11th September 2019
11th September 2019
Purchasing your first home can be one of the scariest and also most exciting milestones in your life.
There will be a number of elements of the transaction that you may not understand and this can make the process feel more daunting than exciting at times. Below are a few pointers as to key parts of the transaction which may help you to understand what is actually going on and what your solicitor is doing as part of their role in representing you.
Help To Buy ISA
If you are using a Help to Buy ISA it is important to declare this to your solicitor at the outset. You will be asked by your solicitor to sign a First Time Buyer Declaration and return the same. Your account will need to be closed prior to completion and the closing statement provided to your solicitor. Once your solicitor has received your closing statement together with a signed First Time Buyer Declaration they will then be in a position to request the bonus funds via an online portal once a completion date has been agreed. The bonus funds will be sent directly to your solicitor in readiness for completion. The bonus monies cannot form part of the deposit monies. The bonus will be put toward any balance purchase monies, stamp duty or other legal fees.
Proof Of Funds & Deposit
Your solicitor will require a paper trail of your deposit funds. They will require from you, prior to completion, three months worth of bank statements showing the funds in your account. The statements will need to show where the funds have come from and if they have been transferred from another one of your bank accounts they will need to see statements from this account showing the transfer. There must be a clear trail of the whereabouts of the funds for at least three months. If the same cannot be provided this will result in delaying completion until the information is made available.
More and more first time buyers are now receiving a gift from parents or other family members to be used as the deposits for their first homes. If this is the case then your solicitor will need to write to the donor and have them sign a declaration confirming the funds are indeed a gift and are not to be repaid. Please advise your solicitor of any gift at the outset of the matter - not doing so may cause delays in your purchase. They will also require three months worth of bank statements from the donor showing the funds in their account and also showing the funds being transferred to you. This will also need to be declared to your lender. Your solicitor will write to them to inform there is a gift if the same is not specified in your offer of mortgage.
Please always try to have realistic timescales for the purchase of a property. Solicitors will usually advise a freehold conveyancing transaction can take 6-8 weeks from contracts being received. This can differ as every single transaction is unique and please do not take these timescales as gospel. Your solicitor will be able to provide you with updates throughout your purchase.
Your solicitor will also be acting on behalf of your lender and will also be acting in their best interests. In order to request your mortgage funds most lenders will require five working days (sometimes more) notice to release funds. Obviously this can have a huge impact on a completion date so please be aware of this and if you are getting a mortgage be aware that you cannot agree a completion date at the drop of a hat.
Exchange & Completion
To exchange contracts your solicitor will require a signed contract, transfer and if applicable signed mortgage deed on their file together with deposit monies. Exchange of contracts is usually a formal telephone call which takes place between the two solicitors acting in the transaction. On exchange the agreed completion date is inserted into the contract, unless you are buying a new build and completion is on notice which your solicitor will discuss with you prior to exchange. Once exchange of contracts has taken place, the transaction is legally binding - no party can withdraw from the transaction without penalties. The completion date will have previously been agreed with all parties and this is the day that you will receive the keys for your new home.