Costs and Fees

Buying a home should not divert your attention from the costs involved. On top of your monthly mortgage commitment you will encounter some of all of these costs.

Valuation Fees.

Lenders require security in the knowledge that the property is the value you say it is and will instruct a surveyor to provide a mortgage valuation. Some times lenders will offer this free as an incentive. You may decide to ask for a more detailed report and a Homebuyers Report will provide concise information on the state of the property including repairs, defects and the valuer’s opinion. A Full Structural Survey is based on a detailed examination of the property. Any areas of concern will be investigated and this needs to be considered if the property is in an area where there is a history of subsidence.

Arrangement Fees.

Today, lenders usually charge an administration fee to cover the cost of setting up your mortgage and this may need to be paid in advance. In addition, there will be a charge for the deal that you take and this will vary from lender to lender. You can add this fee to the mortgage, but remember you will be paying interest on this amount for the mortgage term. All or part may or may not be refunded if the mortgage is declined or withdrawn.

Legal Costs

When buying or selling a property, you will need to appoint a solicitor or licensed conveyancer to carry out the legal work. Conveyancing is the legal process of transferring ownership of the property from the seller to the buyer. There will also be a cost for the disbursements including: -

local searches and land registry fees
Liaise with the seller or buyers solicitor
Draw up contracts ready to exchange
Check the mortgage deed is ready for signing on the completion date
Complete the financial aspects including the mortgage, deposit and stamp duty

Stamp Duty

This is the duty payable when the purchase price is higher than the pre-defined limit set by the government. Remember, stamp duty is not payable on remortgages.

Higher Lending Charge.

This may apply when you wish to borrow more than 75% of the loan to value. The lender takes out an insurance policy for the excess to provide additional security to protect the lender in the event of repossession. Should this arise, then the lender will claim on the policy to cover any shortfall between the selling price and any unpaid interest and associated costs. Remember, you will owe the insurance company the difference. Most lenders will let you add this fee to the mortgage.

Mortgage advice fees

Lenders will only offer from their own range of mortgage deals and only explain their position. However, there are manly advantages to seeking specialist advice where you can gain access to the whole of the market. The cost of this service is met in many ways and you should speak to your adviser for the exact costings. These will appear on your Key Facts Illustrations. A fee may also be paid to your adviser for arranging building and contents and accident & sickness or unemployment cover.