PAD Financial

3 Newsham Road Sheffield

S8 9EA

0844 443 4770

www.PADFinancial.co.uk

First Time Buyer

Property

Finance

Guide

Welcome Thank you for requesting a copy of our guide

to purchasing a property. We hope that you

can use this guide hand in hand with the

advice from your PAD Financial advisor to

make the house buying process an enjoyable

and straight forward one.

The house buying process is a long and

complex one, but you need to start

somewhere and our aim is to advise you

about the journey you have ahead of you

and what you need to do before, during and

after you have bought your house.

First Things First

If you are looking to purchase your property

with the help of a mortgage, there are certain

things you can do to make yourself as

attractive as possible.

Any lender, bank or building society wants to

know who they are lending to and if they have

ever experienced any form of credit in the

past. An applicant that has a good credit

history is far more likely to be offered a

mortgage than one that has little or no credit

history.

There are a few important things that you can

do to ensure you can show you have the

ability to be good with credit:

• Register to vote - if you appear on the

electoral register, the lender knows that

you are at the address on your

application.

• Use credit and make payments on

time - this can be in the form of a credit

card, loan or hire purchase. Many people

are sceptical of taking out credit due to

the interest costs involved and the fact

that they do not trust themselves with

the facility. However, think about this

for a moment. You are asking a lender

for a loan of tens of thousands of

pounds, so you have to be comfortable

managing a few hundred pounds. If you

manage it correctly, you can built your

credit up, not get charged interest and

perhaps even earn cash back.

• Mobile Phone - using a mobile phone

on a contract is a contractual credit

agreement and as long as your monthly

payments are made on time, it will be to

your benefit.

• Postal Bank Statements - in this age

of technology, most lenders encourage

you to bank solely on line and have all

your statements sent electronically to

you. However, when it comes to

assessing you for a mortgage, these

same lenders want to see that your

bank statements arrive at your home

address.

• Check your Own File - using a firm

such as Experian or Equifax will allow

you to view your report and you will be

able to see what its good points or bad

points are. Discuss this report with

your advisor to find out exactly what it

all means.

• Delink from past relationships - you

can write to credit agencies asking to be

delinked from any ex you had a

financial relationship with. This will

stop their credit having an impact on

you.

• Amend errors - If you think that you

file shows a mistake, you can ask the

lender to correct it. If they refuse, you

might be able to add a notice of

correction to the file and perhaps

complain to the Financial Ombudsman.

• Cancel unused cards - if you have no

problem using credit and could maybe

be accused of using to much, you

should look to cancel the cards you no

longer use or try and cut back on them.

If you have any concerns over your credit

history, maybe in the form of:

• Missed / Late payments

• Unpaid phone bills

• Previous rejection

• Defaults

• County Court Judgements (CCJ)

you should speak to your advisor about

possible solutions.

1

Buying a house takes careful budgeting.

You need to know all the costs involved

before you go ahead and they are not

always obvious. The main things to think

about are:

Stamp Duty

This is the tax imposed by the

government on purchased property (or

when there is a change of owner) only –

i.e. you don’t pay tax on the property

you’re selling, just the one you’re

buying.

Stamp Duty is taxed as follows: -

These figures are correct at time of press. Please visit our website for updated figures. Figures in brackets apply to first

time buyers only.

Solicitors / Conveyancing Fees

These are the fees charged by your

solicitor to perform all the legal duties

associated with buying a house. PAD

Financial work with a panel of local

and national firms and can help with

finding you a suitable legal

representative for your purchase. The

more expensive the property you are

purchasing the higher their fees will

be. Additional charges will be

incurred for leasehold properties and

more complex conveyancing. The

cost you pay will generally be

determined by the price you are

paying for the property and typically

equals around £3 -£4 per every

£1,000. So a purchase of £200,000

might typically cost £600 - £800.

However, you will have to pay VAT on

top of this and the cost of the

searches.

