Trading Up Mortgage Process

Here are the steps involved in a trading up mortgage:

The Offer

First you find the property you want, and then you make the offer.

You will normally make your offer to the estate agent working for the seller, and you should first offer less than asked because many sellers add something to their price to make buyers think they are getting a bargain when they settle for less. This is what your valuation is for. What repairs and redecoration are needed?

Offer Acceptance

The real estate agent will write to you when your offer has been accepted.

You might have the valuation prior to the offer, but if not then it should be carried out now, particularly a structural survey. If the house is not sound, then you can withdraw the offer without penalty. The offer you make at this stage is not binding until contracts have been signed and exchanged.

This is also when you must call the mortgage lenders of your choice, and get your mortgage arranged. Your choice of lender should take you through the stages involved in your application.

Exchange of Contracts

Your mortgage lender will give you a formal offer once the survey has been found satisfactory, and this will inform you of the conditions of the mortgage loan.

You will have to pay the agreed deposit when contracts are exchanged, and although you are both now legally committed to the sale, and you will lose the deposit if you pull out, his is not yet the completion stage.

Since you are committed to the purchase, you should now insure the property because should it burn to the ground from now on, it will be legally yours, and you will still have to pay for it. Once the contract has been signed, your solicitor will have it delivered to the seller's solicitor, when it will be exchanged for the contract signed by the seller. That is referred to as the 'exchange of contracts'.

Completion of the Transaction

Now all that has to be done is for the balance of the purchase price to be paid to the seller.

What usually happens is that you will pay your solicitor the balance of the deposit agreed with the mortgage lender, and they will pass on the loan amount. Your solicitor will then pass the full balance (purchase price less deposit already paid) to the seller's solicitor and the deal is completed. The home is legally yours, and you will then receive the keys, but not the deeds. They will be retained by the lender until you have paid off the mortgage loan.