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A guide to help first time home buyers navigate the house buying maze.
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PAD Financial
3 Newsham Road Sheffield
S8 9EA
0844 443 4770
www.PADFinancial.co.uk
First Time Buyer
Property
Finance
Guide
Welcome Thank you for requesting a copy of our guide
to purchasing a property. We hope that you
can use this guide hand in hand with the
advice from your PAD Financial advisor to
make the house buying process an enjoyable
and straight forward one.
The house buying process is a long and
complex one, but you need to start
somewhere and our aim is to advise you
about the journey you have ahead of you
and what you need to do before, during and
after you have bought your house.
First Things First
If you are looking to purchase your property
with the help of a mortgage, there are certain
things you can do to make yourself as
attractive as possible.
Any lender, bank or building society wants to
know who they are lending to and if they have
ever experienced any form of credit in the
past. An applicant that has a good credit
history is far more likely to be offered a
mortgage than one that has little or no credit
history.
There are a few important things that you can
do to ensure you can show you have the
ability to be good with credit:
• Register to vote - if you appear on the
electoral register, the lender knows that
you are at the address on your
application.
• Use credit and make payments on
time - this can be in the form of a credit
card, loan or hire purchase. Many people
are sceptical of taking out credit due to
the interest costs involved and the fact
that they do not trust themselves with
the facility. However, think about this
for a moment. You are asking a lender
for a loan of tens of thousands of
pounds, so you have to be comfortable
managing a few hundred pounds. If you
manage it correctly, you can built your
credit up, not get charged interest and
perhaps even earn cash back.
• Mobile Phone - using a mobile phone
on a contract is a contractual credit
agreement and as long as your monthly
payments are made on time, it will be to
your benefit.
• Postal Bank Statements - in this age
of technology, most lenders encourage
you to bank solely on line and have all
your statements sent electronically to
you. However, when it comes to
assessing you for a mortgage, these
same lenders want to see that your
bank statements arrive at your home
address.
• Check your Own File - using a firm
such as Experian or Equifax will allow
you to view your report and you will be
able to see what its good points or bad
points are. Discuss this report with
your advisor to find out exactly what it
all means.
• Delink from past relationships - you
can write to credit agencies asking to be
delinked from any ex you had a
financial relationship with. This will
stop their credit having an impact on
you.
• Amend errors - If you think that you
file shows a mistake, you can ask the
lender to correct it. If they refuse, you
might be able to add a notice of
correction to the file and perhaps
complain to the Financial Ombudsman.
• Cancel unused cards - if you have no
problem using credit and could maybe
be accused of using to much, you
should look to cancel the cards you no
longer use or try and cut back on them.
If you have any concerns over your credit
history, maybe in the form of:
• Missed / Late payments
• Unpaid phone bills
• Previous rejection
• Defaults
• County Court Judgements (CCJ)
you should speak to your advisor about
possible solutions.
1
Buying a house takes careful budgeting.
You need to know all the costs involved
before you go ahead and they are not
always obvious. The main things to think
about are:
Stamp Duty
This is the tax imposed by the
government on purchased property (or
when there is a change of owner) only –
i.e. you don’t pay tax on the property
you’re selling, just the one you’re
buying.
Stamp Duty is taxed as follows: -
These figures are correct at time of press. Please visit our website for updated figures. Figures in brackets apply to first
time buyers only.
Solicitors / Conveyancing Fees
These are the fees charged by your
solicitor to perform all the legal duties
associated with buying a house. PAD
Financial work with a panel of local
and national firms and can help with
finding you a suitable legal
representative for your purchase. The
more expensive the property you are
purchasing the higher their fees will
be. Additional charges will be
incurred for leasehold properties and
more complex conveyancing. The
cost you pay will generally be
determined by the price you are
paying for the property and typically
equals around £3 -£4 per every
£1,000. So a purchase of £200,000
might typically cost £600 - £800.
However, you will have to pay VAT on
top of this and the cost of the
searches.
