When considering the purchase of a property, it is important to be aware of the multiple costs that are associated with buying process – aside from the cost of the property itself.  Communication with the professionals can put you in good stead to know exactly what process you are about to embark on, and whether you have purchased the property through an internet estate agents or a high street branch, they can help you with information and services.  In any case, here are some hidden costs to be aware of.

Mortgage Arrangement Fee:

When searching through the endless list of mortgage deals, you can easily overlook the fact that they will charge an arrangement fee.  These fees can range from £100 to £1000 and vary with each lender so it is important to budget for this charge.  It is worthwhile checking when you have to pay the arrangement fees as some lenders automatically add it onto the mortgage, which means you will be paying interest on it rather than charging you when you make your application.  Also watch out for lenders offering 0% arrangement fees as although the deal may look attractive it may actually cost you more in the long run.

Stamp Duty:

Stamp duty is a tax applied to the sale of property and land and ranges from 1% to 5% depending on the value of the property.  Currently, first time buyers do not have to pay stamp duty on a property valued up to £250,000, however things can always change!

If you are not a first time buyer, or a buying a property over £250,000 then stamp duty bands are as follows;

-          1% for properties between £125,000 – £250,000

-          3% for properties between £250,000 – £500,000

-          4% for properties up to £1million

-          5% for properties over £1million

Valuation and Survey:

When you purchase a property a valuation is necessary, which is generally carried out by the mortgage lender.  The purpose of the valuation is to make sure the property is worth what you are paying for it and can cost around £250 depending on the lender.

Surveys are essential when taking on a new property to uncover damage and faults, and a basic survey can cost just a couple of hundred pounds.  These types of surveys only pick up visible issues and damage to the property, whereas a full structural survey can cost at least £600 but can report more serious faults or structural damage, and although it may seem like a big pay out it can actually save you thousands in the long run and can put you in a good position to negotiate the buying price of the property.

Conveyancing:

Conveyancing is the term given to a legal member who can guide you through the legal side of the purchase and can cost from £400 upwards depending on the property.  Finding a good conveyancer is certainly worthwhile, either through personal recommendation or word of mouth, if not then the online estate agency can point you in the right direction.

Land Registry and Searches:

The land registry registers all properties in England and when house ownership changes there is an administration fee to pay, and this charge depends on the property price.

Searches are a set of standard enquiries raised with a particular authority, for example the local search is raised with the local council, the drainage and water search is raised with the water authority etc.  Your conveyancer or solicitor is responsible for raising these queries and they can alert you to the charges involved.

All this aside, it is also important to budget for those little extras you have not perhaps thought of yet, like;

-          Moving costs

-          Decoration or renovation costs

-          Disconnection and reconnection of services

-          Mail redirection

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Posted by admin on January 2nd, 2012 :: Filed under Uncategorized
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