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House Buying in UK – Conveyance and Stamp Duty Explained

When moving house you will hear about conveyance and you may wonder what it is exactly. Essentially, the conveyance is moving of property deeds from one person’s ownership to another person’s. It can also be the granting of the encumbrance of a loan – known as a mortgage to someone else.

The first steps of conveyance are finding a new home to move to or selling your existing home to someone else. When you decide on this you will then need to consult the estate agent to begin selling or buying the property.

Buying House in UK

Of course, the estate agent us all important here and you should always research them before deciding on one in particular. Reputation is extremely important when choosing an estate agent and ensures you get the most for your money and also sell your house fast.

Agents Shortlisted

When you do narrow down a few agents, decide on the specifics and look into the extension of the contract, if there is a no sale, no fee deal, or whether you will have advertising inclusive. Check too and ensure that you can use your solicitor as using one referred from them raises costs.

Of course, if you don’t have a solicitor for conveyance then you will have to go about getting one. With many solicitors offering the service, you can be sure you will be promised much, but once again look into the reputation and other factors before choosing – the Internet is a very powerful tool here.

When complete look for a full detailed quote and check to see if you will be charged should the sale of the property fall through for no reason of your own? Additional charges can also catch people out so also beware of these.

Also, be aware there will be a number of items you will need to give the solicitor, including deeds, land registry details and mortgage information – this is all needed for conveyance.

Conveyance Procedure

The conveyance procedure takes around two weeks to complete and there are a number of checks on the house performed during this period. During this period the buyer or you may want to know things about the property and the sale.

If you are not the buyer, then the other person will use this period to sort out their financial. Surveying also occurs during this period of the process to ensure the house is up to the appropriate standards.

Of course, when this is all cleared you will be asked to sign a contract and will hopefully have been able to sell your house fast without delay. This contract will be exchanged with the other party and the date of completion for exchange will be arranged.

The completed deal is done when the seller’s solicitor receives the money and then the deeds are passed over to the other party. Monies will then be paid to the solicitor and other’s involved and the balance is then received by the seller who will most likely undergo the other side of the process as a buyer now.

Stamp Duty End: What It Mean for First Time Buyers?

On the 25th of March 2012, the stamp duty holiday for first-time buyers will come to an end. Perhaps as a response to this news, the sluggish UK housing market has seen a noticeable surge in first-time buyers over recent weeks, with many rushing to take advantage of the discount. But how will the changes affect buyers? Will it really make that much difference?

Stamp Duty
Stamp Duty

Tax on buying a property: How it works

Stamp duty as it applies to the purchase of a property is also known as Stamp Duty Land Tax (SDLT). SDLT is payable on land and properties in the UK that cost above a certain price threshold, currently £125,000.

The cost of SDLT

For properties that are purchased for between £125,001 and £250,000, SDLT is charged at 1% of the cost of the property. For properties between £250,001 and £500,000, the figure rises to 3%, and for properties purchased for between £500,001 and £1million, SDLT comes in at 4% of the cost of the property. Finally, for properties of over £1million SDLT is charged at 5% of the value of the property.

The end of the stamp duty holiday for first-time buyers

Under the stamp duty holiday rules, first-time buyers have enjoyed an SDLT exemption on properties up to £250,000, but not above. This means that for the duration of the stamp duty holiday first-time buyers could expect to save anywhere from £1250 and £2500- or 1%- of the cost of any property that they purchased for £125,001 and £250,000.

In spite of the end to the holiday, anyone purchasing any property for under £125,000 will remain exempt from SDLT even after the 25th of March.

According to the Council of Mortgage Lenders, the average price paid for a property purchased by first-time buyers came in at £130,000 according to figures from November last year, this means that the average saving on SDLT came in at £1,300.

While this may seem like a significant amount, especially when many buyers are struggling to raise the money needed to get a mortgage, in the context of purchasing a property and the associated costs, it is unlikely to work as a too greater deterrent.

According to one recent report, the stamp duty holiday has saved first-time buyers £319million since its introduction. While it may have eased the burden and served its purpose well, the re-introduction of SDLT is by no means the biggest hurdle facing first-time buyers in a troubled market.

7 Tips Help To Save Deposit On Your First House

According to the latest stats by Which?, most first-time buyers will be looking to get a 90% ‘loan to value’ mortgage. This means having to save up for deposit of 10% on the property value, with the view to getting a loan for the remaining 90%.

However, with house prices soaring and money lending at an all-time low, having to save up for a strong deposit of 25% or even more is becoming increasingly necessary. But there are a few ways you can cut back in the lead up to buying your first home with these simple money saving tips.

Think about moving back to your parents’ house for a while

Moving back ‘home’ to your parents after years of living independently can often seem like a huge step back. Not only do you have to face to the prospect of living under the same roof as your mum’s OCD cleaning and your Dad’s cringe-worthy jokes, but it can also have a negative impact on your social life and relationships.

However, if everyone involved is happy about the arrangement and clear ground-rules (for both parties!) are set in place, then it can be a great way to save money on rent and to enjoy some family time.

Treat yourself for less

Unfortunately, there are going to have to be some cut-backs when it comes to expenditure. Thankfully, whether your weakness is holidays, eating out, luxury goods or the theatre, there are websites out there to offer some savings.

The likes of Groupon and Wowcher offer daily deals from the high-street on everything from trips to Canada to hampers of Canadian Maple Syrup. You can sign up to these websites to receive daily email alerts, helping you to always be aware of their latest deals.