Purchase Price of Property (£)
Stamp Duty Payable (%)
0 – 125000 0 (0)
125001 – 250000 1 (0)
250001 – 500000 3 (3)
500001—1000000 4 (4)
2
1000000 + 5 (5)
Searches
Carried out by the solicitor, these are a
safeguard to ensure all aspects of the
property are in order. Some items which a
search might investigate are as follows: -
• Property renovations/alterations
• Location of local Coal Mines
• Flood/ subsidence risk
• Local housing market etc
The cost incurred through instructing
Searches can vary dependent upon the
location and company used. However, your
legal representative will be able to give you a
breakdown of the searches they recommend,
the searches that are required by the lender
and the cost of them.
On some occasions it may be possible to take
out insurances and not carry out a search.
This can be useful if you are in a hurry.
Removal Fees
Some people prefer to do this themselves,
either by hiring or borrowing a van. But from
personal experience, it’s far easier to watch
someone else carrying your sofa than trying
to do it yourself!!!
It is advisable that you obtain at least 3
quotes before finally choosing a removal firm.
The quotes will be based upon the distance
between properties, the amount of furniture,
any extra insurance, time required and
the number of individuals to complete the
job.
Arrangement Fees
These are the fees charged by the Lender
and/or the broker to cover the administration
costs associated with the set-up of the
mortgage account. Arrangement fees can
vary dependant upon the product and can be
up to 2% of the loan amount. Typically those
products which are fixed, or have low
discounts have higher arrangement fees.
However, many Lenders will allow you to add
the fee to the mortgage in order to make it
more affordable.
Budget
Booking Fees
These are very similar to arrangement
fees, however, they are used to gain a
greater level of commitment. For example,
if you were to pull out of a product with an
arrangement fee, it is likely your money
would be refunded. However, if it was a
Booking fee instead, your money would not
be returned as it was used as a “deposit”
to book that rate. The cost can vary but if
charged it can be anything up to 2% of the
loan amount.
Withdrawal Fees
In the current climate, some lenders will
look to charge an additional commitment
fee which could be payable up front or if
you withdraw for any reason.
Advisor Fees
There is a lot of work that goes in to
advising on the best deal for you and then
liaising with the lender, solicitor and estate
agent to ensure that everything happens
as it is supposed to. For this reason it is
likely that your advisor will charge a fee for
their service.
Survey Fees
There are three main types of survey,
giving different levels of information to the
potential borrower.
• Standard valuation
This is a basic valuation for the sole use
of the lender to ensure the property is
adequate security for the loan.
• Homebuyers report
This is a more comprehensive survey,
and can be used by the buyer as
another tool in the decision making
process. This is instructed by yourself
through the lender, and therefore
creates a legal relationship between you
and the surveyor. Unlike with a standard
valuation where no such relationship
exists. Expect to pay around double the
cost of a valuation.
• Full structural survey
As the name suggests this is the most
comprehensive survey available. It is
instructed by you in a similar fashion to
a Homebuyers report, and therefore has
the same legal implications. However,
in addition to the Homebuyers
report, it will detail any maintenance
which is required on the property.
Expect to pay around double the cost of
the homebuyers report.
Upfront Service Charges
These are the charges made by the
management company of flats/apartments for
the maintenance and general up keep of all
public areas such as corridors, gardens.
These are often paid in 6 monthly intervals
and can come as quite a surprise when you
first move in, so be warned, check what these
fees are and when they are due.
Furniture
For most people, this is an expense which is
spread out over a period of time and so
doesn’t really enter into the immediate
equation. However, for first time buyers with
no furniture, this could well be a very large
expense, and must be budgeted for,
depending on the amount and the quality of
the furniture required.
3
Personal Budget Planner
Booking Fees
It is vital that you also plan your own budget as once you have bought your property, you will
have some very big commitments, some of which you may not previously have had to pay. These
will include your mortgage, your home insurance, council tax and your utilities, but there are
many other things that only you will know what you spend your money on.
Please complete this budget planner is as much detail as possible and discuss it with your adviser.
