How To Purchase House

Conveyancing in London and the United Kingdom has started to feel the housing market crunch but The First Time Buyers’ Initiative (FTBI) was introduced to make more affordable homes available to first-time buyers. It is available throughout England from 23 regional HomeBuy agents. So what does this mean for first time home buyers?

Who can buy FTBI homes?

50% of the new homes available through the initiative will be for key workers (nurses, teachers, police officers).

The other 50% will be available to first time buyers who fit the following criteria:

The buyers must be first time buyers. They cannot be homeowners already nor can they be named on a mortgage.

The buyers must be unable to afford to buy a home (within reasonable travelling distance of their workplace) which is suitable for their needs.

The buyers must be able to show that they have sufficient funds to pay a deposit (up to 5% of the purchase price), legal fees, stamp duty land tax and the additional costs associated with moving house.

The buyers must be on a long-term employment contract. If they are self-employed, accounts for the past three years will need to be produced and subsequently approved.

The buyers must have a good credit history.

The buyers must take out a first mortgage with one of the qualifying lenders.

What contribution will be given and how is it repaid?

The government will provide up to 50% of the purchase price. Therefore, the mortgage and the cash funds available to the buyer must be at least 50% of the purchase price. Not all buyers will qualify for 50% assistance, the HomeBuy agent will determine the level of contribution available to each buyer.

The government’s contribution will need to be repaid on the sale of the property. The repayment will be at the same percentage of the sale price as the contribution, so if the sale price is higher than the purchase price, the repayment to the government is higher (in terms of a monetary figure) than the input.

After three years the buyer will need to pay a fee to the government on sale of the property: 1% of the contribution after three years, 2% after four years and 3% thereafter.

What is the procedure?

The prospective buyers need to register their interest with the HomeBuy agent and they need to complete a HomeBuy application.

If eligible, the buyers will receive an “Approval of Eligibility Letter” from the HomeBuy agent and they will be provided with FTBI schemes in the buyer’s area.

The buyers then chose a home and instruct their solicitors and their IFAs to progress a full mortgage application.

Once the HomeBuy agent gives final authority to proceed, the buyer can agree to exchange contracts.

The buyers’ solicitors then need to ensure that all conditions for buying a FTBI home are met (i.e. mortgage offer is in order, property price is agreed and funds are available) and proceed with the purchase of the property as usual.

On completion, the buyers’ lender will provide the drawdown and the government will provide the balance funds. There will be a second charge put on the property for the benefit of the government.

If the buyers want to sell the property later, this can be done on the open market.

A list of FTBI HomeBuy agents is available from the English Partnerships website englishpartnerships.co.uk.

This article is free to republish provided the authors resource box below remains intact.

So you have set aside enough funds for a down payment on a house and

closing costs? And you are curious to know if there is ever a time when you

shouldn¡¯t buy? Regardless of all the benefits of buying a home, it is still a major

and life changing purchase and a buyer should go forward with an cautiously

optimistic but informed attitude.

An important thing to honestly evaluate before you purchase is the average

appreciation rates of your local market and your own personal circumstances.

Historically, the average appreciation rate for real property has been roughly

6%; however, as the nation is huge your local market appreciation rates can

obviously vary. Your main objective should be to stay in your house long

enough so that you are not placed in a position where you will have to sell your

home at a loss. If you have to sell a home before it has appreciated enough to

cover the costs and commissions of selling, you could find yourself in a

serious, financial bind. This especially applies to those who buy a home with a

down payment of ten percent or less. In the market of the past five years,

many who purchased homes with zero down payments are finding themselves in

exactly that position, basically ¡°under¡± their loan.

Real estate commissions traditionally run around six percent of a home¡¯s sales

price. The seller¡¯s closing costs generally amounts to about one and a half

percent. Adding all the costs you would incur if you were forced to sell, you

can see how this can easily exceed the first year¡¯s appreciation of your home. If

you made a minimal down payment (from 3% – 5%), you could actually have to

come up with cash out of pocket to sell your home. In addition, if the value of

the houses in your neighborhood has dropped considerably, you may also find

yourself owing a deficiency judgment. A deficiency judgment is a judgment for

an amount not covered by the value of the security( in this case your house) put

up for a loan or installment payments. In general, with the final sale of the

house, the owner is still left with a balance owing on the original amount of the

loan and is liable by law to pay it. While this is the worst case scenario, it still is

prudent to know that such situations can occur and realistically evaluate how

you can avoid them.

The three occasions when it is much better to hold off on buying a home are the

following:

New to the Area

A very good to reason to delay buying a home is if you have just moved to an

unfamiliar area or region of the country. It makes sense to rent for a number of

months before deciding on exactly which neighborhood you desire and can

afford to live in. Often when people are too hasty to buy a home immediately,

they find that they might have made a better decision if they had waited awhile

and had become more familiar with the surrounding neighborhood and local

community. They would have additional leisure time to evaluate home values

and find the best bargain in the neighborhood they desired to live in.

Uncertain or Unstable Job Future

You could have just graduated from college or you are expecting a promotion

and a transfer. Or perhaps, your company has announced an impending

“restructuring¡± or ¡°downsizing¡±. If any of these apply to your situation, it might

be best to forego buying a home until your job and financial situation stabilizes.

