Owning a second home is something many people dream about, whether it is to upsize from their current house or as a long term investment, but before you begin your property search, getting your finances in order is essential if you want to be in the best position to secure your dream Home/Investment.
Our step-by-step guide is to help you throughout your property journey, starting from a deposit right through to collecting keys.
If you are purchasing a new family home the rules are the same, the bigger the deposit, the better the interest rate, the lower your monthly repayments, the cheaper the mortgage. For a Buy to Let different lenders have specific criteria but the usual trend is to try and save at least 20 to 25% of the property amount i.e £250,000 = £62,500 deposit.
As well as saving for your initial deposit, you’ll also need funds to put towards fees like property searches, surveys, mortgage arrangement fees, solicitor’s fees, stamp duty, home insurance, removal costs and so on
If you are applying for a mortgage, the lender will assess your affordability by looking into your annual salary and any other income you receive. Speak with one of our accredited Financial Advisors to find out how much you can borrow and how much your mortgage repayments will be.
Your home or property may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you re-mortgage.
Since April 2016, when it was announced that 3% would be added to the standard rate for stamp duty in each band. It is the same case for buy-to-let stamp duty too.
HMRC has stated the rates to be as follows for each property price bracket:
Buy to Let/Second Home Owner Rate 2016:
Brackets Rates
The extra stamp duty to be paid on a second home can be off-putting, However, if you sell your original first property within 3 years, there is the possibility of getting the extra stamp duty paid back. Another point to bear in mind is that you are still liable to pay the extra stamp duty if your second property is abroad.
To learn more about STAMP DUTY.
Now you have an idea of what you may be able to afford it’s time to start looking for a house to buy. Estate agents and property portals allow you to register for daily updates of new properties, you can begin your Property Search on Rightmove, Zoopla, On the Market.
When placing an offer to the Estate Agent marketing the property.
You will need to provide the following proof to get your offer looked into and hopefully accepted:
If your offer has been accepted, you will need to formally apply for your mortgage, It is at this point that the sale is ‘agreed’ and both parties will receive a Memorandum of Sale to confirm. Your bank or mortgage advisor will be instructed to get surveys carried out on the home you are purchasing. There are no legal obligations on either side until contracts are signed.
Your solicitor will now begin all the legal work involved when purchasing a property, known as conveyancing.
Up until this point, either party can withdraw from the sale without financial loss.
Once the contract has been signed by both parties the deposit (usually 10% of the purchase price) will be transferred or paid in the form of a banker’s draft from your solicitor to the seller’s solicitor.
On completion day, you will be notified by your solicitor to collect keys either from the estate agent or seller themselves.
Our success stems directly from our professional approach and our insistence on maintaining the highest standards of client care, offered by our high calibre committed trained staff.
297 Uppingham Road,
Humberstone,
Leicester LE5 4DG
KRE Developments LTD T/A Kings Real Estate
Company Number 12215776