The Costs of Buying a Home
Buying a home, whether you’re a first-time buyer or have been in this business before, can be a little stressful and expensive. The cost goes up even more when you want to buy and sell at the same time. Here is a helpful breakdown of some of the expenditures you will have to consider when moving home.
Estate Agency Fees
You should know that you only need to deal with estate agent fees if you are looking to sell a property. Their prices can vary so make sure you try to find the best price and leading service before diving into anything. The cheapest agents tend to be online ones who don’t carry the expense of maintaining offices.
If you aren’t too sensitive to costs and you would prefer a more personalised local service, you may have to pay an extra 1-2% of your selling price.
The fees are usually negotiable, especially in a “seller’s market” – that means when agents are fighting to get your instruction because of lack of houses on the market.
Property Service Fee
If you are thinking of taking out a mortgage, then the lender needs to know whether the property is worth what you’re paying for it. If you are lucky, your lender may offer this service for free, although they may not send you a copy of the report.
Occasionally, the lender may not offer a free valuation, in this case, you may need to pay a few hundred pounds for one. You can expect to pay roughly double that price if you would like to upgrade to more in-depth Homebuyers Report.
Having an element of choice is the key, in whether you wish to elect for a more detailed report or not. Your decision will likely depend upon the age and type of property you’re buying. This will be along with any fears/concerns you have about it.
Mortgage Arrangement Fees
Some mortgage products offer comparatively cheap rates. Although this benefit can be outweighed by an arrangement fee payable to the lender. Not every product has one, so the cost can be nil but could, for example, be £999 or even more depending upon the lender/product.
Sometimes these are to be paid upfront or you can elect to add these to the balance of your mortgage. Although, you would then incur further interest charges.
Being a Local Mortgage Expert myself, I compare mortgage deals with all fees added so we can compare on a like for like basis.
You’ll need to engage the services of a solicitor, the fees quoted by various firms can differ enormously. An estimation for a straightforward purchase with a local company is £600 for a low-value property. You will need to give the property address. This is the case whether it’s leasehold or freehold. You will also need to give the purchase price to obtain quotations.
The key points to cover when asking for a quote are:
- Ensure the firm includes VAT
- Ensure the firm includes the cost of any “disbursements.” These are fees such as Land Registry Fees and Local Authority Search Fees
- Is your Solicitor on your mortgage lenders panel?
You’ll be required to pay this tax which the solicitor collects on completion of the property purchase, in addition to your Solicitor’s fees and disbursements. Full details can be found here: https://www.gov.uk/stamp-duty-land-tax – a residential purchase of £180000, the Stamp Duty would be £1100.
Your Mortgage Broker will usually charge a fee for their service, typically £499. Please try to use a local company that charges on completion only. Avoid any application fees where your money will be at risk.
The cost of moving your furniture can vary significantly. It will depend on the level of service you are looking for. If you are quite happy to hire a van and roll your sleeves up, this can cost less than £200. On the other hand, if you are looking for a company that provides the full service this can be £1,000 plus.
If you would like to discuss the costs involved in obtaining a mortgage in more detail then please don’t hesitate to contact us.