Factsheet: The conveyancing process - an introduction

What is conveyancing?

Conveyancing is the legal transfer of property ownership between a seller (vendor) and buyer. The conveyancing process starts when an offer on a property is accepted and finishes when the buyer has collected their keys, otherwise known as completion. 

There are a number of stages in the conveyancing process, but the average time from offer to completion is 12 weeks, although it has been known to take up to 40 weeks. 

There are 2 main types of buyer: Cash and mortgage. A cash buyer is someone who does not need to borrow any money from the bank, where as a mortgage buyer does. 

Types of property ownership (tenure)

Leasehold - this means you own the property, but not the land its built on, and you own the property for a set amount of time. Any shared spaces, both indoors and out are owned by the freeholder, but as a leaseholder you may be required to contribute to the upkeep, usually through ground rent and maintenance fees (service charges). This is a common tenure with flats, and was common with new builds, (see the "leasehold scandal")

It is common for leasehold properties to have a managing agent who deals with the freeholder/landlord on your behalf. 

Leases are usually from 150 to 999 years - the longer the better in the banks eyes. Lenders are quite often not willing to lend if a lease has less than 100 years. But it is possible for the lease to be extended for a fee. 

Freehold - this means you own the property and the land it's built on. This is the most common type of tenure. 

https://www.halifax.co.uk/mortgages/help-and-advice/freehold-vs-leasehold.html

Mortgages

LTV - Loan to Value Ratio - represented as a % is the amount you are borrowing vs the property value. For example an LTV of 70/30 means you are borrowing 70% of the property value, and have 30% of the value in deposit. The higher the loan, the more interest you are likely to incur as it is riskier for the lender (the bank) to loan you the money. 

Mortgage term

This is the length of time you will be making repayments. Shorter terms such as 20 years usually incur higher monthly costs, as you are paying off your mortgage quicker. If you want to reduce your monthly payments, this is usually done by extending your mortgage term, commonly to 30 years or more. 

Capital & interest vs interest only mortgages

A capital & interest mortgage means you pay off the amount borrowed plus interest each month. An interest only mortgage means you only pay off the interest. The former means you will build up equity in the property, making moving or upsizing easier. 

Fixed term vs tracker mortgages

A fixed term mortgage means you pay the same amount each month including interest. A tracker mortgage is when your repayments could change each month depending on the current interest rates. 

See our next article for the conveyancing process - step by step.