When you make a sizable investment like buying a new home, the process from start to finish may not be as straightforward as you would want it to be. One thing that will most likely take you by surprise is the hidden costs that come with the purchase. In an ideal world, the value of the house will be what you pay and that will be that. This, however, is far from the case. We want to take a look at some of the additional expenses that will inevitably crop up along the way.
When applying for your mortgage, your lender may wish to conduct a valuation survey. This is less to do with the condition of the property but rather a check to see if the amount of money that is being loaned is accurate.
This is paid during the early stages of a mortgage application so is one of the earliest fees that you will encounter and is largely dependent on how much the property is worth.
Other fees involved in a mortgage application include:
For more information regarding mortgage advice, you may wish to talk to someone from the Mortgage Advice Bureau.
- Arrangement Fee (or Completion Fee) which covers the set up of the mortgage
- Application Fee which almost acts as a deposit, ensuring your mortgage funds throughout the term
- Transfer Fee which covers the correspondence between your lender and solicitor.
One of the more well known fees not included in the value of a property is Stamp Duty Land Tax (SDLT). SDLT is a tax that is paid when you purchase a residential property or plot of land that is over a certain price. You may have heard that the government introduced a Stamp Duty Holiday over the last year, which meant that all house purchases under £500,000 were not subject to the tax. Now the deadline has passed, all properties purchased for £125,000 and above will have to pay the usual rates.
The amount of Stamp Duty you pay is dependent on the value of your home. For properties purchased for between £120,001 and £250,000, the tax rate is 2%. Between £250,001 and £925,000, you pay 5%.
Stamp Duty needs to be paid within 14 days of completion. As moving house can be a very stressful process, filing the tax return is something that can be done by a conveyancer.
If you are planning to purchase a house in the very near future, you should use the Stamp Duty calculator on the Gov website to find out how much you need to set aside.
While a lot of these costs are a result of intangible things and administrative duties, the actual physical efforts involved in moving house are just as significant if not more so. Hiring a removals company to assist your move is, again, not a necessity but something that makes the move infinitely easier for you.
Fees for a removal company can vary depending on who you contact and what you need (a couple living in a one bedroom flat in London will not require as much effort as a family of six living in a 5 bed home in suburbia).
Getting a property surveyed before you purchase it is not a definite requirement but it is something that is strongly recommended by property professionals.
Ensuring that the property you are planning to purchase does not have any structural irregularities, bad wiring or just general house issues will mean that when it comes time to move in, you will know exactly what you are in store for. You can begin planning any potential renovations or repairs ahead of time. Without this knowledge, you could be met with a long list of surprises that you need to get actioned, often at a great expense.
Equally, a survey can highlight any major problems that may even put you off buying that particular property altogether, saving you money in the long run. Removing Japanese Knotweed, for example, often requires specialist and professional assistance so it will be useful to know this going into it. Getting a professional survey can, in a way, pay for itself. It may be worth noting that you can conduct a survey yourself however paying for a professional will only prove to be more valuable later on.
Conveyancing is the legal transfer of ownership of property from one party to another. The fees involved can be split into two areas.
The first is the flat fee of what a conveyancer charges. In simple terms, this is just how much a conveyancer’s time is worth, much like paying for any other service.
The other part of conveyancing fees is known as “disbursement”. This is more representative of what the conveyancer will end up doing on your behalf. Authority searches (for potential planning restrictions for example), land registration fees as well as more of the administrative duties such as arranging title deeds.
These fees are by no means set in stone and will vary depending on several factors, most notably the location of the property, if it is by a body of water like a river for example.
Buying and selling a house is difficult. As we said at the start, it is a sizable investment; not just in terms of money but the time and mental effort put into it can add up very quickly. Having to go through all of these steps and paying all of these fees along the way can maybe even put you off the idea of moving entirely.
Spring has a wealth of experience in buying properties and helping people sell their house quickly, taking on the responsibility of all of the fees along the way. We offer free independent valuations including a RICS survey, all conveyancing and legal fees are included, getting your sale wrapped up in as little as seven days or at a timescale to suit you. For more information on how we can help, contact a member of our team today.