Associated Costs
A Mortgage Is Just One Of Many Costs
In addition to future mortgage payments and any redemption or penalty fees that may apply, there are a number of additional costs associated with buying or remortgaging a property that should be considered:
- Deposit: Although some lenders used to offer mortgages up to the full purchase price of a property, it is usual of the borrower to contribute some of the amount. The size of the deposit will affect the amount you need and are able to borrow as well as the cost of your loan. So the larger the deposit in relation to the loan, the better the rate available.
- Solicitor Fees: Charges for 'conveyancing' will depend on a number of things including the value of the property. It is advisable to get a quote from a number of solicitors for this service. The following costs are usually also payable via your solicitor:
(i) Variety of Searches including: HM Land Registry Search, Local Authority Search, Bankruptcy, Drainage and Water Search, Environmental and Chancery Search.
(ii) Land Registry: You must pay a fee to register yourself as the new owner with the central record of land ownership.iii) Stamp Duty Land Tax (SDLT)*:This is a government tax paid on homes when you buy a property.
Rates for a single property - SDLT only applies to properties over £250,000
- The next £675,000 (the portion from £250,001 to £925,000)-you pay 5% SDLT
- The next £575,000 (the portion from £925,001 to £1.5 million)-you pay 10% SDLT
- The remaining amount (the portion above £1.5 million)-you pay 12% SDLTIf you own another residential property: An additional 3% SDLT will usually be charged upon the total purchase price.
If you’re buying your first home: You can claim a discount (relief) if the property you buy is your first home. This means you’ll pay:
- no SDLT up to £425,000
- 5% SDLT on the portion from £425,001 to £625,000
You are eligible if you and anyone else you are buying with are first-time buyers.
If the price is over £625,000, you cannot claim the relief.
Rates if you’re not a UK resident: You’ll usually pay a 2% surcharge if you’re buying a residential property in England or Northern Ireland.
Valuation and Surveys: For their own benefit lenders will want to check the condition and marketability of your chosen home. They will use a qualified surveyor to make this assessment and provide a current valuation. This type of survey is called a 'Valuation report'. The fee is usually based on your home's value. For an additional cost you can get a more detailed 'Homebuyers report' or for much older properties or those with defects a full Structural Survey may more appropriate.
- Lenders Fees: Depending on the lender and the product, additional fees may be payable. Our advisors will stipulate whether or not these are included in the mortgage application:
- Lenders Arrangement or Completion Fee
- Lenders Legal Fees
- Lenders Valuation Fees
- High Lending Fee
- Mortgage Broker Fees: At Harrington & Horne charge a minimum fee for our mortgage advice of £1,000. However, this is only payable where we are not remunerated to this level by the lender we recommend.
- Building & Contents Insurance: The insurance of the property against fire and other risks will normally be a condition of the mortgage loan. You may also wish to insure your contents.
- Personal Insurance: To ensure that in the event of death, illness, accident or unemployment you, your family and home are protected.
- Removal Expenses: The cost will depend upon the quantity of your possessions and the distance involved.
- Utility Costs: Gas, Water, Electricity, Phone and Internet connection or transfer costs may be payable.
- Council Tax: Find out from your local authority what band your property is to determine what your payments will be.
- Home Improvements: Consider the costs of any immediate work that may need to be undertaken e.g. Damp Proofing, Roof Repairs, Plumbing, Rewiring.
- Mail Redirection: The costs of redirecting your existing mail to your new address.
- Emergency Fund: Things often cost more than you budget for!
*correct as at 4th November 2022