Purchase Price of Property (£)

Stamp Duty Payable (%)

0 – 125000 0 (0)

125001 – 250000 1 (0)

250001 – 500000 3 (3)

500001—1000000 4 (4)

2

1000000 + 5 (5)

Searches

Carried out by the solicitor, these are a

safeguard to ensure all aspects of the

property are in order. Some items which a

search might investigate are as follows: -

• Property renovations/alterations

• Location of local Coal Mines

• Flood/ subsidence risk

• Local housing market etc

The cost incurred through instructing

Searches can vary dependent upon the

location and company used. However, your

legal representative will be able to give you a

breakdown of the searches they recommend,

the searches that are required by the lender

and the cost of them.

On some occasions it may be possible to take

out insurances and not carry out a search.

This can be useful if you are in a hurry.

Removal Fees

Some people prefer to do this themselves,

either by hiring or borrowing a van. But from

personal experience, it’s far easier to watch

someone else carrying your sofa than trying

to do it yourself!!!

It is advisable that you obtain at least 3

quotes before finally choosing a removal firm.

The quotes will be based upon the distance

between properties, the amount of furniture,

any extra insurance, time required and

the number of individuals to complete the

job.

Arrangement Fees

These are the fees charged by the Lender

and/or the broker to cover the administration

costs associated with the set-up of the

mortgage account. Arrangement fees can

vary dependant upon the product and can be

up to 2% of the loan amount. Typically those

products which are fixed, or have low

discounts have higher arrangement fees.

However, many Lenders will allow you to add

the fee to the mortgage in order to make it

more affordable.

Budget

Booking Fees

These are very similar to arrangement

fees, however, they are used to gain a

greater level of commitment. For example,

if you were to pull out of a product with an

arrangement fee, it is likely your money

would be refunded. However, if it was a

Booking fee instead, your money would not

be returned as it was used as a “deposit”

to book that rate. The cost can vary but if

charged it can be anything up to 2% of the

loan amount.

Withdrawal Fees

In the current climate, some lenders will

look to charge an additional commitment

fee which could be payable up front or if

you withdraw for any reason.

Advisor Fees

There is a lot of work that goes in to

advising on the best deal for you and then

liaising with the lender, solicitor and estate

agent to ensure that everything happens

as it is supposed to. For this reason it is

likely that your advisor will charge a fee for

their service.

Survey Fees

There are three main types of survey,

giving different levels of information to the

potential borrower.

• Standard valuation

This is a basic valuation for the sole use

of the lender to ensure the property is

adequate security for the loan.

• Homebuyers report

This is a more comprehensive survey,

and can be used by the buyer as

another tool in the decision making

process. This is instructed by yourself

through the lender, and therefore

creates a legal relationship between you

and the surveyor. Unlike with a standard

valuation where no such relationship

exists. Expect to pay around double the

cost of a valuation.

• Full structural survey

As the name suggests this is the most

comprehensive survey available. It is

instructed by you in a similar fashion to

a Homebuyers report, and therefore has

the same legal implications. However,

in addition to the Homebuyers

report, it will detail any maintenance

which is required on the property.

Expect to pay around double the cost of

the homebuyers report.

Upfront Service Charges

These are the charges made by the

management company of flats/apartments for

the maintenance and general up keep of all

public areas such as corridors, gardens.

These are often paid in 6 monthly intervals

and can come as quite a surprise when you

first move in, so be warned, check what these

fees are and when they are due.

Furniture

For most people, this is an expense which is

spread out over a period of time and so

doesn’t really enter into the immediate

equation. However, for first time buyers with

no furniture, this could well be a very large

expense, and must be budgeted for,

depending on the amount and the quality of

the furniture required.

3

Personal Budget Planner

Booking Fees

It is vital that you also plan your own budget as once you have bought your property, you will

have some very big commitments, some of which you may not previously have had to pay. These

will include your mortgage, your home insurance, council tax and your utilities, but there are

many other things that only you will know what you spend your money on.

Please complete this budget planner is as much detail as possible and discuss it with your adviser.

It will help you plan what sort of mortgage you can potentially afford so that your house does not

become a prison and you are still able to enjoy life.

