The Cost of Buying a Property
There are various additional costs and fees which can be incurred when buying a home or arranging a remortgage.
The first of these is the mortgage arrangement fee. This a fee which is charged in some instances by the lender.
Usually an arrangement fee is only payable on a "special" deal such as a fixed or discounted rate, although some lenders
do charge arrangement fees on all types of mortgage. If an arrangement fee is charged, it will usually be no more than 1% of the mortgage amount
and can either be paid up front or added onto the loan.
There are also legal fees which are paid to your solicitor or conveyancer. These are made up of the solicitor's own fee
(typically £300-£400) plus "disbursements". These are fixed amounts that the solicitor pays to others on your behalf, for example
fees to the land registry, search fees, etc. Some lenders offer packages where they will meet part or all of these costs.
For more information please click here for a conveyancing quote.
Stamp duty is a Government tax on the purchase of a property. The level of tax varies depending on the purchase price. For a
purchase price of up to £125,000 there is no stamp duty. Between £125,001 and £250,000 the level of stamp duty is 1%. This rises to
3% for properties from £250,001 to £500,000. Properties with a purchase price of £500,001 or more attract stamp
duty at 4%. Stamp duty is not normally payable on a remortgage, except in cases where an
additional name is being added to the title deeds.
Finally, there are the valuation and survey fees. There are three types of survey: a Basic Valuation, a Homebuyer's Report, and
a Full Structural Survey.
A Basic Valuation is usually the minimum that is required by the lender before they will proceed with the mortgage. This type
of survey gives very little information about the state of the property and so is not normally recommended for older properties.
The cost of a Basic Valuation is usually around £100-£500. Again, this is something which the lender will sometimes pay, for
example as part of a special deal for remortgages or first-time buyers.
A Homebuyer's Report provides more detail about the overall condition of the property, and will
highlight any problems that require attention. The report follows an industry-wide format and covers areas such as: the heating,
wiring, evidence of damp, subsidence, condition of the walls and roof structure, etc. Costs for this type of survey are typically
in the region of £300-£600.
A Full Structural Survey is the most comprehensive type of inspection, covering every aspect of the property
from the foundations upwards. It is also the most expensive - often around double the cost
of a Homebuyer's Report.
The type of survey you opt for will depend to a large extent on the type of house or flat you are buying.
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