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What are the costs involved when buying a property?

What are the costs involved when buying a property?

It’s easy to underestimate the costs involved when buying a property. Many people underestimate the costs involved when buying a property. Here’s a summary of the main costs you could incur.

Valuation Fee

Lenders may ask you to pay the valuation fee. The type of valuation you choose will depend on factors such as the age and condition of the property.

Application/Arrangement fee

This is the costs your lender will charge you for arranging your mortgage. Some lenders will allow the fee to be added to your mortgage. However, this means you will be charged interest on it over the term of the mortgage.

Legal costs and fees

The fees charged by a solicitor include the charge for conveyancing (the transfer of ownership of land), and the costs of legal registrations and miscellaneous costs (known as disbursements) such as Local Search fees and Land Registry fees. Some lenders may offer to finance some or all of the legal costs as an incentive.

Higher lending charge

If the amount you wish to borrow is greater than a certain proportion of the property’s value (typically 75%), you may incur a higher lending charge.

Early repayment charge (ERC)

Lenders may charge an ERC if you make an overpayment in excess of any stated limit. For example, if the loan is repaid early or you remortgage during an early repayment period. This can sometimes be a significant amount, so you should always check the terms in the offer letter from your lender.

Deeds release or exit fee.

Lenders may charge a fee to release the deeds of a mortgaged property to you or a new lender.

Our advice fee

Before we get started, we will explain how we will be paid for arranging your mortgage.

Stamp Duty Land Tax

In England and Northern Ireland, you can be liable to pay Stamp Duty Land Tax when you buy a residential property or a piece of land. In Scotland, you will pay Land and Buildings Transaction Tax and in Wales, you will pay Land Transaction Tax.

What else do you need to know?

Buying a property isn’t just about the right mortgage; it also involves solicitors, surveys and insurance.

Surveying

Before giving you a mortgage, your lender will instruct a survey to confirm the price you’re paying for the property is appropriate. The most common types of survey are:

• Basic mortgage valuation – This is for the lender’s own purposes to confirm the property provides security for the loan.

• Homebuyer’s report – This provides brief information on the property’s condition. The report will include comments on the property’s defects and the valuer’s opinion as to its marketability.

• Full structural survey – This report is the most comprehensive survey. It is based on a detailed examination of the property.

Solicitors

Before going ahead with a property purchase you may need to appoint a solicitor or conveyancer to act on your behalf. They will undertake the legal work required to ensure the ownership (title) of the property and land transfers successfully.

If you don’t already have a solicitor who undertakes conveyancing work, we can recommend one using a specialist company that provides access to a nationwide network of solicitors.

Some lenders will offer to pay for the basic mortgage valuation as an incentive. You may also want to consider one of the more detailed surveys, depending on the age and condition of the property. In most cases, you can use the same surveyor to carry out both surveys, but there’s nothing to stop you appointing an independent surveyor should you choose to do so. We can help you do this.

To get in touch with our Mortgage Adviser for fee-free advice, please call us on 01252 416516 or email us at info@peepalmortgages.co.uk. Alternatively, you can also reach out to us via our FacebookInstagram & Twitter.

Peepal for the People.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

Solicitors, valuers and surveyors are not regulated by the Financial Conduct Authority.


Download our Brexit Housing Guide

Due to the uncertainty of the Brexit deal, buyers and sellers are putting their plans on hold. Similar to Theresa May, buyers and sellers are having difficulties getting the right deal. 

We here at Peepal Mortgages share your concern and to bring light into the issue, have put together a concise guide for those of you looking to buy a property. 

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