By Felicity Hannah
Read the Full article on homesandproperty.co.uk
Saving up a big enough deposit, securing a mortgage and getting your offer accepted may feel like the end of an expensive, stressful process, but there’s more to come.
Make sure you’ve budgeted for fees, taxes and moving costs too, or the next phase may be even more stressful.
The last thing you need is to misjudge how much it will cost and end up with an unexpected bill that gouges a hole in your decorating fund or plunges you into debt.
Being realistic about the cost of buying a property and moving — on top of the deposit and mortgage — is important.
Here’s what you need to know about who will expect payment and when.
On top of your deposit you will need to consider any fees and charges that your mortgage provider will demand to process your application.
These can range from valuation fees of a couple of hundred pounds to booking fees and even mortgage arrangement fees from anywhere between £99 and £1,999.
Not every mortgage adviser charges arrangement fees so it’s essential you factor them into your sums when comparing deals.
Also, bear in mind that you may be offered the chance to add these costs to your loan rather than paying them up front. That might make the move more affordable, but it means you’ll pay interest on those fees for potentially decades.
Stamp duty is a tax on purchasing property and the amount you pay depends on how much you are paying for the home.
As of November 2017, first-time buyers purchasing a home of £300,000 or less will be exempt from stamp duty. Those buying a home costing up to £500,000 (which is likely if it’s in London) will have their payment reduced, paying only five per cent on the portion of the house price above £300,000.
For anybody else buying a primary residence (not buy-to-let or second homes, which are liable for an additional three per cent stamp duty) the following rules apply.
If your home costs more than £125,000 you will be required to pay stamp duty, with a higher percentage charged progressively with the price of the property.
|Property price||Stamp duty rate|
|Up to £125,000||Zero|
|The remaining amount||12%|
As an example, if you buy a house for £275,000, the SDLT you owe is calculated as follows:
- 0% on the first £125,000 = £0
- 2% on the next £125,000 = £2,500
- 5% on the final £25,000 = £1,250
- Total stamp duty = £3,750
This is not an area where you want to skimp so it’s important to spend some money on having a surveyor check the property. That way you understand whether the home needs any extra work, making it less likely you will move in and suddenly have to pay for a new roof.
You can get a basic survey for as little as £250-£300 but it is a really good idea to pay extra for a homebuyer’s report or a full structural survey, which may cost between £400 and £1,000.
If anything is discovered then you may be able to renegotiate the price with the seller to reflect the extra work you will have to do.
You’re likely to use a solicitor to deal with the legal checks and paperwork. This is likely to cost between £1,000 and £1,500, although it can be less.
A solicitor will also carry out searches on your property (designed to tell you if there are plans to build a high speed railway through your garden, for example) and bill you for those. These will not usually cost more than £250.
Estate Agent Fees
As a buyer you won’t pay anything to the estate agent overseeing the sale of your new home. However, if you are selling a property as well then you will need to include them in your budget.
Prices are negotiable but are typically between one and three per cent of the final sale price, with VAT on top. If there is a lot of demand in your area then you might be able to haggle, perhaps to as low as 0.75 per cent of the sale price.
Another option is to look at online estate agents, which typically charge lower, fixed fees. However, they may not do as much to help you sell.
Electronic Transfer Fee
It doesn’t seem fair but you will also need to pay the lender for the cost of moving so much money around. This is often about £50 although, as always, it can vary.
Unless you want to rent a van and move all your stuff yourself, you will need to pay some professional movers.
They often charge between £400 and £600, although obviously that may be higher if you are moving particularly valuable belongings and need a specialist.