports are prepared by an engineer or other expert. While it might be tempting to skip this step, an expert report might provide valuable information about the condition of the property, perhaps even something that would make you change your mind.
You will also need to arrange buildings and contents insurance if you are buying a freehold house, and to fill in forms for electricity, water and gas supplies. It is also worth making a tentative booking with a removal firm, after agreeing the handover time through the estate agent.
10 - Sign up and go to court!
Once all the research is complete, you will need to meet with your lawyer to review the contract of sale and to sign your loan documents. This meeting will probably take at least an hour, so put aside some time when you will not be interrupted. There will be a lot of information to take in, but don’t be afraid to ask questions, both at that meeting and afterwards.
If you are purchasing a freehold or flying freehold property, you will need to go to or be represented in the Royal Court by an authorised attorney. Most first time buyers like to appear personally. Your lawyer will explain the procedure to you and arrange to meet you at about 2:15 pm on the day. Men must wear a jacket, shirt and tie, or they may not be allowed to pass the contract.
Once the contract has been passed before the Court, the property is officially yours and you will be given a set of keys. Of course, you can’t move in until the agreed time, but there is nothing to stop you having a celebratory drink!