When buying any home you will incur costs. It is also unlikely you will avoid paying fees if you are selling your home.
Where do the fees go to?
- Mortgage lender: will charge you for most mortgage products. They can be called product fees , booking fees, sometimes you will pay both.
Surveyor: You will need at least a mortgage valuation. This informs the mortgage lender if the property you have chosen is worth the amount you are borrowing. You may even require a homebuyers report or a full structiral survey. Both of these are worthwhile investments because they give you a more detailed report on the condition of the property.
- Solicitor: You will need conveyancing work done. Your solicitor will apply for local authority searches, liase with vendors solicitor and also mortgage providers soilicitor.
- Local authority: They will charge you for any searches that are completed on your behalf by your solicitor.
- Inland Revenue: Unless your property is less than £125,000 you will pay Stamp Duty Land Tax (SDLT)
- Estate agent: If you are selling your home and use an estate agent you will pay anything from 1% of the selling price of your home.
The following is an example of costs that may be charged. The purchase price is £163,000 (this is just above the average house price in the UK. Source: Land registry) the mortgage required is £73,000 over 25 years. A house is being sold for £130,000. I have sourced a mortgage that offers me a tracker rate which according to calculatrions gives me the best value option over the 25 year term. The fees charged are as follows (information correct at the time of writing 25 April 2013).
A Booking fee £199.00 (charged by mortgage lender)
Lenders conveyancing fee £177.43 (charged by mortgage lender)
Money transfer fee £20.00 (charged by mortgage lender)
Soilcitors fee £398.00
Land registry fee £190.00
Stamp duty £1630.00
Money transfer costs £30.00
Disbursements (approx) £140.00
Estate agent selling fee@1% £1300.00
Total of the above = £5134.43
Stamp Duty Land Tax Rates
Disadvantge Area Relief
Disadvantaged Areas Relief (DAR) can reduce the amount of Stamp Duty Land Tax (SDLT) payable in areas designated by the government as ‘disadvantaged’.
DAR will be abolished for transactions with an effective date on or after 6 April 2013.
All claims to relief for purchases of residential property where the effective date is before 6 April 2013 must be made on or before 5 May 2014. Claims made after that date will not be accepted.
This guide explains which areas and properties DAR applies to, the current rates, and how to work out how much SDLT is payable if a property qualifies.
To make a claim for DAR you must complete an SDLT return even though there is no SDLT payable. The quickest and easiest way to do this is online.
For more information: http://www.hmrc.gov.uk/sdlt/reliefs-exemptions/disadvantaged-areas.htm
Your home may be repossessed if you do not keep up repayments on your mortgage
For further information or you wish to discuss further please contact:
Telephone number: 01708 640855
Authorised and regulated by the Financial Conduct Authority