It will help you plan what sort of mortgage you can potentially afford so that your house does not
become a prison and you are still able to enjoy life.
Monthly Income Total Montly Expenditure Balance
Your Basic Salary Total Commitments Monthly Income
Partners Basic Salary Total Everyday Monthly Expenditure
Guaranteed overtime Total Occasional
Pensions
Child Benefit
Income Support
Tax Credit
Other Benefits
Maintenance
Other
Total Income £ Grand Total £ Monthly Surplus/deficit £
Monthly Expenditure
Commitments Amount Everyday Spending Amount Occasional Amount
Mortgage Food Clothes
Home Insurance Phone Holidays
Life Insurance Broadband Cinema
Income Protection TV Alcohol
Council Tax Pet Smoking
Gas Sports Birthdays
Electricity Christmas
Gym Furniture
Pension
Investments
Total Commitments £ Total Everyday £ Total Occasional £
4
It’s common knowledge that moving house is
one of the most stressful events to occur in in
your life. Whether you’re a first time buyer, or
an experienced mover, the number of
considerations to bear in mind sometimes
seems like an insurmountable burden. Here
are some of the things to bear in mind to
make that move go a little smoother.
You will by now have worked out a budget and
been preparing yourself to get out and start
looking for a home. There are now some
important things you need to do.
Speak to an Advisor
Your advisor will discuss things such as the
type of rates available and what is the most
suitable way for you to repay the mortgage.
Agreement in Principle
An Agreement in Principle (sometimes referred
to as a Decision in Principle) is a formal credit
check with a lender to confirm in principle
whether they are willing to lend you the
money you require to purchase your property.
Once you have this Agreement in Principle,
you can offer on a property with confidence
and will be taken more seriously by both
estate agents and house vendors.
Research Locations
Who are you and what are you looking for?
Chances are you will be staying in this
property for some years, therefore you must
establish what factors are important to you in
relation to the area in which you want to live.
Are you a young, single, first time buyer
looking for the buzz of city living, or are you a
couple, about to start a family, looking for a
house in the right catchment area?
It is essential that you research your move
carefully – so here are some top tips: -
• Phone local estate agents to gauge which are the best
areas that meet your criteria.
• Speak to the council. Council officers will know where
money is being spent on better transport, shopping facilities, or schools. They will also know about regeneration projects planned for city centres or run-down industrial areas.
• Speak to the planning department who will know
about proposals from property developers. There will also been announcement for planning permission in
• Drive round the areas at different times of the day
and night to measure traffic noise etc
• Why not try driving to and from work at the
appropriate times. The last thing you want to do is have perfect house and not see any of it because you’re stuck in traffic!!
• Go to www.dfes.gov.uk/performancetables/ to look at
school performance tables.
• Try www.upmystreet.com for information about your
potential location.
Make an Offer
It is wise before you make an offer to find out
who you are bidding against, not only in terms of
what their offers are, but also what their
circumstances are. This way you can try to work
out how high the opposition can go and how fast
they can move. This, combined with your budget
and Agreement in Principle, means you can
decide what your opening bid will be, and where
you set your upper limit.
One point of warning - should the property move
to sealed bids, or when buying at auction, be
careful not to get carried away an exceed your
pre-determined limits- no matter how lovely a
house is, you can’t enjoy it if you can’t afford to
live there.
Offer Accepted
Hopefully you will already have made your
financial advisor aware that you are beginning
negotiations on a property, but it is vital you
contact them as soon as possible once your offer
is accepted.
Your Advisor will then guide you through the
mortgage admin maze and ensure that your
documentation is in order and that everything is
happening as it is supposed to be.
They will discuss the type of valuation you want
and arrange for the application to the lender.
They will then liaise with the lender and keep you
updated throughout to ensure there are no hold
ups and make the process as smooth as possible.
Moving
5
Mortgage Offer Arrives
You should read this very carefully and
consult with your solicitor before
accepting the terms of the mortgage
offer. This is likely to be one of the
biggest decisions you are ever likely to
make, therefore it is essential that you
take a careful approach and fully
understand the details of the loan you are
undertaking.
