Buying a House - The Costs Involved Part 1

Budgeting for a property purchase needs to include the costs of the entire process, not simply how much you can afford to pay the seller. Here are the (often) mandatory fees involved:

At mortgagesplease, we make it our business to understand exactly what a lender will charge for providing a mortgage. Some deals involving particularly attractive rates incur special up-front application fees, for example, involving several hundred pounds. It is often part of the game played by lenders to get higher up on the mortgage Best Buy tables, but can still prove a good deal for you: we can work out the details for you.

A lender has to be satisfied that the risk attached to its loan is reasonable, so may ask you to pay for a valuation of the property (up to a several hundred pounds for a larger place). Remember this survey is from the lender’s perspective – is it a balanced risk, not whether it is structurally sound from your point of view. You yourself would be well advised to have your own survey (from basic to full structural) costing upwards of £200. While your surveyor will, inevitably, hedge his or her bets up to a point, it will indicate any significant points of concern (and you can ask questions later to clarify what the surveyor discovers).

You will need a solicitor to sort out the conveyancing, dealings with the Land Registry and assorted other administrative necessities, costing between £500 and £1,200.

 Insurance is a sensible precaution (see Insurance), but also an expense that needs to be taken into account. Mortgage Payment Protection Insurance specifically designed as an income protection measure to help you pay your mortgage if you become unemployed, have an accident, or fall seriously ill. The more circumstances you wish to cover, the more expensive the monthly premiums and, of course, policies sold by lenders (just like policies offered by high street retailers when you buy a washing machine or a hi-fi) are almost invariably the most expensive.
 
 
The unavoidable and enormous expense of Stamp Duty is usually the biggest cost of all in a property purchase. As the percentage bands are charged on the full value of the property, the amount of Stamp Duty payable leaps for homes valued around the £125,000, £250,000 and £500,000 levels.
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