Monthly Income Total Montly Expenditure Balance

Your Basic Salary Total Commitments Monthly Income

Partners Basic Salary Total Everyday Monthly Expenditure

Guaranteed overtime Total Occasional

Pensions

Child Benefit

Income Support

Tax Credit

Other Benefits

Maintenance

Other

Total Income £ Grand Total £ Monthly Surplus/deficit £

Monthly Expenditure

Commitments Amount Everyday Spending Amount Occasional Amount

Mortgage Food Clothes

Home Insurance Phone Holidays

Life Insurance Broadband Cinema

Income Protection TV Alcohol

Council Tax Pet Smoking

Gas Sports Birthdays

Electricity Christmas

Gym Furniture

Pension

Investments

Total Commitments £ Total Everyday £ Total Occasional £

4

It’s common knowledge that moving house is

one of the most stressful events to occur in in

your life. Whether you’re a first time buyer, or

an experienced mover, the number of

considerations to bear in mind sometimes

seems like an insurmountable burden. Here

are some of the things to bear in mind to

make that move go a little smoother.

You will by now have worked out a budget and

been preparing yourself to get out and start

looking for a home. There are now some

important things you need to do.

Speak to an Advisor

Your advisor will discuss things such as the

type of rates available and what is the most

suitable way for you to repay the mortgage.

Agreement in Principle

An Agreement in Principle (sometimes referred

to as a Decision in Principle) is a formal credit

check with a lender to confirm in principle

whether they are willing to lend you the

money you require to purchase your property.

Once you have this Agreement in Principle,

you can offer on a property with confidence

and will be taken more seriously by both

estate agents and house vendors.

Research Locations

Who are you and what are you looking for?

Chances are you will be staying in this

property for some years, therefore you must

establish what factors are important to you in

relation to the area in which you want to live.

Are you a young, single, first time buyer

looking for the buzz of city living, or are you a

couple, about to start a family, looking for a

house in the right catchment area?

It is essential that you research your move

carefully – so here are some top tips: -

• Phone local estate agents to gauge which are the best

areas that meet your criteria.

• Speak to the council. Council officers will know where

money is being spent on better transport, shopping facilities, or schools. They will also know about regeneration projects planned for city centres or run-down industrial areas.

• Speak to the planning department who will know

about proposals from property developers. There will also been announcement for planning permission in

• Drive round the areas at different times of the day

and night to measure traffic noise etc

• Why not try driving to and from work at the

appropriate times. The last thing you want to do is have perfect house and not see any of it because you’re stuck in traffic!!

• Go to www.dfes.gov.uk/performancetables/ to look at

school performance tables.

• Try www.upmystreet.com for information about your

potential location.

Make an Offer

It is wise before you make an offer to find out

who you are bidding against, not only in terms of

what their offers are, but also what their

circumstances are. This way you can try to work

out how high the opposition can go and how fast

they can move. This, combined with your budget

and Agreement in Principle, means you can

decide what your opening bid will be, and where

you set your upper limit.

One point of warning - should the property move

to sealed bids, or when buying at auction, be

careful not to get carried away an exceed your

pre-determined limits- no matter how lovely a

house is, you can’t enjoy it if you can’t afford to

live there.

Offer Accepted

Hopefully you will already have made your

financial advisor aware that you are beginning

negotiations on a property, but it is vital you

contact them as soon as possible once your offer

is accepted.

Your Advisor will then guide you through the

mortgage admin maze and ensure that your

documentation is in order and that everything is

happening as it is supposed to be.

They will discuss the type of valuation you want

and arrange for the application to the lender.

They will then liaise with the lender and keep you

updated throughout to ensure there are no hold

ups and make the process as smooth as possible.

Moving

5

Mortgage Offer Arrives

You should read this very carefully and

consult with your solicitor before

accepting the terms of the mortgage

offer. This is likely to be one of the

biggest decisions you are ever likely to

make, therefore it is essential that you

take a careful approach and fully

understand the details of the loan you are

undertaking.