Make sure you look out for any conditions
in the mortgage offer, do they need any
further property reports to be carried out,
what insurances are compulsory. Speak
to us and get this all sorted as quickly as
possible.
Exchange of Contracts
It is at this point you become legally
committed to the purchase of your
property, and where applicable pay your
deposit to the vendors solicitors. It is
also at this date where all your
insurances should take affect, and you
should instruct your removal firm of your
completion date. Completion can happen
immediately but usually it will be set for a
week or so later.
Completion
CONGRATULATIONS!!! Your solicitor has
sent the remaining payment to the vendors
solicitors and it’s time for you to get the
keys and move in.
The only thing left to do now is let everyone
know you have moved.
Repaying the Money
• Repayment (Capital and Interest) - The
safest way to repay your mortgage. In
the early years most of your money goes
towards paying the interest. Later more
money is used to repay the capital on the
loan.
You should ensure that you have
sufficient critical illness, life assurance
and income protection to cover the loan
• Interest Only - You only pay the lender
interest on the amount you have
borrowed. Be warned, you will have to
repay the money you have borrowed at
the end of the term.
You may have a current investment
backed mortgage, either through an
endowment, ISA, or pension. These
were common in the past, however, due
to stock market instability in recent
years, these have proved not to be the
best method of repayment. As a result,
we will not advise this method of
repayment, and should you wish to
discuss your current situation, we will be
more than happy to advise you of the
best course of action when remortgaging
6
Types of Mortgage Rates
TYPE THE FACTS THE BENEFITS BUT……
STANDARD
VARIABLE
RATE
Your monthly mortgage payments go up and down in line with the lenders standard rate of interest.
You pay less when interest rates are low.
You pay more when interest rates rise, so it’s difficult to budget accurately for your monthly payments.
FIXED RATE
You chose to repay the mortgage at a rate of interest that doesn’t change for a set period of time.
You know exactly what you’ll repay each month; rising interest rates won’t affect you.
You’ll miss out on any savings if interest rates fall, and you might be charged if you repay your mortgage early. A booking fee may also be required.
DISCOUNTED
RATE
The interest rate on your mortgage is discounted from the lenders standard variable rate, usually with a bigger discount at the start.
Lower monthly payments than the standard variable rate. Your payments will decrease if interest rates fall.
Your payments will still go up if interest rates rise.
CAPPED RATE
The interest rate on your mortgage never goes above a certain level during an agreed period – but does go down if interest rates fall below a certain level.
You’ll always know the maximum amount you’ll ever have to pay during the agreed period.
It will often be more expensive initially than a discounted rate mortgage. A booking fee may also be required.
CASH BACK You are given a cash lump sum when you start the mortgage.
You’ll have extra cash to help when you are moving
You might be charged if you repay the mortgage early – and you may have to repay the cash.
FLEXIBLE
You can vary how much you repay each month – you can pay extra, or even suspend payments for a while.
You can pay extra amounts to reduce your mortgage, and build up cash that can be used for future monthly
payments. You can pay more when you have spare cash or reduce / suspend payments when money is tight.
Under payments will be added to
your outstanding mortgage
7
These illustrations are only for educational purposes and do not constitute
advice. Please follow the recommendations of your advisor as to which is the
best method for you.
Property Purchase Ideas
Traditional Property is purchased for a set price. The purchaser buys the house for the agreed price
with a sum composed of mortgage and deposit. The deposit can take the form of a gift from
a family member or savings in the bank. The mortgage is the arranged based on the level of
borrowing needed.
For Example
A man agrees to buy a house for £100,000. He has £15,000 saved in the bank and requires
a mortgage of £85,000. This is commonly known as an 85% Loan to Value (LTV) mortgage.
Vendor Gifted Deposit This method of purchasing is most commonly seen in the new build market, but can be
equally acceptable in the resale market too. In this scenario the person selling the home,
the vendor, would offer to pay the purchaser’s deposit, usually to the value of 5%. In some
cases, this all the deposit needed to satisfy the lender.
