If you’re thinking of buying a property, there are a lot of costs involved. Some of them are pretty obvious – like the cost of the house and the mortgage repayments. But there are other costs that aren’t quite so obvious, and if you don’t know they’re coming they can be a bit of a nasty shock.
At Hudson Conveyancing we believe that buyers have the right to know everything including what they’re spending their money on during the buying process. So to help you out, we’ve put together a list of the most common costs involved in buying a property that you might not think about.
Conveyancing costs
Conveyancing is the legal procedure of physically buying a property and transferring ownership from one person to another. This is an essential part of buying a property, but one that many people don’t realise often comes at an added cost. The good news is you can use a solicitor or a specialist conveyancer for this, so you do have the option to shop around and find the best deal for you. The cost will vary depending on the value of the property you’re buying, which searches you have done and who you use to do them, but an average guide price is anywhere from £800 to over £1000.
Surveys and Valuations
Before you buy a property, you’ll want to make sure it’s structurally sound and in good condition. This is what surveys are for. There are 3 types of surveys you can choose from:
Level 1 Home Survey: Otherwise known as a condition report, this is the most basic survey option. It details the condition of the building, services and grounds, and provides an assessment of any defects and their importance.
Level 2 Home Survey: A visual, non-intrusive visual inspection of the building, inside and out, and any permanent outbuildings.
Level 3 Home Survey: The top tier level of survey. Level 3 is the most thorough survey you can get, and is recommended for any older properties. can get, and is recommended for any older properties.
This is on top of the mortgage valuations survey, which your mortgage provider will insist on. You want both because the mortgage valuation survey is done in the interest of the lender, while a home survey is done in your interests. A home survey can cost anything from a few hundred to over £1000, again depending on who you choose to do the survey.
We talked all about surveys and valuations in this blog, so if you want more information, click here to read it.
Stamp Duty
Stamp duty is basically a tax charged on all legal documents relating to a property purchase. It’s applied to residential and commercial properties, and the cost is based on a tiered system. So depending on the price of your property (or if it’s your second property) you could be facing an extra cost of up to 12% on your property price. Though I wouldn’t worry too much – 12% is only charged on properties over £1.5 million! But it’s worth noting that if you’re buying a second property, or a buy-to-let, then your stamp duty will be charged at a higher rate.
We wrote a blog about this a few months ago, which you can read here.
Mortgage Fees
On top of the cost of your actual mortgage, you’ll be asked to pay a few more up-front fees for your mortgage. These are usually:
Arrangement fees: Charged by the mortgage company as a way to cover their time arranging and processing your mortgage. They can range in price from just a few hundred pounds up to 1% of your mortgage value. Some mortgage providers will roll this cost up into the total cost of the mortgage, in which case you won’t see the charge, while others will want you to pay it separately at the start of the mortgage.
Indemnity fees: If you have a high loan-to-value ratio, then your lender may charge you something called an ‘indemnity fee’. This is essentially a fee to cover the insurance they take out in case you can’t pay back your loan. The good news is that most lenders won’t charge this fee, even if you’re borrowing a substantial amount, but some will, so it’s worth looking out for.
Broker fees: If you’ve used a broker, then you will likely need to pay some form of fee to them too. This can come in the form of a broker fee, but some will also charge up to 1% of the value of your mortgage and roll it in. So make sure you check the fine print for this so that you don’t get caught out.
Removals
And then, of course, there’s the small matter of actually moving your belongings. Even if you do this yourself, it’s not exactly a cheap option, as you will still need to rent vans and fill them with fuel. If you don’t have much to move then this could be a good choice, but most of the time people have a fair bit of furniture. Which means hiring a removals company to help. The cost of this can vary hugely depending on where in the country you are and which company you use, but it’s still something you need to factor in when you’re working out the cost of the move.
At Hudson Conveyancing, we firmly believe that advice doesn’t cost a thing, and we want you to make the most informed decisions possible when buying your new property. That’s why we’re always on hand to help with any questions you might have, especially around the conveyancing process while buying a home. If you’d like to know more, just get in touch with us today.
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