Make sure you look out for any conditions

in the mortgage offer, do they need any

further property reports to be carried out,

what insurances are compulsory. Speak

to us and get this all sorted as quickly as

possible.

Exchange of Contracts

It is at this point you become legally

committed to the purchase of your

property, and where applicable pay your

deposit to the vendors solicitors. It is

also at this date where all your

insurances should take affect, and you

should instruct your removal firm of your

completion date. Completion can happen

immediately but usually it will be set for a

week or so later.

Completion

CONGRATULATIONS!!! Your solicitor has

sent the remaining payment to the vendors

solicitors and it’s time for you to get the

keys and move in.

The only thing left to do now is let everyone

know you have moved.

Repaying the Money

• Repayment (Capital and Interest) - The

safest way to repay your mortgage. In

the early years most of your money goes

towards paying the interest. Later more

money is used to repay the capital on the

loan.

You should ensure that you have

sufficient critical illness, life assurance

and income protection to cover the loan

• Interest Only - You only pay the lender

interest on the amount you have

borrowed. Be warned, you will have to

repay the money you have borrowed at

the end of the term.

You may have a current investment

backed mortgage, either through an

endowment, ISA, or pension. These

were common in the past, however, due

to stock market instability in recent

years, these have proved not to be the

best method of repayment. As a result,

we will not advise this method of

repayment, and should you wish to

discuss your current situation, we will be

more than happy to advise you of the

best course of action when remortgaging

6

Types of Mortgage Rates

TYPE THE FACTS THE BENEFITS BUT……

STANDARD

VARIABLE

RATE

Your monthly mortgage payments go up and down in line with the lenders standard rate of interest.

You pay less when interest rates are low.

You pay more when interest rates rise, so it’s difficult to budget accurately for your monthly payments.

FIXED RATE

You chose to repay the mortgage at a rate of interest that doesn’t change for a set period of time.

You know exactly what you’ll repay each month; rising interest rates won’t affect you.

You’ll miss out on any savings if interest rates fall, and you might be charged if you repay your mortgage early. A booking fee may also be required.

DISCOUNTED

RATE

The interest rate on your mortgage is discounted from the lenders standard variable rate, usually with a bigger discount at the start.

Lower monthly payments than the standard variable rate. Your payments will decrease if interest rates fall.

Your payments will still go up if interest rates rise.

CAPPED RATE

The interest rate on your mortgage never goes above a certain level during an agreed period – but does go down if interest rates fall below a certain level.

You’ll always know the maximum amount you’ll ever have to pay during the agreed period.

It will often be more expensive initially than a discounted rate mortgage. A booking fee may also be required.

CASH BACK You are given a cash lump sum when you start the mortgage.

You’ll have extra cash to help when you are moving

You might be charged if you repay the mortgage early – and you may have to repay the cash.

FLEXIBLE

You can vary how much you repay each month – you can pay extra, or even suspend payments for a while.

You can pay extra amounts to reduce your mortgage, and build up cash that can be used for future monthly

payments. You can pay more when you have spare cash or reduce / suspend payments when money is tight.

Under payments will be added to

your outstanding mortgage

7

These illustrations are only for educational purposes and do not constitute

advice. Please follow the recommendations of your advisor as to which is the

best method for you.

Property Purchase Ideas

Traditional Property is purchased for a set price. The purchaser buys the house for the agreed price

with a sum composed of mortgage and deposit. The deposit can take the form of a gift from

a family member or savings in the bank. The mortgage is the arranged based on the level of

borrowing needed.

For Example

A man agrees to buy a house for £100,000. He has £15,000 saved in the bank and requires

a mortgage of £85,000. This is commonly known as an 85% Loan to Value (LTV) mortgage.

Vendor Gifted Deposit This method of purchasing is most commonly seen in the new build market, but can be

equally acceptable in the resale market too. In this scenario the person selling the home,

the vendor, would offer to pay the purchaser’s deposit, usually to the value of 5%. In some

cases, this all the deposit needed to satisfy the lender.

