Buying a property can be an exciting time, but it does mean getting to grips with some terms you may not be familiar with. Here are just a few you may come across during the process.
Agreement in principle
Also known as a ‘Decision in Principle’, this is a certificate or statement from a mortgage lender that states they will be prepared to lend a certain amount to a particular borrower, based on the initial information and checks they have carried out. Although it isn’t a guarantee of a mortgage (you will still need to go through the full application process), having this in place shows that you are a serious buyer and can make your offer on a property more attractive to a seller.
Getting a property checked out by a professional surveyor can save you thousands of pounds in repair bills and a lot of stress in the future. They will submit a report and highlight any faults that may need to be remedied. There are various options available, and your adviser will be able to offer help and advice on choosing the type that meets your needs.
This is a sequence of linked property transactions. A chain is created when there are multiple transactions that need to happen simultaneously for each sale and purchase to conclude. A chain begins when someone is only buying, not selling and ends with someone who is selling, not buying.
If you are a first-time buyer, your chain only moves in one direction, as you don’t have a property to sell. The longer the rest of the chain, the greater the chance that hold-ups will occur. A buyer may drop out, results of a survey may halt a sale, unforeseen events such as illness can intervene. This is where having a solicitor or conveyancer with good communication skills can really help, as they can investigate delays and keep you informed on progress.
Conveyancing involves the legal transfer of home ownership to you, the buyer, from the seller. The conveyancing process starts when your offer on a property is accepted, and finishes when you receive the keys, and your solicitor or conveyancer completes the transaction by registering your title with the Land Registry.
Leasehold and freehold
These are two forms of legal ownership of a property. If you own the freehold, it means that you own the building and the land it stands on. Leasehold, on the other hand, means that you have a lease from the freeholder (sometimes called the landlord), that allows you to use the home for a number of years. Leases can often be 90, 120 or even 999 years and conditions and charges apply. Flats are often leasehold and houses usually freehold. It’s important to get legal advice to ensure you understand which type you’re buying.
Your home 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 remortgage.