Before buying a property

Buying a property can be an exciting time in your life. It is also an important decision that requires a lot of research and planning, so you should make sure you do all the necessary checking around before going ahead with the purchase. Here is a list of things to check before you buy.

Legal documents:

Check that the property is free of all debts, such as unpaid school fees or outstanding taxes. If there are any outstanding debts, it will affect your ability to obtain approval for your mortgage.

Make sure that protective covenants on the property deed prevent third parties from acquiring or developing the land without your permission. This will help ensure that you can fully use your land while you own it. Protective covenants provide that if a neighbor buys the property behind you, they won't be able to build next door without your approval.

Make sure that there is a valid contract for the sale of the property. If the warranty is void, it will make it difficult for you to obtain approval for a mortgage.

Make sure your new neighbor has a legal right to sell the property- such as a power of attorney for their elderly parent or life tenant. If there is no legal right to sell, you may have to purchase this yourself without an escrow account if you want the bank's approval to proceed with the loan.

Also Read: Know Your Legal Rights in a Housing Society

Property documents:

Check that the title to the property has been correctly transferred from the previous owner. This means that all outstanding loans have been paid and that there are no other debts owed on the property. If there are any outstanding debts, it may be difficult for you to obtain approval for a mortgage. It is best to have a solicitor check and approve an appropriate transfer of ownership before you buy a property.

Check that the property has a title search or abstract listing on file with the Land Titles Office. This will ensure that any valid rights of the previous owners are protected.

Financial documents:

Check that all household bills have been paid and that you have made at least 30 days' notice to the landlord to give their consent for your purchase. Also check with your mortgage provider if there are special conditions for purchasing a property if you make an overseas purchase using a bank loan. If you are buying from overseas, it is best to work with an experienced property agent who can help with these arrangements.

Check and prepare your finances for a reasonably priced mortgage. It is ideal to have enough cash in the bank to cover potential closing costs, stamp duty, legal and survey fees. If you have less than this amount, you should seek financial advice as it may be challenging to secure a mortgage with this amount.

Also Read: Know The Every Minute Detail Before You Proceed To Buy A Property In Bangalore

What are protective covenants?

Protective covenants are a legal way of protecting the rights of property owners from potential development and encroachments of neighboring properties. They don't protect property from creditors or third party rights, but they can prevent neighbors from buying adjacent pieces of land.

What are titles?

Title documents prove that real estate is legally owned by its owner. They include a deed for the property, the title plan, chain of title certificates and any conditions on the sale or transfer. You should check these documents to ensure that there are no outstanding debts on the property or any other restrictions on its sale.

What are clear title conditions?

Clear title conditions limit the ability of third parties to acquire title by acquiring shares in the property's mortgage or beneficiary. These types of transactions can be used by people who want to encroach on land other people own. A person without legal rights to the property will not have the legal right to negotiate for a mortgage or sell on their behalf. This type of condition should be listed in your property deed and information when you buy a property. You should make sure that this condition is included before buying a property.

Any other documents:

Check that all water meters, sewerage bills and telephone lines function correctly before buying a property. If any of these are faulty, it will affect your ability to obtain approval for your mortgage.
Check that all sewage pipes are free from leaks, and that there are no significant defects in the wastewater disposal or stormwater systems. If there are any problems, you may be asked to repair them before purchasing a property.
Ensure that there is no outstanding Council tax bill on the property. Because Council does not collect this tax, if it is exceptional at the time of sale you may have problems purchasing a property if you give notice to pay an amount less than the current liability due on the property (the purchase price).

Check that there is a valid contract for the sale of the property. If this document is void, you may have to purchase this yourself and without an escrow account if you want the bank's approval to proceed with the loan.

Make sure your new neighbor has a legal right to sell the property - such as a power of attorney for their elderly parent or life tenant. If there is no legal right to sell, you may have to purchase this yourself without an escrow account if you want the bank's approval to proceed with the loan. This also applies if your neighbor has a tenancy agreement that enables them to live permanently on their land but prevents them from selling it without first giving several months' notice.

Also Read: What is commercial and residential in real estate- who's Invest is more riskier

FAQ

Q: Is it possible to purchase a property and then transfer the deed of your home to someone else?

A: Yes. This is called a “transfer of equitable ownership.” To complete this transaction, you will need to officially record the sale and the transfer in the Land Registry with a solicitor or licensed conveyancing practitioner. The cost can range from £300 to £1,500, depending on the value of your property.

Q: Can I finance my purchase with my existing mortgage?

A: Yes, you can use your existing mortgage for a new home purchase to keep paying it off at its current level. In most cases, you will be able to add the new property to your name and continue paying the minimum repayment each month on your existing loan.

You can also refinance your existing mortgage to take advantage of low rates and competitive mortgages. This is a good option if you consider a large mortgage and want to stretch your cash for home improvements or a larger deposit. If you are currently paying too much interest on your mortgage, consider refinancing at a lower rate with the help of an experienced broker.

Q: Can I use my existing home insurance policy when buying another property?

A: It depends on the type of policy that you have. If you have a standard policy, it will not extend to your new property, and you will need to buy a new policy. However, if you have a joint home insurance policy, it may be possible for the first house owner to take over the second property under this cover.

Q: How much can I borrow?

A: It depends on many factors, such as the value of your deposit, income, and other liabilities like outstanding credit card debts. There is no specific formula that lenders use when calculating mortgage finance limits. Instead, your lender will assess based on their policies and risk-management practices. However, some lenders assess borrowers individually according to their income, savings, and assets before granting them a mortgage loan.