For Example

A man agrees to buy a house for £100,000, but has no or little deposit. The vendor offers to

pay 5% deposit or £5,000. This leaves the purchaser needing to arrange a 95% mortgage.

75/25 Split or Shared Equity Common in the new build sector, this is where the builder retains 25% of the property value,

effectively lending the purchaser a 25% deposit. The purchaser can then acquire a 75%

mortgage using the gifted equity share as a deposit. The purchaser must repay the equity

share within 10 years or on the sale of the property.

For Example

A man agrees to buy a house for £100,000 and is offered this deal by the builder. The

builder keeps 25% and the man takes out a mortgage for £75,000. In 5 years time, the man

sells the property for £200,000 and gives the builder its 25% (now £50,000) back.

Guarantor Mortgage This is ideal for a first time buyer (FTB) or someone who for one reason or another at present

cannot afford the mortgage wholly on their own, but due to their career path, should be able

to in the future. In this scenario, the lender will use parental income to underpin the loan

they offer to the FTB. This means that the Parent is liable for the mortgage should the son /

daughter fail to keep up on the mortgage repayments. For this reason, it is advisable that

the guarantor seeks independent legal advice before committing to this mortgage.

Right to Buy

8

When a social tenant wants to buy the house they are in, they can often buy the property below

open market value. It is usually possible for them to purchase the property borrowing the vast

majority and in some cases all of the money needed. Ie. 100% of the discounted price.

Life Assurance

If you were to die without any insurance,

you would leave your family with a

house to pay for, with maybe no means

of doing so. Life assurance would pay off

your mortgage if the worst happens.

All endowment plans and some pension

plans have built in life cover, but if you

have a repayment mortgage, you should

think about arranging separate life

assurance.

Critical Illness

If you suffer from a life-threatening

illness, the last thing you should be

worrying about is returning back to

work. But you might not have a choice.

Your mortgage repayments won’t stop

because you can’t work. Critical illness

protection can enable you to pay off

your mortgage, leaving you to

concentrate on your recovery.

Income Protection

Designed to provide you with a regular

income if, because of sickness or

accident, are unable to work, resulting

in a loss of earnings. Income protection

allows you to choose how soon and for

how long this income is paid, in order to

create a plan to fit your personal

requirements.

Accident, Sickness,

& Unemployment

Cover

Could you still pay off your mortgage if you

lost your job? If you were made redundant,

or if long term illness or an accident

stopped you from working, you might lose

your home. You can take out insurance

against this threat, which meets your

monthly payments if you can’t.

Buildings and

Contents Cover

In most cases, you have to pay for the

cover of the building itself. Mortgage

lenders insist on it. And it’s a good idea to

insure the contents of your home as well.

You can insure against burglary, accidental

damage, loss and many other eventualities.

Protection

9

8 Weeks Before the Move

If you’re thinking of using a professional

mover, get estimates from different

companies. Choose the one that offers the

service you want at a competitive price. If

you’re moving yourself, work out what size

van or lorry you need (see point about boxes

and non-boxable items below) and get quotes

from a range of companies. Make your

reservation well in advance. Make a rough

floor plan of your new house. This will help

you decide what furniture will fit where and

give you plenty of opportunity to sell the

things you won’t need. Kids’ furniture can be

bulky (bunk beds etc). Check to make sure

your new home can accommodate existing

furniture.

6 Weeks Before the Move

Finalise costs and discuss insurance, packing,

loading, delivery and the claims procedure

with your chosen removal company. Decide

what you’re taking with you. Moving time is a

great time for a clear out as it will save you

the hassle of packing and unpacking things

you don’t really want or need. Either sell

unwanted items through classified ads or a

car boot sale, or donate them to a local

charity shop. If you’re moving a long way,

get copies of your records from doctors,

dentists, solicitors, accountants, etc. Make

arrangements to transfer your children’s

school records.

4 Weeks Before the Move

If the removal company is doing all the

packing for you, arrange to have this task

completed a day or two before loading the

van. If you’re moving yourself, work out how

many boxes you’ll need and get hold of them.

