So, you have decided to buy, you have an idea of what you can afford to borrow, and your deposit is in the bank ready to use. But would fees should you expect to pay?
For the purposes of this article I am going to use a £280,000 purchase price, first-time buyer with a £40,000 deposit. Obviously different fee combinations will apply.
What will a mortgage broker charge me to find a mortgage?
If you are using a broker, they will tell you their fee charging structure from the outset.
Some brokers won’t charge a fee, others can charge north of £500. I’d say that the norm will be £250 but this will vary.
Please ensure you understand what fee is payable, when the fee is payable, and if any refunds apply from the start.
Will my mortgage have any application fees?
A lender may or may not charge an application or a product fee.
If they do, that charge could be £499, £999 or £1,999 as typical examples.
Let’s keep this simple; a higher fee will typically attract a lower rate and vice versa.
As a rule of thumb the bigger the loan the more likely it is for a high fee to be a better option but you or your adviser can check. It’s just a case of doing the maths.
Lender fees can normally be added to the loan, but this is not necessarily cost efficient as you are effectively increasing the amount of money you are borrowing, which you have to pay interest on.
What legal fees are involved with buying a house?
I’d suggest it’s best to typically allow £900 for legal fees and related costs for the £280,000 purchase mentioned above.
If you are selling as well, you will need to add in a solicitor sale fee.
You usually pay Stamp Duty Land Tax (SDLT) on increasing portions of the property price above £125,000 when you buy residential property, e.g. a house or flat. https://www.gov.uk/stamp-duty-land-tax
Check an online stamp duty calculator for an accurate figure. https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro
There are different rules if you are a first-time buyer and the purchase price is £500,000 or less.
So, do your research carefully and ask your solicitor or conveyancer for a quote and explanations of what the quote includes and excludes.
Are there any valuation fees involved in buying a house?
Many lenders now throw in a free valuation, but if it’s not free the valuation will cost between £300 and £500 typically.
Please note, the valuation is for the lenders use only.
You must consider getting the appropriate survey for yourselves.
What will that cost? Anything from £400-£1000.
What does it cost to move home?
Don’t forget moving costs.
Are you going to hire a van or pay friends and family in beer? Depending on what you do, means you’re looking at anywhere between £50 to £1000!
(My daughter has a 4-figure number of friends on Facebook so why is always me who gets to move her round London?)
So, there you have it. A first-time buyer, as a rule of thumb, needs at least £3,000 or £4,000 for the above but of course it’s all down to circumstance and property size.
In future articles we will explore the work the solicitor does and explain the different types of survey available to you.