For Example
A man agrees to buy a house for £100,000, but has no or little deposit. The vendor offers to
pay 5% deposit or £5,000. This leaves the purchaser needing to arrange a 95% mortgage.
75/25 Split or Shared Equity Common in the new build sector, this is where the builder retains 25% of the property value,
effectively lending the purchaser a 25% deposit. The purchaser can then acquire a 75%
mortgage using the gifted equity share as a deposit. The purchaser must repay the equity
share within 10 years or on the sale of the property.
For Example
A man agrees to buy a house for £100,000 and is offered this deal by the builder. The
builder keeps 25% and the man takes out a mortgage for £75,000. In 5 years time, the man
sells the property for £200,000 and gives the builder its 25% (now £50,000) back.
Guarantor Mortgage This is ideal for a first time buyer (FTB) or someone who for one reason or another at present
cannot afford the mortgage wholly on their own, but due to their career path, should be able
to in the future. In this scenario, the lender will use parental income to underpin the loan
they offer to the FTB. This means that the Parent is liable for the mortgage should the son /
daughter fail to keep up on the mortgage repayments. For this reason, it is advisable that
the guarantor seeks independent legal advice before committing to this mortgage.
Right to Buy
8
When a social tenant wants to buy the house they are in, they can often buy the property below
open market value. It is usually possible for them to purchase the property borrowing the vast
majority and in some cases all of the money needed. Ie. 100% of the discounted price.
Life Assurance
If you were to die without any insurance,
you would leave your family with a
house to pay for, with maybe no means
of doing so. Life assurance would pay off
your mortgage if the worst happens.
All endowment plans and some pension
plans have built in life cover, but if you
have a repayment mortgage, you should
think about arranging separate life
assurance.
Critical Illness
If you suffer from a life-threatening
illness, the last thing you should be
worrying about is returning back to
work. But you might not have a choice.
Your mortgage repayments won’t stop
because you can’t work. Critical illness
protection can enable you to pay off
your mortgage, leaving you to
concentrate on your recovery.
Income Protection
Designed to provide you with a regular
income if, because of sickness or
accident, are unable to work, resulting
in a loss of earnings. Income protection
allows you to choose how soon and for
how long this income is paid, in order to
create a plan to fit your personal
requirements.
Accident, Sickness,
& Unemployment
Cover
Could you still pay off your mortgage if you
lost your job? If you were made redundant,
or if long term illness or an accident
stopped you from working, you might lose
your home. You can take out insurance
against this threat, which meets your
monthly payments if you can’t.
Buildings and
Contents Cover
In most cases, you have to pay for the
cover of the building itself. Mortgage
lenders insist on it. And it’s a good idea to
insure the contents of your home as well.
You can insure against burglary, accidental
damage, loss and many other eventualities.
Protection
9
8 Weeks Before the Move
If you’re thinking of using a professional
mover, get estimates from different
companies. Choose the one that offers the
service you want at a competitive price. If
you’re moving yourself, work out what size
van or lorry you need (see point about boxes
and non-boxable items below) and get quotes
from a range of companies. Make your
reservation well in advance. Make a rough
floor plan of your new house. This will help
you decide what furniture will fit where and
give you plenty of opportunity to sell the
things you won’t need. Kids’ furniture can be
bulky (bunk beds etc). Check to make sure
your new home can accommodate existing
furniture.
6 Weeks Before the Move
Finalise costs and discuss insurance, packing,
loading, delivery and the claims procedure
with your chosen removal company. Decide
what you’re taking with you. Moving time is a
great time for a clear out as it will save you
the hassle of packing and unpacking things
you don’t really want or need. Either sell
unwanted items through classified ads or a
car boot sale, or donate them to a local
charity shop. If you’re moving a long way,
get copies of your records from doctors,
dentists, solicitors, accountants, etc. Make
arrangements to transfer your children’s
school records.
4 Weeks Before the Move
If the removal company is doing all the
packing for you, arrange to have this task
completed a day or two before loading the
van. If you’re moving yourself, work out how
many boxes you’ll need and get hold of them.
