Extra One Off Costs - Mortgage Advice

Extra One Off Costs - Mortgage Advice

What are the extra one-off costs?

When you take out a mortgage, it's not just the mortgage payments you need to worry about. There are actually quite a few one-off costs which you need to have budgeted for when you think about buying a home. Some people take out 105% mortgages or cash back mortgages so that they can cover these costs. Others set aside some money for them.
Bear in mind that some of these costs can be avoided, depending on the lender, so do look out for them.

Arrangement Fee - This is a fee charged by lenders to cover the cost of the administration involved in setting up the mortgage. Some lenders will waive this fee, in particular because they will make profits through the mortgage anyway. This fee is usually between £100 and £500.

Booking Fee - This is sometimes applied when you apply for a fixed rate mortgage, and is charged because in order for you to be offered that amount of money at that fixed interest rate, the lender needs to borrow a chunk of money from the money market, on whose rates fixed rates are set around. The lender has to "book" this chunk of money, and the cost for doing that is passed onto the borrower. This fee is usually between £100 and £500.

Lender's Valuation Fee -In order to check that the price of the property is fair and worth the price paid for it, a lender will commission a surveyor to carry out a valuation. The price of this depends on the property's value. So if the property is worth £50,000 you'll need about £125, but for a house worth £150,000 you'll need about £250. Look out for lenders who do not waive this fee, as an incentive for you to go with them.

Survey -This is for your benefit, and you are strongly advised to commission one to see if they can spot any defects that you'll have to pay to fix when you move in. A homebuyer's report will cost between £250 and £500 and a full structural survey will cost up to £1000 plus VAT. Again it depends on the property's value.

Legal/Conveyancing Fees - Although you could do this work yourself with a DIY conveyancing kit, it is strongly recommended that you hire an expert solicitor or licensed conveyancer to carry out the legal aspects of the purchase. You should shop around as there is no standard fee for this. Some solicitors charge a percentage of the property's value and some charge a flat fee. They will give you an estimate depending on the amount of work needed, which depends on the complication of the transaction.
You will also need to pay for the lender's solicitor to do their work. Sometimes you can use that solicitor yourself and cut down the cost. But get an estimate and compare with other firms.

Stamp Duty - A government tax that is charged for properties bought for above £60,000. You will pay 1% of the property's value if your home is worth between £60,000 and £250,000. You will pay 3% of the property's value should it be worth between £250,000 and £500,000, and 4% for anything above £500,000. So a £300,000 will cost you £9000 in stamp duty. Literally, you are paying for a local authority to put a stamp on your title deeds. The tax originated when William of Orange asked his courtiers to come up with a way of getting him more money through taxes. We kid you not!

Land Registry Fee - This is a government department looking after a registry of all the registered properties in England and Wales. They will charge a fee for transferring the registration for the property to the new owner. The fee will depend on the price of the property. Up to £40000 = £40. £40,001 - £70,001 = £60. £70,011 - £100,000 = £100. £100,001 - £200,000 = £200. £200,001 - £500,000 = £300. £500,001 - £1,000,000 = £500 and for £1,000,001 and above = £800.

Local Authority Search Fees - This is the fee charged by the local authority when your conveyancer carries out a local search to check that there are no potential problems such as a new road being built nearby or planning permission granted on a neighbouring property. You should allow £60 for this and more should the property be in a London borough.

Other Search fees and Disbursements - Other search fees include the coal authority, the land charge, index map, commons and company searches along with the bank transfer fee when your mortgage finds are moved. You should allow about £70 to cover this on an average house purchase.

Estate Agent's Commission - Should you be selling as well as buying a home, your estate agent will charge you a percentage of the property. This is likely to be about 1.5 - 2% of the property's value. Should you be selling it privately, then you should set aside funds for advertisements.

House-Hunting Expenses - The act of hunting for a house can be costly. You should allow money for the travelling you'll have to do, along with hotels and eating out should you be buying in a different area. You should add telephone calls as well as the fact that you may have to take time off.

Removal Fees - You should get quotes from 3 separate removal firms, because prices can vary enormously. You will also need to give tips. Removal companies will not only move your stuff, some will pack it all up and unpack it in your new property. Should you decide to do the removals yourself, you will need to pay for van hire, and petrol, plus return travel from the van hire company when you get and return the car. You will need to put aside £25 extra for insurance.

Mortgage Indemnity Guarantee (MIG) fee - An insurance premium that lenders sometimes charge when the Loan to Value of your mortgage is over 75% of the property. Some lenders will not charge an MIG at all, whilst some will do it only for LTVs of more than 80% or 90%. This is charged to cover the lender should you default on your mortgage repayments leaving your lender unable to recover the money it is owed. The insurance covers the lender, not the borrower.

Different lenders charge differing amount, but on average the costs will be thus:

Should your loan be between 75% and 90% of the property's value, you are likely to pay about 4% of the amount between what you have borrowed and the property's value.
Should your loan be between 90% and 95% of the property's value, you are likely to pay about 6% of the amount between what you have borrowed and the property's value.
Should your loan be between 95% and 100% of the property's value, you are likely to pay about 8% of the amount between what you have borrowed and the property's value.

Other Costs

- Premiums for Buildings insurance
- Premiums for contents insurance
- Removal insurance
- Disconnection and re-connection of utilities
- Installation of new equipment
- Laying of carpet
- Animal Kennelling
- Redirection of mail
- Notices for change of address.

Extra One Off Costs - Mortgage Advice

What are the extra one-off costs?

© AskFinancially.com 2008

Mortgage Advice

Insurance & Loans

Copyright

Extra One Off Costs - Mortgage Advice

What are the extra one-off costs?

© AskFinancially.com 2008

Mortgage Advice

Insurance & Loans

Copyright