Cost of purchase

Getting the deposit saved is one of the first things people think about when buying their own home, however there are other expenses that need to be considered. Some of these costs do vary from lender to lender and area to area so please use this as a guide only.

Surveys

Valuation Report - You will normally pay the lender a fee when submitting the application form for the surveyor to value your prospective home. This is done for the lenders benefit to confirm that the property is adequate security for the loan. It will tell you if there are any major problems with the property such as damp electrical or structural problems but it is not a detailed inspection. The amount you can borrow will be based upon the valuation on the report rather than the amount you are paying for the property and usually if this is lower than the purchase price then it is advisable to try to renegotiate a lower price.

The cost of a valuation report is dependant on the purchase price of the property however usually ranges from £150- £500. There are often deals that offer a free or refunded valuation especially for First Time Buyers or clients arranging to remortgage. We will make you aware of these deals.

Homebuyers Report - This is much more comprehensive than a valuation report and is always advisable for someone purchasing an older property or one in a poor state of repair. The report will point out any major defects as well as any minor ones giving you a much better indication of any future expenses and problems. If we ask the lender to instruct the same surveyor to carry out this survey at the same time as their valuation it will usually save you time and money. This survey is carried out on your behalf and not the lender's, in fact they will not even ask to see it. The cost of the homebuyers report is usually roughly double the price of the valuation.

Full structural survey - A much more in depth report on the structure of the property but not normally used unless the purchaser is especially concerned about structural movement or if the house is very old. This can be very expensive to carry out as it normally involves digging down to the foundations of the property. Most purchasers will instruct, either a valuation or, homebuyers report as these would both point out any structural problems and whether further investigations are required. They could then decide if they should spend more money on investigations of withdraw from the sale. Further investigations will involve a Structural Engineers Report which will
Focus on the problems highlighted in the previous report. This report can cost in the region of £250- £500.

Booking & Arrangement fees

These are the fees charged by the lender to arrange the mortgage for you. The booking fee is usually charged to secure a particular fixed rate deal. They vary between different lenders and even the deals they offer so we will ensure that you are aware if there is a fee on the quotations that we produce. The fee is usually £250-£500 and can often be added to the loan or it should be paid with the application although some lenders will deduct it from the amount sent to the solicitor on completion.

Deposit

The deposit for your property is due on exchange of contracts if you are a first time buyer although we will need confirmation of the amount when we are shopping around for your mortgage. 5% or 10% are the most common although it is possible to pay no deposit or as little as 3%. As a second time buyer the funds are usually coming from equity in your property therefore you do not need to supply a deposit.

Indemnity guarantee

This is a fee that we will always try to avoid for you. It is payable if you are borrowing a high percentage of the purchase price and it protects the lender if you do not keep up the monthly payments and the lender is forced to repossess the property. If they then sell the house at a loss then they are able to claim the difference against the insurance that you have paid for! To make matters worse the insurance company could still chase you for the money. The fee is often over £1000 but the good news is that not all lenders will charge it even if you borrow 100% of the purchase price. If we have no choice than to do a mortgage with a lender charging an indemnity guarantee then normally you can add it to your mortgage.

Solicitors Fees

Again the fees charged can vary depending on area of the country, purchase price, service provided by the solicitor etc. We are able to provide you with a quotation on request but as a rough estimate you should allow £500-£800 for a purchase or remortgage and £1500-£2000 for a sale and purchase. In some cases it is possible to add these fees to the loan.

Stamp Duty

This is a government tax on property purchase and is therefore difficult to avoid. It is paid to your solicitor on completion of your purchase and can not be added to the mortgage. The threshold is now so low that with the rise in house prices over the last few years almost everyone is charged it. The fees are based on the purchase price of your property as follows-

Tax Year 2006/07
up to £125000 = 0%
£125001 to £250000 = 1%
£250001 to £500000 = 3%
£500,001 and above = 4%

A few areas in the country are exempt from stamp duty. You can find out if your new purchase is one of them by checking the Inland Revenue website.