Up Front Costs
Valuations And Surveys
Valuations and surveys not only give you peace of mind that what you are paying is correct, but will assess the property as a suitable security to lend you money against i.e. if they have to repossess you are they going to be able to sell it to repay your mortgage. When you apply for a mortgage you will be required to get a basic valuation carried out on your property as a minimum. You normally pay this upfront, when the application is submitted. Most lenders offer the facility for their surveyor to complete a Homebuyers report at the same time as they do the Basic Valuation which could save you money due to the surveyors time and traveling costs being shared.
There are 3 levels of valuation / survey:
- Basic valuation – this is carried out purely on behalf of the mortgage lender even though you may have to pay for it. Most lenders charge valuation fees on a scale depending on the value of your property. The report is basic and all lenders disclaim any responsibility for the condition of the property. You have no comeback against the surveyor for any defects or problems overlooked in the report.
- Homebuyers survey / report – this service includes a basic valuation but also contains a report on the condition of the property, highlighting any defects that the surveyor has spotted. It is still fairly basic.
- Full structural or Building survey – the most thorough (and most expensive) report. If the property is defective, the surveyor should discover this. If major defects are not discovered then the surveyor acting for you would have some legal liability, and you would be able to claim redress.
With any level of survey, if there are potential or actual defects found the surveyor may suggest you obtain additional specialist reports such as a Structural Engineers report or a Damp and Timber survey. These will be at your expense and may delay your move.
Some Lenders will ask you to pay a fee on application for your mortgage typically £99 to £299. This fee is to secure the funds you are intending to borrow. It is sometimes described as an administration fee or a booking fee which can secure a mortgage rate where the funds for that product may be limited. Some lenders believe the fee is a useful way of getting the borrower to show commitment at an early stage. Reservation fees are not normally refundable should the mortgage not go ahead.
Mortgage arrangement / application fee
Most lenders will charge some sort of arrangement fee when taking out a mortgage these can be anything from £0 to £1000+! Assured Mortgage Advice will explain all the conditions that may apply. These fees can play a massive part in choosing the best mortgage for you as very often the lowest rates will have the larger fees, therefore the cheapest rate does not necessarily mean it is the cheapest mortgage for you.
Brokers charge fees for their advice and recommendation service offered to you. Typically fees are paid when the application is submitted. Your adviser will be able to explain any broker fees to you. These fees can vary depending on your circumstances but will be clearly explained and documented for you.
There may be a fee for arranging your mortgage and the precise amount will depend on your circumstances. This will typically be £300.
Costs payable at Exchange of Contracts/Completion
Early repayment charge
The charge some lenders make if a mortgage is paid off early within an incentive period e.g. during a fixed rate. Assured mortgage advice will check through your current mortgage details to see if this is applicable and is so it may be possible to port your existing mortgage to the new property to avoid paying these.
Estate agents’ fees
These will differ between Estate Agents, some will charge upfront fees to market the property and then a fee on the completion of sale. The cost is likely to be based on a percentage of the property value however some will charge a fixed fee. It is best to get a few Estate Agents out so you can compare their valuations and fees.
Solicitor / Conveyancing fees
Conveyancing is the legal process to transfer the ownership of a property from the seller to the buyer.
If you are buying a property, your solicitor works for you and on behalf of the mortgage lender, who usually insists on certain searches before they will release the money for your property.
If selling a property, the solicitor will draw up a contract for the sale. They will also apply for title deeds (or details of freeholder if leasehold) from your mortgage lender. They will also set a completion date and inform the relevant parties and make sure all mortgage conditions requiring attention are complied with.
It is really important to have a good Solicitor/Conveyancer due to the complex nature of the conveyancing process and that any problems can cause long delays in the buying process.
If your do not have a Solicitor in mind, Assured Mortgage Advice can recommend a good solicitor for you.
When you buy property, you may need to pay stamp duty. Stamp duty land tax (SDLT) applies to any property purchase over £125,000, unless your property is in a disadvantaged area where separate rules apply. The table below shows you the current limits (as at Jan 2015):
Purchase price of property:
Up to £125,000 – 0%
£125,000.01-£250,000 – 2%
£250,000.01 – £925,000 – 5%
£925,000.01 – £1,500,000 – 10%
£1,500,000.01+ – 12%
Removal fees are one of the easily forgotten costs of property buying or selling. Removal fees will have to be paid if a company is hired to help shift belongings and goods from one property to another. You should look around for a competitive quote and ask around for a reliable removal firm, your estate agency will help you with this.
If you need some help with finding a removal company Assured Mortgage Advice can assist you.
Assured Mortgage Advice will explain all the potential costs that could be applicable to you based of your circumstances. If you have any questions please call on 0800 055 66 36 or email [email protected].