THE REAL COST OF BUYING
Whether you are looking to buy your first home or move on to the next one, the first concern is always how much will it cost and is there anything I haven’t budgeted for. Here we look to give you an outline of all the costs to consider. It is always best to speak to an adviser as the true cost of buying will be different with every property but here are a few to consider.
Solicitors: - The solicitor’s job is to legally change the property out of the current owner’s name into your name. The solicitors will usually break down their cost in terms of the price for them doing the work, plus the costs of the charges that apply with land registry and local authorities. These are known as disbursements. If are you buying with a mortgage, then a solicitor will also need to complete searches on the mortgage lenders behalf. The total cost of all of this work usually ranges between £1,000-£1,500 depending on the purchase price of the property and the area you are buying in.
Stamp Duty: - This is a tax paid on the purchase price of your property. If you are buying your first home, selling your current home to buy a new one or are currently renting and want to buy then the first £125,000 of your purchase will be free from stamp duty. Above £125,000 then stamp duty is charged in brackets as follows:
Up to £125,000: Zero
The next £125,000 (the portion from £125,001 to £250,000): 2%
The next £675,000 (the portion from £250,001 to £925,000): 5%
The next £575,000 (the portion from £925,001 to £1.5 million): 10%
The remaining amount (the portion above £1.5 million): 12%
If you are buying a property to rent out or will own more than one home on completion of your purchase then you will need to add 3% to each of the brackets, including the Zero bracket for your stamp duty cost.
Survey: - The survey or valuation is designed to let you know that the house is worth what you are paying for it and highlight any areas of work that are recommended. If you are buying with a mortgage then the mortgage lender will always insist on a basic mortgage valuation being completed by them. How much this costs will largely depend on the lender and the value of the home. You are then given the option to upgrade this survey to a more in depth report known as a home buyers survey. This report will advise you on the current condition of the property and things to keep an eye on in the future.
Mortgage Arrangement Fees: - Each mortgage lender can charge up to 3 fees per application. These are booking fees, arrangement fees and survey fees. A booking fee is payable when you first submit your full mortgage application. The costs vary between lenders with some not even charging one but a typical fee is £199.00. The arrangement fee is the lenders fee for processing the application. Again depending on what deposit you have, which lender you go with and what mortgage deal you pick, the arrangement fee can vary between £0 – £2,000. The difference with an arrangement fee is that you can sometimes add this to your mortgage. If you do, you will be charged interest on it. It is best to speak to a mortgage adviser who is able to show you all of the comparative costs between all of the mortgage lenders.
Mortgage Adviser: - Speaking with a mortgage adviser early on in your property search will give you a firmer idea of all the costs listed above. As no two purchases are the same, it is always best to get an idea of the exact picture for you before finding the house of your dreams. The mortgage adviser will advise you on all of the above as well as a timescale of when you will need to part with this cash. If you are moving, they will also factor in the costs of Estate Agents and any charges due on your existing mortgage to show you what equity you can use to buy the next home. As the adviser, they will also guide you through the process once you have an offer accepted. How much the adviser charges for this service and when their payment is due depending on who you see. Here at Lomond Mortgages we never charge until completion, the end of the process when you have the keys. Whilst the charge can vary between applications depending on the complexity, a typical fee is £395.00 on completion.
Removal Cost: - You may be lucky enough to know a man (or woman) with a van that will make this costs as low as possible for you. You may be extra handy with a roll of bubble wrap and parcel tape. If not, there are plenty of local firms that can help from just moving the boxes to physically packing everything away for you. A google search will usually show up the firms most local to you.
Understandably this is only a guide and the specific costs incurred during your property purchase will depend completely on how the process goes, who you instruct as a solicitor and property value etc. We hope anyway that this helps you start budgeting for your new home!