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As an owner you are likely to have to make regular payments

Mortgage or charge on the property

Unless you are going to buy your home with cash, you will need a special kind of loan called a mortgage.  There are various kinds of mortgage which your bank or building society can tell you about.  You can call the Financial Services Authority (F.S.A.) consumer helpline on 0845 606 1234 or on the internet at www.fsa.gov.uk

As an example, a £100,000 (25 year) fixed mortgage based on an interest rate of 6.5% would require monthly repayments of nearly £700.00  

After you have bought your home, you can sell it at any time but if you sell within the discount repayment period you will usually have to repay some or all of the discount.  Where the 5 year repayment provision applies we are entitled to recover a percentage of any increase in the value of the property but this does not include any increase in the value because you have carried out home improvements.

Our right to recover the outstanding discount in the first 5 years is protected by a charge registered at the Land Registry.  This charge is classed as a second mortgage.  It means that if your mortgage lender repossesses your home because you have not kept up the payments on the mortgage and they sell your home, the ‘outstanding discount’ must be paid back to us before any balance is paid to you.  In the first 5 years, if you wish to re-mortgage your home or take out a further loan you should check with us and the proposed lender to see if you are allowed to do this.  Please check before you have to make any payments or arrange anything.

Mortgage Protection

You should consider taking out insurance to cover your mortgage payments in case you lose your income through illness or unemployment.  Again, there are many providers of this service and you should ask for quotes and consult with your mortgage lender.

Life insurance

Mortgage lenders will normally require you to take out life insurance to at least the value of the property.  This means that in the event of your death the loan will be repaid.  There are many providers of this cover and you should ask the lender to get the best cover for you.

Repairs and maintenance

After you purchase, you alone will be responsible for the future decoration, repair and maintenance of the interior of your home and for its services such as water, electricity, gas and telephone. 

If you purchase a house you will also be responsible for all repairs and services to the outside of the property and its grounds too.  This includes the outside walls, windows and roof, as well as any fences around the garden.

In the case of flats we retain responsibility for the outside and areas you share with others, but we recover our costs in the annual ‘service charge’ you have to pay. 

Building repairs can be costly so it is very important to obtain a survey before you purchase.  In this way you will have as much knowledge as possible about the property.  Building elements deteriorate over time and their replacement can be expensive.  The need for repairs can happen at any time.  Sometimes repairs may need to be done when you have less money available.  We therefore advise you to put money aside regularly to cover these repairs. 

Building insurance

If you are a house-owner you should arrange for building insurance to cover the cost of repair or reinstatement in the event of fire or a similar incident.  This insurance will not cover you for repairs arising from wear and tear to the property. 

We provide buildings insurance for flat owners but the cost of providing it is recovered in the annual ‘service charge’.

Water, sewerage, gas, electricity or other utility services

If you pay these charges in with your rent at the moment and you buy your home, you will have to pay these separately to the service provider.

Contents Insurance

It is wise for you whether you are a tenant or an owner to insure the contents of your home.  There are many policies available so we advise you to seek a variety of quotes to get the best cover for your personal circumstances.

Service charges

If you buy a flat or maisonette we will be responsible for any outside repairs and for the maintenance of the ‘block’ and any shared parts.  We will also provide communal services such as lighting and caretaking. 

We will recover our costs for repairs, building insurance and so on from you by way of a ‘service charge’.  Service charges can change according to what works are carried out in a particular year and the level of communal services we have provided in that year.  Also, we are obliged to carry out repairs when they are needed and costs of repairs will be added to your service charge.  This may make the service charge higher than you expect in any one year.  When you get details of the purchase price from us for a flat, we will give you an estimate of the service charges.  This will give you an idea of the charge that you will pay in the first year but bear in mind unexpected repairs might become necessary.  This would result in a higher charge for that year, but generally charges do go up each year.  The law does provide a number of protective measures for leaseholders and the following independent website is worth looking at if you are thinking about buying and your home is a flat or maisonette. www.lease-advice.org

Page last updated on 24 May 2012