In each edition of our newsletter we will follow a client from their first encounter with a solicitor through to various different scenarios in their life where advice from a solicitor is needed.
Buying my first house
I am 25 years old and buying my first house with my partner. Prior to this, neither of us have rented or owned our own properties.
The first point to consider when a property is being purchased in joint names is whether the parties will hold the legal estate as joint tenants or tenants in common.
Joint tenants share equal ownership of the property and have equal rights to keep or sell the property at a later date. When one party dies, the property automatically passes to the surviving joint owner. Whereas tenants in common can hold equal or unequal shares in the property and they each own their share separately. On the death of one owner the property would not automatically pass to the surviving joint owner. The simplest way to record if the parties intend to own equal or unequal shares of the property is to make an express declaration to that effect using a Land Registry form or a separate trust document.
When purchasing a property together, this is a factor you should consider and take legal advice on the appropriate method of ownership.
What to do?
Buying a house is a big investment for anyone, no matter what stage of life you are in; therefore, it is important to be prepared. Firstly, we would suggest getting your finances in order, and we have set out below a number of points you should consider:
-Have a healthy savings account- By regularly putting money aside for your deposit and mortgage payments, lenders will see you are a consistent saver by not living payslip to payslip. Having savings set aside for your new home can also help by contributing to maintenance of the home at a later date.
-Help to Buy ISA- If you don’t already have savings set aside this is a great way to kick start the savings process.
A Help to Buy ISA is a savings scheme for first-time buyers. If you are saving to buy your first property, the government can contribute to your savings by 35% (up to £3000).
In order to benefit from the government bonus, the home you buy must:
- Have a purchase price of up to £250,000 (or £450,000 within London).
- Be the only home you own
- Be where you intend to live
An initial payment into your ISA can be up to £1,200; following this you, can pay up to £200 into the ISA each month. When you buy the property, your solicitor or conveyancer will apply for the additional 25%.
-What can you afford? Figure out what you can afford, concentrate on a budget and ensure the purchase is the right decision long-term.
-Credit Score; Boost your credit score, the higher the credit score the better. Ensure you do not get penalised for small mistakes when applying for a mortgage. For example, having active accounts registered to an old/incorrect address can affect this score, so ensure this is checked.
How to find a solicitor:
In order to buy a house you will need to be represented by a solicitor. Here are a number of ways we recommend finding the best solicitor:
- Google reviews; reading reviews is important because it can give you an insight into the type of solicitors and experience you will be paying for. Then make enquiries with those who have the best reviews.
- Client recommendation/word of mouth; ask family and friends who have been through the same process. They can give you honest advice and recommend a solicitor.
- Checking social media; social media is a helpful tool for finding any business. Once you have found some names of solicitors, you can search their social media to see how active they are, as well as finding out their involvement within the community.
Declaration of Trust
Take advice on whether you will need a Declaration of Trust. A Declaration of Trust is a legal document that records how much money each person has contributed towards a property purchase and what should happen to this money in the future. It is particularly important for unmarried couples and we would recommend it for a number of reasons. It details:
- How much money each person has contributed towards the property purchase and other costs, such as maintenance and mortgage repayments.
- How and when each person will get their money back.
- What will happen to each person’s financial contribution if the current relationship breaks down.
If a Declaration of Trust is not in place, there will not be a legal record of the contribution each person has made.