The Cost of Buying a Property
Buying a property is one of the biggest investments any person will make. But it is not just the purchase price that you need to consider. There are a number of other hidden costs to consider when working out your house buying budget. At what can be a stressful time, during the property buying process, it is important to have made all of your calculations at the outset, so there is no last minute panic to find funds.
As well as having your funds available, which typically will need to be at least 10% for the purchase price, you should also explore how much you can borrow to finance the purchase. Buyers can either approach banks and building societies directly, or instruct a mortgage broker to assist in finding a mortgage.
Below are a list of a number of other possible costs that you should consider when making your calculations:
1. Search Fees
Your solicitor will carry out a number of searches on your behalf. These will provide information about the property itself, including information on planning permission, building regulation certificates and local land charges, as well as information about the local area, such as flood and subsidence risks.
At Tolhurst Fisher, we have negotiated a very competitive search package with our search provider, giving a cost saving that we pass on to our clients. All search fees will be provided to you up front in our quote to you.
2. Survey / Valuation Fees
Your mortgage lender will, at the very least, carry out a valuation of the property, to ensure that it provides good security for the loan. Some mortgage deals allow for one free valuation. You should check with your mortgage provider whether any valuation is included.
In addition, buyers may want to have a more thorough survey carried out, such as a Homebuyers Survey or a full structural survey. These will give rather more information about the current condition of the property and any anticipated works. Buyers should speak to a surveyor about the most appropriate survey for them.
3. Fees charged by the mortgage lender / broker for arranging the mortgage
The mortgage company may charge arrangement fees that may be payable at the time of the mortgage application or at the completion of the mortgage. You should ensure that you are clear about all of these fees from the outset and when they are payable. Buyers can often choose to have these fees added to their loan, although they will then incur interest at the lender’s interest rate.
A mortgage broker may also charge a fee for preparing your mortgage application. You should establish at the outset whether you will be responsible for any fees, or whether these will be paid by the lender.
4. Legal Fees
Your Solicitor will charge a fee for the legal work carried out on your behalf, checking the title to the property, reporting everything to you and ensuring that exchange and completion goes as smoothly as possible. This will include liaising with your mortgage lender to ensure that funds are received on time.
At Tolhurst Fisher, we believe it is very important that all of our fees are openly disclosed at the outset, with no hidden extras that may come as a surprise towards completion. When we provide a quote, we include all fees that we could reasonably expect to incur in your transaction.
5. Stamp Duty Land Tax
Stamp Duty Land Tax is a tax payable upon the purchase of any property. The rate of tax is determined by the value of the property. First Time Buyers can claim an exemption in some cases, meaning that the tax liability will be reduced. Purchasers of a second property will have to pay an additional rate of Stamp Duty Land Tax when they purchase a second or subsequent property. Based on the information that you provide to us at the outset, we will calculate the Stamp Duty liability on your behalf and include this within our quote.
6. Land Registry registration fee
The Land Registry charge a fee for registering a property following completion. Registration is now compulsory whenever a property changes hands. We will deal with registration on your behalf following completion. The Land Registry fee is calculated on the value of the property. We will provide you with details of this at the outset.
The Land Registry offer a reduced fee for any applications completed online through their portal. Wherever possible, we do carry out applications electronically and pass the 50% saving on to our clients.
7. Removal costs
Whether this is your first property or you are moving from another property, buyers will have furniture and other items to take with them. You should obtain quotes from removal companies and make sure that these costs are factored in to your calculations.
The above list gives an indication of all the additional costs that buyers need to consider when deciding how much they can spend on a property. Having accurate information and doing these calculations at the outset can be crucial to ensuring the completion goes smoothly, with no unwanted surprises.
Author: Jonathan Pickford