There’s no doubt for a first time buyer and home movers that buying a home can be an expensive business. It gets even more expensive when you are buying and selling at the same time. Here we have a look at the breakdown of some of the costs and when things become due for payment.
One of the most considerable costs of buying a house is having a deposit. Your deposit will all depend on the price of the property you are purchasing.
For example, if the buyer has a 5% deposit of the purchase price and got accepted. A mortgage lender would then lend you the remaining 95%. The larger the deposit you can put down, the better mortgage deals you may be eligible for.
You only need to pay for an Estate Agent if you are selling a property. The fees vary widely from Agent to Agent. The cheapest Agents tend to be online ones who don’t carry the expense of maintaining offices.
If you are not as sensitive to fees and you would prefer a more personalised local service then that might cost 1-2% of your selling price.
The fees are usually negotiable, especially in a “seller’s market” – that means when Agents are fighting to get your instruction because there aren’t many houses on the market.
If you are taking out a mortgage then the lender needs to know the property is worth what you’re paying for it. Some lenders offer this for free, although they may not send you a copy of the report.
If the lender is not offering a free valuation then this could cost a few hundred pounds. You can expect to pay roughly double that if you want to upgrade that to a more in-depth HomeBuyer’s Report. The top of the range survey is the most expensive option and you can expect to pay a four-figure sum for one of those.
Your mortgage advisor can explain what each different survey consists of so you can make an informed choice. The older/worse condition the house is in the more likely you should consider upgrading the survey. Whilst a good survey is indeed expensive, it’s a fraction of the cost of buying a property blind and having to spend a lot of money on repairs over the years.
By rule of thumb, the mortgages with the lowest interest rates tend to come with the highest fees. Fees to set up mortgages can range from zero to a few thousand pounds. Your mortgage advisor will recommend the cheapest product to meet your needs, calculating the total amount to pay over the product term including all fees.
The higher the amount you are borrowing the more likely it is that you will want to keep the interest rate as low as possible. If you are borrowing a small amount then it’s usually cheaper to take out a mortgage without fees as a rule.
Lender arrangement fees can often be added to your mortgage. If you elect to add a fee then interest will be charged on the fee and this can really add up over the term of the mortgage.
You will need a Solicitor to carry out the legal aspects of your purchase. They need to check lots of things such as does the seller actually own the property, who is responsible for maintaining adjoining fences/walls etc and whether anyone has lodged any plans (for example to build future transport links). These things could affect your ability to sell the house in the future.
When comparing Solicitor’s fees (which might be in the region of a thousand pounds depending on various factors) you need to check if the quote includes VAT and local searches.
Not all Solicitors are on the “panel” for all lenders so be careful to choose the right one. Again your mortgage advisor can help you decide who to go for.
Some purchases are subject to Stamp Duty which is a tax payable to the Government. The rules on which purchases are captured by this tax change from time to time so you should check on the Government website to see if this is payable.
Full details can be found on the Government stamp duty page.
If Stamp Duty is due you will normally pay this upon completion to your Solicitor who will make the payment to the Government on your behalf.
Most mortgage brokers charge fees for their work, the amount that you will pay will often depend on how much the Lender pays the Broker for the work they do on their behalf.
Most brokers will only charge a fee if they are successful in obtaining a formal mortgage offer for you. Check your mortgage brokers online reviews to see what other customers are saying about them.
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