Property Practice - Buyer's Funding of the Purchase

Question 1

Cash Buyer

Answer 1

Buyer to find out source of funds and source of wealth

Question 2

Mortgage Offer

Answer 2

Terms on which lender will lend money to buyer

Buyer’s solicitor can only give generic advice in relation to mortgage product

Question 3

Types of Mortgage

Answer 3

• Re-payment: buyer repays interest and capital
• Interest only: buyer re-pays interest only for the term of the loan and the capital at the end of the term
• Endowment: mortgage combined with life insurance policy, intention is that life insurance policy realises sufficient funds to re-pay the loan
• Pension: at end of mortgage term the pension policy used to repay what is left on loan
• Sharia compliant

Question 4

Lender’s Instructions

Answer 4

Buyer’s solicitor will also generally act for lender in residential transactions

Given with mortgage offer

Question 5

Certificate of Title

Answer 5

Confirms title is good and marketable

Lender will not release mortgage funds until CoT is submitted

Acts as request for the release of the mortgage advance

Lenders will specify in mortgage offer the amount of notice they require from receipt of CoT to release of mortgage advance (usually 5-7 working days)

Question 6

Borrowing from Private Source

Answer 6

Must be checked by buyer’s solicitor to comply with money laundering requirements

Question 7

Mortgage: Completion and Post-Completion

Answer 7

Completion of mortgage cannot take place until transaction completes

After completion buyer’s solicitor must register mortgage in charges register of title by including mortgage deed in application to Land Registry (known as ‘perfecting’ the mortgage)

Question 8

Time Limits for Mortgage Registration

Answer 8

Registered: within 30 day priority period
Unregistered: within 2 months of completion
Limited Company: registered at Companies House within 21 days of completion (certificate of registration must accompany the HMLR application)

Question 9

Mortgage Offer

Answer 9

Issued once lender is satisfied that property represents good security for the loan and the buyer can afford the repayments

Question 10

Occupiers on Completion

Answer 10

If any adult is to live in the property in additon to the mortgagor(s) they will be required to sign a waiver/consent form to ensure they do not acquire any rights in the property