Hidden Homebuying Costs To Budget For
Buying a home requires more than just a mortgage deposit. There are many other hidden costs that can catch out homebuyers. Not having the budget to cover these expenses could prevent you from being able to complete the purchase. Below are some of the overlooked costs to prepare for.
Mortgage arrangement fee
There are many hidden fees when taking out a mortgage. On top of a deposit, many lenders will charge a mortgage arrangement fee – a fee for setting your mortgage. This may also be referred to as an application fee, product fee or completion fee and it can cost anywhere from £200 to £2000. It may be possible to add this fee to your mortgage, however you’ll pay interest on it. Paying it upfront will prevent you from paying interest on it, but it does have its risks – you won’t get this money back if for any reason the house purchase doesn’t go ahead.
Mortgage valuation fee
Another fee that mortgage lenders will typically charge is a mortgage valuation fee. What is a mortgage valuation fee? Before agreeing to lend you money, a mortgage lender will typically send a representative to your property to assess its value to make sure that it’s truly worth the amount of money that you’re asking for. To cover the cost of this assessment, the lender will charge a valuation fee between £150 and £1500. You’ll need to be able to cover this cost in order for your mortgage application to be approved.
Legal fees
The legal transfer of a property from the seller to the buyer requires doing a lot of paperwork. You will need to hire legal professionals to help you with this. Look for expert conveyancing solicitors in your area who can handle this job for you. Expect to pay somewhere between £850 and £1500 for this service.
Broker fees
When shopping for a mortgage, many homebuyers will use a mortgage broker to help them find the best deal. Mortgage brokers will often charge a fee for their service – usually no more than £500. Make sure that you can cover this fee if you choose to use a mortgage broker.
Surveyor fees
Getting a home survey carried out is recommended before buying a property. This is an assessment of the property’s condition so that you can determine what repairs will need to be carried out in the years to come. If you don’t want to be spending thousands of pounds on maintenance, it’s worth investing in a home survey to check that you’re not buying a money pit. Chartered surveyors charge varying fees depending on the size of the property and how thorough you want the inspection to be. On average, expect to pay between £400 and £1500.
Stamp duty land tax
As a first time buyer, you may not have to pay stamp duty land tax – depending on the value of the property. If you’re already a homeowner, you will need to pay this tax when purchasing a new property. This is a percentage fee that is determined by the value of your home. It needs to be paid within fourteen days of buying a property and can often cost several thousand pounds – so make sure to set some money aside for it!
