|How Much To Borrow?||Table of Contents||Choose Your Home|
Arrangement FeeA fee charged by lenders to cover the cost of setting up the mortgage. Some lenders waive this fee.
Lender's Valuation (Basic Valuation)All lenders require a valuation of the property to check that it is worth the price being paid for it. This is commissioned by the mortgage lender but you must cover the cost. The cost of the valuation depends on the value of the property - for example, allow about £125 for a property worth £50,000, £165 for a £100,000 house and so on. Some lenders do not charge this fee, as an incentive for you to take out a mortgage with them.
SurveyIt is strongly advised that you have your own independent, more detailed survey carried out to check for any defects. There are three types of survey: the Valuation usually carried out for the Lender (see above); the Homebuyer's Report which costs between £250 and £500; and the more comprehensive Building Survey (Structural Survey) which can cost anything up to £1,000 plus VAT, depending on the value of the house. You should also consider having newly built properties surveyed, although the condition of new properties is guaranteed by the builder, it is much safer to get any snagging carried out before you move in, or while you can retain money against outstanding works. The alternative of claiming from the builder afterwards can be a painful experience.
Legal/Conveyancing FeesYou will need to hire a solicitor to deal with the legal aspects of buying a property. There is no standard fee so it is a good idea to shop around for the best rate. Some solicitors charge a flat rate while others charge a percentage of the property price, normally up to half a percent. As well as the price of your house, the fee will take into account factors such as the amount of paperwork involved, how much skill is required and how complicated the transaction is.
You will also have to pay for the legal work done by your lender's solicitor. Again, prices vary so ask your lender how much they charge. If you use the same solicitor as the lender to do your conveyancing this may save you money, but compare charges with other firms.
Stamp duty is a tax, charged for properties above £125,000. If your new home is priced between £125,000 and £250,000, you will pay 1% of the property price.
From £250,000 to £500,000, it will be 3% and over £500,000 it will be 4%. So, for example, if you are paying £200,000 for your home you pay £2,000 in stamp duty. For a £300,000 property the stamp duty at 3% is much higher in proportion to the purchase cost (£9,000).
Stamp Duty Land Tax Exemption in 'Disadvantaged Areas'If you're buying a residential property in an area designated by the government as 'disadvantaged', you don't pay any Stamp Duty Land Tax if the purchase price is £150,000 or less. To find out more about Stamp Duty Land Tax and how you pay it, please see the HM Revenue & Customs article Tax on Buying Property.
Land Registry Fee
The Land Registry is a government department which looks after the registers of all registered properties in England and Wales. It charges a fee for transferring the register to the new owner. This fee is charged according to property price.
|Price (£)||Fee (£)|
|up to 40,000||40|
|40,001 - 70,000||60|
|70,001 - 100,000||100|
|100,001 - 200,000||200|
|200,001 - 500,000||300|
|500,001 - 1,000,000||500|
|1,000,001 and over||800|
Local Authority Search FeesLocal searches will be carried out by your solicitor/conveyancer to ensure that there are no potential problems such as planning permission on neighbouring properties or plans for new roads nearby. Allow at least £60, or more in London boroughs.
Other Search Fees and DisbursementsThese include index map, commons, the coal authority, land charge, company searches, bank transfer fees. Allow about £70 to cover an average house purchase.
Estate Agent's CommissionIf you're selling your property as well as buying one, the sum charged by your estate agent has to be taken into account. Usually this is charged as a percentage of the property price, around 1.5 - 2 per cent on average. If you are selling it yourself, you will need to pay for advertisements.
House-hunting ExpensesHouse-hunting itself can be a costly business - allow money for eating out, travel and telephone calls, and hotels if you are buying in a different area. Consider whether you will need time off work.
Removal FeesAsk for quotes from at least 3 different removal firms, as prices vary. Remember you will need to give tips. You can do the removal yourself, but this is much more time-consuming and inconvenient. If you are DIY-ing it, costs will include van hire (+VAT and insurance), petrol, and return travel from the van hire company when you return it. You will also need about £25 for insurance.
MIG Fees (mortgage indemnity guarantee)This is an insurance premium charged by some lenders where your loan amount is more than 75% of the price of the property - in other words, where the loan to value (LTV) is greater than 75%. Other lenders do not charge an MIG, while some only charge when the LTV is more than 80 or 90%.
This is charged in case you default on your mortgage repayments and the mortgage lender cannot recover its money. Note that this protects the lender, not you.
Costs vary from lender to lender but typical MIG premiums are:
- 4 per cent of the amount borrowed above 75 per cent on a loan of up to 90 per cent of the purchase price
- 6 per cent of the amount borrowed above 75 per cent on a loan of up to 90-95 per cent of the purchase price
- 8 per cent of the amount borrowed above 75 per cent on a loan of up to 95-100 per cent of the purchase price
Other CostsA few more to bear in mind:
- Buildings insurance premiums
- Contents insurance premiums
- Additional removal insurance
- Disconnection of services (water, gas, electricity, telephone)
- Reconnection of services
- Installation of new equipment
- Carpet laying
- Kennelling of pets
- Mail redirection
- Change of address notice
Contingency FundLeave a decent-sized contingency fund for emergencies. You do not want to be left completely penniless in case you have unexpected extra costs.
|How Much To Borrow?||Table of Contents||Choose Your Home|