Use cash-back websites

Then there are cash-back sites such as Quidco and TopCashBack that give you back either a percentage or a lump sum of the purchase price when you buy online, whether it’s your weekly shop or an insurance deal. All you need to do is log on to the cashback site and find the retailer you wish to buy from their list. Your visit and the subsequent purchase are then tracked, and the cash deposited into your account.

Cancel your cable/satellite TV package

Another simple cut back is to not renew your cable/satellite TV package. Freeview and on-demand websites make watching your favourite show easier – and cheaper than ever. Alternatively, if you can’t live without that movie fix, then sign up to Netflix or Lovefilm for a fraction of monthly Sky/Virgin costs.

Become a dinner party pro

Organise evenings in with your family and friends instead of eating out. Hosting ‘Come Dine With Me’ evenings means spending quality time with your friends, trying new dishes and saving money all at the same time.

Save money on haircuts

Spend £40+ a month of getting your hair styled? Check out if your local hair college is offering cheaper cuts from trainee stylists. Don’t worry; there’s always a professional overseeing the cut!

Cut your car costs

And finally, often the biggest expenditure after rent is your car. Think; could you walk to work instead of driving? Or is there a car-pooling programme at your work? If your car is due for an MOT test, consider going to a government MOT test center instead, where there is no vested interest in prescribing repairs.

Helping Your Child Onto The Property Ladder

With the instability of the property market and many mortgage providers tightening their belts on lending, it is an undoubtedly challenging climate for people looking to buy a home. Those looking to get their foot on the property ladder have been hit the hardest with many first time buyers finding it impossible to make the first step.

The weak economic climate has led to mortgage lenders protecting themselves by scrutinising all prospective buyers in extensive detail and expecting them to come up with higher deposits than ever to prove their worth.

With only 14% of 20 to 45-year-olds in the UK alone saving for a mortgage, research has highlighted more young people than ever are turning to ‘The Bank of Mum and Dad’ for help with securing their first property.

Some are simply expecting free hospitality to save on rent while they stow away some of their earnings for a deposit but many more are looking to their parents for financial handouts.

It is estimated that nearly 50% of parents have provided or plan to provide an average of £12,800 to help their young ones onto the property ladder.

It is a concern that this can leave many parents worried about their own financial situation as a result of their offspring’s financial reliance. It is a difficult milestone for all parents as naturally, you want to do whatever you can to help your loved ones.

However, we are in an economy where incomes are rapidly being eaten away by inflation making money tighter than ever for many. In this post, we will explore different ways that you can help without putting your own finances in danger.

Consider the options
Many parents fall into the trap of offering lump-sum handouts simply because they do not realise that there are other methods of helping. The truth is that lenders appreciate many parents want to offer aid where possible and have procedures in place to assist them in doing so.

1. Guarantor mortgages basically take into accounts parents’ assets in order to help children borrow more than they would be able to on their own.

Parents (or other relatives) may be given the opportunity to put up extra funds so their loved one can get more from their mortgage – for example, if they could only borrow £80,000, you may wish to stand as a guarantor for an additional £20,000. This does mean that you will be tied in and liable to meet any repayments that they fail to.

2. Joint mortgages consider both yours and child’s incomes and assets; you will be both be named on the mortgage agreement and deeds giving you more control than a guarantor mortgage and possibly helping you to secure a better deal. However, you will still be liable for ensuring that repayments are met.

3. Family offset mortgages are an increasingly popular option for family members looking for alternative methods to help. Many lenders now offer this method which allows parents to offset some of the deposit against their own savings.

Typically the homebuyer will need to raise a deposit of around 5% provided that a family member puts savings of around 20% of the property’s value in a savings account with the lender.

The savings are then linked to the mortgage and you sacrifice the interest that you would have earned in order to offset a percentage of the interest your child will pay, you will, however, be relieved from tax on the interest amount.

Consider buying student digs
For many investors, student accommodation can be a good source of capital enhancement. If it is within your budget then you may wish to consider purchasing a property for your child to live in while they are at college or university.

The property can then be let out other students and the rent charged could be put in a high-interest savings account in order to help contribute towards their mortgage deposit when it is time to buy.

The money that they are saving on rent may also allow them to save some of their other finances to make or you may wish to charge your child a subsidised amount and add this to their deposit savings in order to get them used to meet monthly property payments.

If you had three or four other students paying rent each month, you could potentially save a substantial amount so that the deposit fund is not all coming out of your own pocket. This could also help to get your child used to look after a property.

Let them ‘lodge’ with you
In recent years, figures have shown that the amount of young people residing with their parents has increased rapidly. With house prices high and student debts increasing, moving back in with Mum and Dad seems like the easy option for many youngsters.

Although it is easy to fall back into the routine of freeboard and full hospitality (cooking, cleaning, washing), you should consider how beneficial this really is for both you and your child.

Immediately discuss time frames and goals with them in order to get them to think about what they are trying to achieve from moving back home. If it is to save money for a mortgage or try and get out of debt then considering a time when they would like to have that achieved and making manageable financial goals will help to keep them on track.

Treat them as you would a lodger in order to help them prepare them for the property ladder; ask for contributions to bills and make sure that they are aware of energy costs, charge an amount towards rent and board and ensure that they appreciate the day-to-day costs of running a home.

You may wish to put the rent they have paid in a high interest savings account to help build a fund towards their mortgage deposit. It may seem like tough love but the lesson learned could prove highly valuable in their later life!

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