Make a list of non-boxable items. Add 15
percent to their combined cubic feet (along
with total cubic feet of boxes to be loaded) to
work out the size of the van you’ll need.
Arrange for storage if you need it.
3 Weeks Before the Move
Assemble packing material, furniture pads,
packing tape, bubble wrap, polystyrene
packaging, nylon packing string and rope,
crumpled newspapers, scissors, utility knife,
large sticky labels, felt-tip markers and
boxes. Begin packing items you won’t need.
Arrange to cancel utilities and services at
your old home and have them installed at
your new home.
2 Weeks Before the Move
Make any special arrangements to move pets.
Consult your vet about how to make moving
easier for your pet. Start filling out your
change of address cards. Cancel delivery
services.
1 Week Before the Move
If you will need a babysitter, arrange for
moving day service.
2 or 3 Days Before the
Move
Defrost your fridge and freezer. Have the
movers pack your belongings. Arrange to have
money ready to pay the driver on moving day.
Set aside valuables and legal documents to go
with you, not in the van. Pack your first-day
handy items box (see ‘Moving day’) to go with
you.
Moving Day
If you’re doing-it-yourself, pick up the van
early. Make a list of every item and box loaded
on to the van. Let the mover know where you
can be reached. Before you sign your
agreement with the mover, read the
conditions. Keep it in a safe place until your
goods are delivered, charges are paid, and
any claims are settled. Check your old house
to make sure you’ve turned off water,
appliances, etc.
Inspect basement, attic and garage. Lock all
doors and windows. Be on hand to answer
questions and give directions to the mover.
Assemble first-day handy items: Scissors,
utility knife, cups, kettle, paper plates, toilet
roll, coffee, tea, milk, soft drinks, soap, pencils
and paper, local phone book, masking tape,
bath towels, large bags for rubbish, toiletries
kit, shelf liner, mobile phone charger, first aid
kit. Check off all boxes and items as they
come off the truck. Install new locks. Make
sure all utilities are connected. Unpack kids’
toys. Be on hand to answer questions, pay the
driver, give directions, and examine your
goods.
GetThisDone
10
Financial/Legal (notify in Writing)
Any other insurance
Bank (including children’s accounts)
Building society
(loan and savings accounts)
Car breakdown cover provider
Car insurance company
(quote policy no.)
Car registration
Credit cards and store cards
Digital/Cable TV provider
Driver’s license
Electoral office (address in telephone
directory under Government section)
Hire purchase companies
Inland Revenue
Life assurance companies
(quote policy no.)
Local council
Local police
(if you have any driving summonses,
etc. pending, or if you are to be a
witness in a case, etc.)
Mobile phone provider
Pension provider (quote policy no.)
Property insurance company
(contents quote policy no.)
Public library
Shares, investments, endowments
Government bonds, etc.
TV license
Personal/Social
Children’s activities
(Scouts, ballet, etc.)
Dentist
Doctor
Employers
Friends
Hospital (for example, if you’re
an outpatient)
Nursery
Neighbours
Other
Part-time, evening and
correspondence courses
Relatives
Schools
Social clubs
Sporting clubs (whether a player
or a member)
House Keeping
Electricity company:
– ‘off ’ at old address
– ‘on’ at new address
Gas company:
– ‘off ’ at old address
– ‘on’ at new address
Water company:
– ‘off ’ at old address
– ‘on’ at new address
Magazine subscriptions
(or anything else regularly received
by mail) – save wrappers with
reference numbers
Newsagent (with date last
paper required)
Post office (pay a fee for
redirected mail)
Telephone:
– ‘off ’ at old address
– ‘on’ at new address
11
Advance
The mortgage loan.
Agreement in principle
Agreement by a mortgage lender to lend a sum of money, subject to certain
conditions.
APR
This is the figure quoted by lenders and reflects the total cost of the loan.
ARLA
The Association of Residential Letting Agents. A self-regulating body for letting agents in
the UK.
Arrangement fee
A fee paid to the lenders for arranging the loan.