Make a list of non-boxable items. Add 15

percent to their combined cubic feet (along

with total cubic feet of boxes to be loaded) to

work out the size of the van you’ll need.

Arrange for storage if you need it.

3 Weeks Before the Move

Assemble packing material, furniture pads,

packing tape, bubble wrap, polystyrene

packaging, nylon packing string and rope,

crumpled newspapers, scissors, utility knife,

large sticky labels, felt-tip markers and

boxes. Begin packing items you won’t need.

Arrange to cancel utilities and services at

your old home and have them installed at

your new home.

2 Weeks Before the Move

Make any special arrangements to move pets.

Consult your vet about how to make moving

easier for your pet. Start filling out your

change of address cards. Cancel delivery

services.

1 Week Before the Move

If you will need a babysitter, arrange for

moving day service.

2 or 3 Days Before the

Move

Defrost your fridge and freezer. Have the

movers pack your belongings. Arrange to have

money ready to pay the driver on moving day.

Set aside valuables and legal documents to go

with you, not in the van. Pack your first-day

handy items box (see ‘Moving day’) to go with

you.

Moving Day

If you’re doing-it-yourself, pick up the van

early. Make a list of every item and box loaded

on to the van. Let the mover know where you

can be reached. Before you sign your

agreement with the mover, read the

conditions. Keep it in a safe place until your

goods are delivered, charges are paid, and

any claims are settled. Check your old house

to make sure you’ve turned off water,

appliances, etc.

Inspect basement, attic and garage. Lock all

doors and windows. Be on hand to answer

questions and give directions to the mover.

Assemble first-day handy items: Scissors,

utility knife, cups, kettle, paper plates, toilet

roll, coffee, tea, milk, soft drinks, soap, pencils

and paper, local phone book, masking tape,

bath towels, large bags for rubbish, toiletries

kit, shelf liner, mobile phone charger, first aid

kit. Check off all boxes and items as they

come off the truck. Install new locks. Make

sure all utilities are connected. Unpack kids’

toys. Be on hand to answer questions, pay the

driver, give directions, and examine your

goods.

GetThisDone

10

Financial/Legal (notify in Writing)

Any other insurance

Bank (including children’s accounts)

Building society

(loan and savings accounts)

Car breakdown cover provider

Car insurance company

(quote policy no.)

Car registration

Credit cards and store cards

Digital/Cable TV provider

Driver’s license

Electoral office (address in telephone

directory under Government section)

Hire purchase companies

Inland Revenue

Life assurance companies

(quote policy no.)

Local council

Local police

(if you have any driving summonses,

etc. pending, or if you are to be a

witness in a case, etc.)

Mobile phone provider

Pension provider (quote policy no.)

Property insurance company

(contents quote policy no.)

Public library

Shares, investments, endowments

Government bonds, etc.

TV license

Personal/Social

Children’s activities

(Scouts, ballet, etc.)

Dentist

Doctor

Employers

Friends

Hospital (for example, if you’re

an outpatient)

Nursery

Neighbours

Other

Part-time, evening and

correspondence courses

Relatives

Schools

Social clubs

Sporting clubs (whether a player

or a member)

House Keeping

Electricity company:

– ‘off ’ at old address

– ‘on’ at new address

Gas company:

– ‘off ’ at old address

– ‘on’ at new address

Water company:

– ‘off ’ at old address

– ‘on’ at new address

Magazine subscriptions

(or anything else regularly received

by mail) – save wrappers with

reference numbers

Newsagent (with date last

paper required)

Post office (pay a fee for

redirected mail)

Telephone:

– ‘off ’ at old address

– ‘on’ at new address

11

Advance

The mortgage loan.

Agreement in principle

Agreement by a mortgage lender to lend a sum of money, subject to certain

conditions.

APR

This is the figure quoted by lenders and reflects the total cost of the loan.

ARLA

The Association of Residential Letting Agents. A self-regulating body for letting agents in

the UK.

Arrangement fee

A fee paid to the lenders for arranging the loan.

