Having considered the actual purchasing process in our previous blog posts (click here for the buying process), it would be prudent to highlight some of the costs that buyers can sometimes overlook or not factor into the money they are putting aside to cover the eventual costs.
Here are the nine main costs that could be associated with your purchase that you need to factor in to your affordability!
1. Stamp Duty
Stamp Duty is a government tax on properties over £125,001. This is going to be one of the biggest extra charges, and for most will total in the thousands of pounds.
How much you pay is tiered depending on the house price.
0% on the first £125,000
2% on the next £125,000
5% on the next £675,000
10% on the next £575,000
12% on anything more
If you are buying a second home then there’s an extra 3% on each band, this applies to buy-to-lets and any holiday homes.
--> If you are a first time buyer, you get an allowance of £300,000. If you purchase your first property over £300,000, then anything over this allowance will be subject to a 5% charge.
If you are purchasing with a partner, you still only have £300,000, this does not accumulate to £600,000 as its £300,000 allowance per property, not applicants.
2. Mortgage fees
This fee has a few different names - arrangement fee, booking fee and mortgage fee are all common ones. This is the price you pay to the lender to have their mortgage. This can range between £99 and £2,000.
Low interest rates can sometimes come with higher fees, so work out the total cost of the mortgage to get a true comparison.
3. Valuation fees
Here the mortgage lender checks the property is really worth what you’re planning to spend. This is commonly between £150 to £1,500.
-- Mortgage Valuation - this is the basic valuation that will cost, on average, £200. This valuation is put in place by the lender so they can assess if the property is good security to lend on.
4. Survey fee
You also need to check everything is ok with the property. It’ll cost between £250 and £600. The more expensive the survey, the more thorough it’ll normally be, so it could be worth paying more to make sure there aren’t hidden problems waiting for you when you move in.
-- Home Buyers Report - A more comprehensive survey that will show any problems that need urgent attention, any potential legal issues and gives advice on how to remedy these problems.
-- Building Survey Report - This survey covers everything, in addition to the home buyers report they will establish property building materials, energy efficiency and will have the most comprehensive consideration to the roof, ground floors and general property area.
5. Legal Fees
Once you’ve got the mortgage and are buying the home you’ll have to pay your solicitor to process all the paperwork. Look at £850 to £1,500.
6. Local Searches
Another fee to your solicitor. Here they search for any issues such as planning permission. Plan for £250 to £300.
7. Transfer fee
You then have to pay for your money transferred. It’s generally £40 to £50.
8. Moving costs
On average plan for £300 to £600 to move all your possessions. This could of course be a lot more if you have a lot of furniture to transport.
9. Mortgage Adviser Fees
A typical mortgage adviser will offer their services for £100 - £300, however because advisers are also paid a procuration fee from the lender for introducing the client to them, they may choose to waive their fees.
MWS Financial Advisers Limited are experienced and friendly. We have a knowledgeable team of advisers, who have a collective industry experience of over 100 years! So you can see the team that will be looking after you know their stuff! Contact Us Today for a free mortgage consultation!