When considering buying a new home it’s the headline numbers that grab our attention and get the mind racing. It might be the realisation of what your current home is now worth or that you've seen a ‘do-er upper’ at a knock down price that makes a move to a new house at the top end of a sensible budget now possible. However, it’s not as straight forward as it seems at the outset and it’s not just first time buyers that get caught out, stamp duty alone on a £300k house would be £9,000 for example. There are other unavoidable costs too such as structural surveys, mortgage fees and legal fees to traverse so we've put together a simple check list over a couple of articles for buyers to consider before getting in too deep.
You can expect to pay around £250 for a valuation fee. This is to reassure the lender of the value of the home as security before they agree to lend the money and to ensure the property legally exists. The cost of the valuation fee will change depending on the value of the property but on average it’s around £250.
Mortgage Arrangement Fees
As the housing market slowed down and interest rates were forced down so mortgage arrangement fees have risen sharply. To many this is a particularly dubious charge as banks make money in the form of interest on the sum that is lent to a buyer so arranging this to happen is something most people feel the bank should happily pay for. Charges vary between £400 and £1600 and some lenders will charge another one, a reservation fee, to secure a fixed rate. Be warned, both these fees are often non refundable even if the house purchase falls through!
Legal fees will cost around £500 or more if you have conveyancing too. Some lenders will include this as part of their package but your legal party will need to be approved by them.
Mortgages with fees included...
A word of warning. Many lenders will try to massage the fees into the cost of the mortgage, either to make it appear a less expensive process or because the buyer does not have the money available up front. You may end up paying a higher rate in interest over a long time to compensate them or you borrow the money to pay the fees and the cost is added to the overall mortgage value. Either way this will end up costing in excess of original fees.
On top of these fees are Stamp Duty, Surveys, Removal costs, Repairs, Furniture and other extras. These are covered in a sister article.
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