Assignment/Assignations of life assurance

The right of a mortgage lender to claim under a life assurance policy to ensure the

mortgage is repaid, if you die, or at maturity.

Building insurance

Insurance against damage to the structure of the building caused by specific events

such as storm damage to the roof.

Capital

The amount of the loan on which the mortgage lender calculates interest.

Capital gains tax

A tax you pay on profits above an allowed level (£8,500) you make from the sale of an

asset such as a buy-to-let property.

Completion or settlement date

The date when the money is paid, the deeds are handed over, the keys are released

and you can move into your new home.

Conclusion of missives

In Scotland, this is the same as exchange of contracts.

Contents insurance

Cover can be arranged for the contents normally in the home and can be extended to

include possessions away from the premises.

Conveyancing

The legal process involved in transferring a property from one person to another.

Deed

The legal papers that show ownership of the house and provide information about

boundaries and rights of way.

Early redemption charges

A fee charged by some lenders if, during an agreed period, you repay the loan or

switch to another lender.

Equity

The difference between the current value of the home and mortgage amount.

Exchange of contracts

The point where your contract and the seller’s contract are exchanged.

Fire and Furnishings (Safety) Regulations

Levels of fire resistance for domestic furniture, furnishings and upholstery that your

property must meet before you can let it out.

Freehold

Ownership of the house and the land on which it stands (see ‘Leasehold’).

Full structural survey

A thorough investigation and report on the home’s structure.

Ground rent

Annual charge payable by a leaseholder to a freeholder.

Higher Lending Charge

An arrangement that covers the lender if your home is repossessed and the lender can't get the

money back from you. You're charged a ‘higher lending charge’ to cover the cost of this insurance.

Homebuyer’s report

Surveyor’s report on a property – less extensive than a structural survey.

Inventory

A comprehensive list of all the items in the property before the tenants move in. You should

check it when they're leaving to see that everything is accounted for.

Land registration fee

A fee paid to the Land Registry to transfer ownership record of the home.

Leasehold

Ownership of the home, but not the land on which it stands. When the lease expires, ownership

reverts to the freeholder.

Letting agent

Someone you pay to deal with the day-to-day running of the property. They will take around 10

-20 per cent of your rental income, but if you don't have time to do the work yourself, it can be well worth it.

Loan to value (LTV)

The ratio, expressed as a percentage, of the amount you want to borrow against the value of

the home.

London Inter-Bank Offered Rate (LIBOR)

The rate of interest at which banks borrow funds from other banks, used to set the rate of

interest you'll pay on an overseas buy-to-let mortgage.

Mortgage

A loan secured on your home. This security will remain in existence until you pay off the loan.

Mortgagee

The financial institution lending the funds secured on a property.

Mortgagor

The person taking out the mortgage.

Remortgage

Changing your mortgage without moving property.

Returnable deposit

A deposit the tenant pays to you before they move in to cover the cost of any damage to the

property and to protect you against unpaid rent. This is repaid to the tenant when they move

out.

Search fee

A fee charged for checking with the local authority for details of any plans that may affect the

value of the house.

Stamp duty

A Government tax that has to be paid on houses with a purchase price of £60,000 or more.

Tenancy agreement

An agreement between you and prospective tenants checked by a solicitor and signed before

you give them the keys, which explains all the rules of the tenancy.

Tenure

A term for the type of ownership of a house e.g. leasehold, freehold.

Term

The length of time over which a mortgage is to be repaid.

Title

The legal right to ownership of a house, as shown in the Title Deeds.

Vendor

The person selling the house.

Void periods

A period of time when you are between tenants and aren't receiving any rental

income.

Terms

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PAD Financial, 3 Newsham Road, Sheffield, S8 9EA tel 0844 443 4770 fax 0844 443 4771 email info@padfinancial.co.uk web www.padfinancial.co.uk

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up

repayments on your mortgage.

PAD Financial is an Appointment Representatives of Home Loan Partnership Ltd which is authorized and regulated by the Financial Services Authority