This guide explains the process from starting your house search to finally moving into your new home.
Step 1: Decide your budget
Buying a home is a long-term financial commitment and you should set yourself a purchasing budget that you can afford.
The first step is to determine how much money you can raise (the deposit) and the amount you can borrow from a lender (the mortgage). The size of your mortgage will depend on several factors such as the deposit, your income or equity in your existing property.
Once you have figured out your deposit and mortgage amount, you may assume that adding the two figures will give you a purchasing budget. However, this is not the case as there are other costs that need to be considered before setting a budget.
These costs include professional fees for valuation, legal and mortgage arrangement services, stamp duty (4% of the value of the property in urban areas), land registry fees and mortgage insurance fees.
Your purchase budget = {mortgage + deposit} + {sum total of extra costs}.
Step 2: Find your ideal house
Once you have decided your budget the next step is to search for a house. Make a list of the features you consider to be essential and use the list to move on to the next step. Essentials may include the number of bedrooms, price, age of the house, social amenities, etc.
When you determine the essentials, the next step is to perform a thorough house search. You can do this by checking local newspapers and property websites or you can hire the services of a professional real estate agent.
Step 3: Viewing
When you identify a home that meets your requirements, the next step is to arrange a viewing session. Consider both the exterior and the interior of the house.
Is the front of the house maintained well? Are there tiles missing on the roof? Are there built in wardrobes? Ask the owner as many questions as necessary, just to be sure.
Tip: Never buy a home before viewing it and never view a house alone. Ask a colleague to accompany you for security reasons.
Step 4: Make an offer
After finding a home that meets all your requirements, it is important that you move quickly to secure it. Make your offer based on the asking price. Your offer should be slightly lower than the asking price but you should decide if you are able to raise the offer if the initial offer is rejected.
At this point you should hire a property lawyer who will manage all the legalities of the transaction. The lawyer must be residing in Kenya so as to represent you in these proceedings.
Step 5: Arrange a property survey
When your offer is accepted, the next step is to arrange a property survey on the house. The survey helps to ensure you are aware of any issues or defects within the structure of the house.
Property survey includes mortgage valuation and home-buyer survey. Carried out on behalf of the lender, mortgage survey assesses the monetary value of the house and provides only the general comments on the condition of the property.
On the other hand, home-buyer survey is a more detailed survey (carried out on behalf of the home-buyer) to assess the general condition of the house including evaluating any issues that may affect the price of the property.
Step 6: Close the deal
Once the property survey is done you are now set for the final stage commonly referred to as sale agreed. At this stage, your lawyer checks out all the legalities of the sale.
This is also the time to proceed with your mortgage application, to ensure that your mortgage provider is willing to lend you on that specific property.
The seller’s lawyer will get copies of the house’s title deeds and other relevant documentation (e.g. lease) and prepare a draft contract of sale. On the other hand, your lawyer will check the contract of sale, title deeds and other documentation for any issues or inconsistencies.
Your lawyer will also organise all of the required local authority searches, request your deposit, deal with the formal mortgage offer and report to you with the contract signing.
Assuming everything goes as planned, your lawyer will transfer your deposit to the seller’s lawyer, prepare the deed of transfer and mortgage deed and arrange for you to sign them.
The lawyer will then receive and arrange for payment of the government stamp duty, prepare and send off application to land registry to register your ownership and if the house is mortgaged the lawyer will send deeds to the lender.
Once both lawyers exchange contracts, the house will become legally yours.
NOTE: The process of buying a home may appear so straightforward but you should always take precautions before parting with your money.
Source: HomeGuide