Assignment/Assignations of life assurance
The right of a mortgage lender to claim under a life assurance policy to ensure the
mortgage is repaid, if you die, or at maturity.
Building insurance
Insurance against damage to the structure of the building caused by specific events
such as storm damage to the roof.
Capital
The amount of the loan on which the mortgage lender calculates interest.
Capital gains tax
A tax you pay on profits above an allowed level (£8,500) you make from the sale of an
asset such as a buy-to-let property.
Completion or settlement date
The date when the money is paid, the deeds are handed over, the keys are released
and you can move into your new home.
Conclusion of missives
In Scotland, this is the same as exchange of contracts.
Contents insurance
Cover can be arranged for the contents normally in the home and can be extended to
include possessions away from the premises.
Conveyancing
The legal process involved in transferring a property from one person to another.
Deed
The legal papers that show ownership of the house and provide information about
boundaries and rights of way.
Early redemption charges
A fee charged by some lenders if, during an agreed period, you repay the loan or
switch to another lender.
Equity
The difference between the current value of the home and mortgage amount.
Exchange of contracts
The point where your contract and the seller’s contract are exchanged.
Fire and Furnishings (Safety) Regulations
Levels of fire resistance for domestic furniture, furnishings and upholstery that your
property must meet before you can let it out.
Freehold
Ownership of the house and the land on which it stands (see ‘Leasehold’).
Full structural survey
A thorough investigation and report on the home’s structure.
Ground rent
Annual charge payable by a leaseholder to a freeholder.
Higher Lending Charge
An arrangement that covers the lender if your home is repossessed and the lender can't get the
money back from you. You're charged a ‘higher lending charge’ to cover the cost of this insurance.
Homebuyer’s report
Surveyor’s report on a property – less extensive than a structural survey.
Inventory
A comprehensive list of all the items in the property before the tenants move in. You should
check it when they're leaving to see that everything is accounted for.
Land registration fee
A fee paid to the Land Registry to transfer ownership record of the home.
Leasehold
Ownership of the home, but not the land on which it stands. When the lease expires, ownership
reverts to the freeholder.
Letting agent
Someone you pay to deal with the day-to-day running of the property. They will take around 10
-20 per cent of your rental income, but if you don't have time to do the work yourself, it can be well worth it.
Loan to value (LTV)
The ratio, expressed as a percentage, of the amount you want to borrow against the value of
the home.
London Inter-Bank Offered Rate (LIBOR)
The rate of interest at which banks borrow funds from other banks, used to set the rate of
interest you'll pay on an overseas buy-to-let mortgage.
Mortgage
A loan secured on your home. This security will remain in existence until you pay off the loan.
Mortgagee
The financial institution lending the funds secured on a property.
Mortgagor
The person taking out the mortgage.
Remortgage
Changing your mortgage without moving property.
Returnable deposit
A deposit the tenant pays to you before they move in to cover the cost of any damage to the
property and to protect you against unpaid rent. This is repaid to the tenant when they move
out.
Search fee
A fee charged for checking with the local authority for details of any plans that may affect the
value of the house.
Stamp duty
A Government tax that has to be paid on houses with a purchase price of £60,000 or more.
Tenancy agreement
An agreement between you and prospective tenants checked by a solicitor and signed before
you give them the keys, which explains all the rules of the tenancy.
Tenure
A term for the type of ownership of a house e.g. leasehold, freehold.
Term
The length of time over which a mortgage is to be repaid.
Title
The legal right to ownership of a house, as shown in the Title Deeds.
Vendor
The person selling the house.
Void periods
A period of time when you are between tenants and aren't receiving any rental
income.
Terms
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PAD Financial, 3 Newsham Road, Sheffield, S8 9EA tel 0844 443 4770 fax 0844 443 4771 email info@padfinancial.co.uk web www.padfinancial.co.uk
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up
repayments on your mortgage.
PAD Financial is an Appointment Representatives of Home Loan Partnership Ltd which is authorized and regulated by the Financial Services Authority
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