You've found your dream home, you’ve taken on board the asking price advertised by the estate agent, and now you’ve had an even more favourable offer accepted by the vendor. So, that’s the purchase price. That’s your total outlay. Right? Err..no!
If only life were as simple! Of course it’s not the end of the story. It rarely ever is. Unfortunately, there’s a rather long list of additional expenditure on the fees associated with buying a home. Even more unfortunately, most of them are unavoidable. Some you may now be able to avoid, if the vendor’s Home Information Pack is as complete as it should be. Nevertheless, since all the remaining fees will still add up to several thousands of pounds, it’s important to take them on board at the outset and include them in your budget.
Mortgage Arrangement Fee
Some lenders will charge you a registration or arrangement fee for setting up the mortgage. It will be non-refundable, which means that you’ll still be bearing the expense even if your purchase doesn’t eventually go through. In some cases, this can cost you up to £400, although some lenders will allow you to add the cost to the mortgage itself, whilst some will waive it altogether in order to attract your business.
Mortgage Indemnity Guarantee Fee (MIG Fee)
Depending on what proportion of the purchase price you’re looking to borrow, you may have to pay your lender this fee for arranging his insurance cover for any financial loss arising from your defaulting on the loan. Lender’s policies and rates will vary. Some may insist on it if your loan to value (LTV) ratio is more than 75%, others may not do so unless the LTV is 80% or 90%.
Lender’s Survey/Valuation Fee
Any lender will need to make sure that the property is worth what you’re wanting to pay for it. The valuation will be conducted by the lender, but you’ll need to pay for it and the cost will depend on the value of the property. Budget for around £200 on a £100,000 property or £250 on a £200,000 property.
You’ll be very well advised to find out exactly what you’re buying by arranging your own, independent survey. Even on newer properties, this should be at least as detailed as the simple Homebuyer’s Report (costing around £250 to £500). Alternatively, you might be lucky and find that the vendor has opted to include a Home Condition Report in the required Home Information Pack (HIP). Nevertheless, on an older property, you will want to pay for a full structural survey by a qualified surveyor and this will set you back in the region of £1,000.
The legal processes involved in buying a home are complicated, so you’ll need to instruct a solicitor or registered conveyancer to do this work for you. Fees vary, so it will pay to shop around. Some charge a flat-rate fee, for others it’s a percentage of the purchase price (up to around 1% - so as much as £2,000 on a £200,000 property).
The legal processes will also include the relevant local, environmental and water searches. Unless these have already been satisfactorily obtained and certified in the vendor’s HIP (which they should have been, for any offer of sale after 14th December 2007), the cost of your obtaining them will be between £250 and £300
This is a tax on buying real property. It’s applied on a sliding, so that homes costing up to £125,000 pay no stamp duty; home costing between £125,001 and £250,000 attract 1% stamp duty; home from £250,001 to £500,000 attract 3%; and those costing £500,001 or more attract 4% stamp duty. Please note: Stamp duty brackets change from time to time so be sure to check the Direct.Gov.Uk website for the latest figures.
Land Registry Fee
If the property is registered, you will have to pay a fee for the necessary amendment of the Land Registry entry in your name as the new owner. The fee is on a sliding scale, related to the purchase price of the property, and ranged from between £100 to £500 for properties sold for between £100,000 and £1,000,000 or £800 for any more than £1,000,000.
Casting your eye across all of the above, you’ll soon be notching up at the very least £4,000 or more and, on top of all these, there are all the less definable expenses such as those incurred during the house-hunting itself, removal fees, building insurance, contents insurance, connection of services, installing new equipment. And don’t forget the carpet laying, mail redirection, change of address notice..etc!
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