It is much easier to dissolve a lease on an apartment or condo, than to try to sell

a home in a financially difficult or pressing situation.

Marital Problems

While not advertised on national real estate ads, real estate agents are often

participants in the real unfolding life drama of clients who have to sell their

houses due to foreclosure, divorce, and deaths in the family. One of the

saddest scenarios occurs when recent former clients undergo a divorce and are

forced to sell a recently purchased house. For whatever reason, many couples

in marital turmoil, are steeped in denial and often decide that buying a new

home may help resolve their difficulties. Perhaps it is inevitable that such

problems should then occur, but selling a home before it appreciates can create

an additional emotionally draining financial burden in an already difficult

situation.

While this certainly isn¡¯t meant to discourage the prospective buyer, it certainly

is intended to inform the buyer of the serious decision they are about to

undertake and to evaluate his or her circumstances honestly. Taking the time to

be forthright at the outset will assure a purchase they will be happy with in the

long run.

For more information visit http://www.nefcortez.com

It is often said that the first time buyer is the lifeblood of the housing market. They buy the houses at the bottom of the housing ladder, allowing previous owners to buy at the next level up and so on. Without first time buyers, the housing market would slow down dramatically – a process which according to many commentators is starting to happen. In fact, figures quoted by Rightmove suggest that during August, the average house price in London actually fell by 0.1%, and the rest of the UK saw growth of only 0.6% – the fourth month in a row that house prices have increased by less than 1%. In theory, this could mean a light at the end of the tunnel for the first time buyer as at this rate, it won’t be too long before house price increases are aligned to the average salary increase of 3-4%. However, it’s not all great news for first timers as this still means that the average house price in the UK is running at over £240,000. It might take a sustained period of rime before those that have re-mortgaged are willing to sell at prices that first time buyers can afford to kick start the market again.
What does this mean to the first time buyer then? The great housing market boom may have slowed down, but the average Joe on the average salary still can’t afford to buy the average house unless he has a huge deposit.
One statistic that parents and young adults alike might find mind-blowing is that the average age of the first time buyer in the UK has increased from 27 to 34 in the last 30 years (according to the GE Money Home Lending and Customer Research Organisation). The research also shows that the number of first time buyers buying with a spouse has decreased from 80% in 1977 to just a third today. This means that the prospect of leaving home and moving into that ‘party pad’ remains a dream for many.
With so many people getting well into their careers before buying their first place, there are more and more people either choosing or being forced to live in house shares throughout their early working lives. In fact for many graduates, who are in often also burdened by student loans the reality is that they will still be living in student house shares well into their thirties!
For more information on house sharing, or to find housemates, visit abodewithme.com.

According to the Land Registry, house prices in January were down by 15.1% since the same time last year.  Every region in England and Wales has seen property prices fall by at least 12% in the last year.  Buyers are waiting until they see that the market has bottomed out, and with the waiting, house prices are expected to continue falling for the next few months.  There are however signs that the freefall may be easing and soon may have reached the bottom. 

For example, with prices in prime spots in London being down up to 20% compared to the March 2008 peak coupled with the weak pound, buyers from overseas are seeking to pick up a bargain.  The window of a strong euro against the pound and the security of bricks and mortar in prime location adds further appeal.  Although Londoners themselves may object to property being snapped up it will be one small prop to help stabilise house prices.  Importantly, according to TimesOnline, cash sales, which are not recorded in the statistics produced by Nationwide or by Halifax, now account for a whopping 40 per cent of transactions as buyers turn to property as a more lucrative alternative to low-paying deposit accounts.

Mortgage availability is beginning to see change.  In January, mortgage approvals held steady at 31,000.  Although this is half of what it was last year, they have averaged 31,000 for the last six months.  Mortgage lenders typically want a deposit of 20% of the purchase price which is a hefty sum to secure.  Saving for a deposit takes time and in this time house prices fall.  However, Northern Rock will soon begin to offer some 90% mortgages.  The Bank of England is expected to lower base rates again and is also likely to increase the amount of money in the British economy, both of which will improve the supply of funds for mortgages.

The current low interest rates, although will not lead to a sudden housing market revival, do make loans more affordable which will be another positive support for both new and existing borrowers.  According to Halifax, mortgage payments have fallen from 31% of gross earnings for a new borrower in the first half of 2008 to an estimated 21% in January 2009.  The house price to average earnings ratio has decreased to an estimated 4.48 in December 2008 from a peak of 5.84 in July 2007; a fall of 23%. The long-term average is 4.0.  Potential buyers are noticing the opportunity: according to the Royal Institution for Chartered Surveyors enquiries from new buyers rose in January 2009 for the third successive month.  

Of course, there continues to be pressure on incomes with rising unemployment and the negative impact of the turbulent financial markets on the availability of mortgage finance, but the update is that there are signs that the freefall on house prices and drought of mortgage availability is easing.  As such, it could be wise to buy before house prices reach bottom as with low prices, low interest rates and increased mortgage availability an eventual recovering economy could bring house prices to rebound sharply.