Types of Fees
There are a number of possible fees
when purchasing a new property, whether you are a first time
buyer, or moving home. The first thing people normally think
of is the deposit, however, we have compiled a list of the
different types of fees, how much they could be, and what
they are for, to help you with budgeting. Some of these costs
do vary though from lender to lender, and area to area, so
please use this as a guide only.
Surveys
Valuation Report - You will normally pay the lender a fee
when submitting the application form for the surveyor to value
your prospective home. This is done for the lenders benefit
to confirm that the property is adequate security for the
loan. It will tell you if there are any major problems with
the property such as damp electrical or structural problems
but it is not a detailed inspection. The amount you can borrow
will be based upon the valuation on the report rather than
the amount you are paying for the property and usually if
this is lower than the purchase price then it is advisable
to try to renegotiate a lower price.
The cost of a valuation report is dependant
on the purchase price of the property however usually ranges
from £200 - £500. There are sometimes deals that
offer a free or refunded valuation especially for First Time
Buyers or clients arranging to re-mortgage. We will make you
aware of these deals if they are available.
Homebuyers Report - This is much more
comprehensive than a valuation report and is always advisable
for someone purchasing an older property or one in a poor
state of repair. The report will point out any major defects
as well as any minor ones giving you a much better indication
of any future expenses and problems. If we ask the lender
to instruct the same surveyor to carry out this survey at
the same time as their valuation it will usually save you
time and money. This survey is carried out on your behalf
and not the lender's; actually they will not even get to see
it. The cost of the homebuyers report is usually about double
the price of the valuation.
Full structural survey - A much more
in depth report on the structure of the property but not normally
used unless the purchaser is especially concerned about structural
movement or if the house is very old. This can be very expensive
to carry out as it normally involves digging down to the foundations
of the property. Most purchasers will instruct, either a valuation
or, homebuyers report as these would both point out any structural
problems and whether further investigations are required.
They could then decide if they should spend more money on
investigations on the property or withdraw from the sale.
Further investigations will involve a Structural Engineers
Report which will focus on the problems highlighted in the
previous report. This report can cost in the region of £250-
£500.
Booking & Arrangement fees
These are the fees charged by the lender to get the deal on
offer and arrange the mortgage for you. The booking fee is
usually charged to secure a particular fixed rate deal which
may mean you have to pay this upfront. They vary between different
lenders and even the deals they offer so we will ensure that
you are aware if there is a fee on the quotations that we
produce. The fee is usually £300-£600 and can
often be added to the loan, however, you will then pay interest
on it if it is, or some lenders will deduct it from the amount
sent to the solicitor on completion.
Deposit
The deposit for your property is due on exchange of contracts
if you are a first time buyer although we will need confirmation
of the amount when we are shopping around for your mortgage.
5% or 10% are the most common although it is possible to pay
as little as 3%. It is acceptable in some cases to put no
deposit down at all, as 100% mortgages may be available. As
a second time buyer the funds are usually coming from equity
in your property therefore you do not need to supply a deposit.
Higher Lending Charge
This is a fee that we will always try to avoid for you. It
is payable to the lender if you are borrowing a high percentage
of the purchase price. The lender may use part or all of this
charge to purchase protection which protects them if you do
not keep up the monthly payments and they are forced to repossess
the property. If they then sell the house at a loss, they
are able to claim the difference against the protection that
you have paid for! To make matters worse the protection company
could still chase you for the money. The fee is often over
£1000 but the good news is that not all lenders will
charge it even if you were to borrow 100% of the purchase
price. But if we have no choice than to do a mortgage with
a lender charging a higher lending charge, then normally you
can add it to your mortgage if you did not have the funds
to pay for it before completion. If the higher lending charge
is added to the mortgage though, you will pay interest on
the amount added.
Solicitors Fees
Again the fees charged can vary depending on area of the country,
purchase price, service provided by the solicitor etc. We
are able to provide you with a quotation on request but as
a rough estimate you should allow £700-£900 for
a purchase or re-mortgage, unless we get a free package from
the lender, (Re-mortgages only); and £1500-£2000
for a sale and purchase. In some cases it is possible to add
these fees to the loan, but again you will pay interest on
anything added.
Stamp Duty
This is a government tax on property purchase and is therefore
difficult to avoid. It is paid to your solicitor on completion
of your purchase and can not be added to the mortgage. The
fees are based on the purchase price of your property as follows-
£125,000 and below 0%
£125,001 to £250000 1%
£250001 to £500000 3%
£500,001 and above 4%
A few areas in the country are exempt
from stamp duty. You can find out if your new purchase is
one of them by checking the Inland Revenue website.
Removal Costs
When moving home, you may have to pay for a removal company
to help you transport all of you furniture and belongings
to the new address. Many companies charge by the hour, and
could cost on average £400 - £800 in total.
Your home may be repossessed
if you do not keep up repayments on your mortgage.
Details
of our fees can be found here.
The FSA does not regulate Commercial
Mortgages or some forms of Buy to Let Mortgages.
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