Don't forget about these things when it comes to buying a house...
Fees and charges you pay when buying a house
When thinking about the costs related to buying your first house, the deposit you put down on your mortgage is just one part of the overall cost. There are other things along the process that you’ll need to factor in like mortgage fees, legal costs and removal/moving charges. Let’s dive in to having a look at them, shall we? Once you know about the extra costs you can get down to saving for them.
Most mortgage lenders will charge an arrangement fee for setting up the loan or arranging the mortgage for you. These costs go straight to the lender, they’re not charged by the mortgage adviser themselves.
You can get deals without fees, but they’re likely to increase the interest rate you pay and overall, your monthly repayments could be higher because of this.
Fees will vary between lenders, and some lenders will allow you to add the fees onto your mortgage, rather than pay them upfront but this will mean that your monthly payments could be higher.
Higher lending charges
A small number of lenders apply these charges if your loan-to-value ratio (LTV) is high. For example, if you’re a first-time buyer wanting to borrow 95% of the property value, they may charge extra as you seem like a higher risk. The charge covers their insurance fees in case you default on your repayment. So, this is another case for having more deposit as you could be able to access more deals with lower lending charges. If you need more tips on how to save for your deposit
, Beehive is here to help.
You’ll have to take out buildings insurance just before you complete on the purchase of your new home, as a requirement from your mortgage lender. You can take out home contents insurance at the same time to cover your belongings too so that you’re ready for when you move in. These are available as joint policies or separately if you’d prefer.
Land registry fees and Stamp Duty Land Tax
You won’t have to pay Stamp Duty if you’re a first-time buyer up to a certain amount, however everyone else will – and the amount is based on the value of the property you’re buying. Visit the Gov.uk website for the current taxes
. The land registry fee you pay will vary depending on the value of the property.
You’ll need a solicitor (also called a conveyancer) to sort out the legal parts of buying and moving home, such as transferring the legal title of a property from the property seller to you, the new owner. These costs vary across solicitors and is dependent on your location. You will need to ask for a quote, but it could be from around £1,000 up to over £2,000 depending on where you live and how much legal work is required for your house purchase.
How much stuff you have will obviously determine whether you need a big lorry and a removals company or whether you could easily do it yourself and hire a van. If you can hire a van or do it yourself it will almost certainly be cheaper, but removals companies are experienced in fitting everything into the back of a van like a magic game of Tetris, so it depends how confident you are in your own packing skills. The cost will depend on how much you have to move and how far, but removals companies usually work on half a day or a full day basis when it comes to billing.
A ‘search’ is when your conveyancer requests information from the local authorities to confirm details about any planned developments, disputes or roadworks that may affect a property.
Your lender has to make sure that the property is worth the value you’ve agreed to pay for it. This is done through a valuation. Costs vary depending on who carries out the valuation. Some lenders also offer free valuations. While the internet is a great source for research, it’s well worth taking mortgage advice before you embark on buying a property.
You might also consider having a Homebuyer Report (which includes a valuation report). This provides a more detailed review of the property but tends to be pricier than a standard valuation.