The largest expense you’ll probably face when buying a house is the mortgage. There are other fees you’ll need to budget for as well.
- Mortgage Booking – not always chargeable and sometimes known as an application fee, this is charged by the mortgage lender and covers the cost of ‘booking’ your loan product while your mortgage application is processed by the company loaning you the money. An upfront fee, can be free to usual maximum of £200.
- Mortgage Arrangement – not always chargeable, this is the fee the company lending you money will charge you to set up the mortgage. This is likely to start around £500 but varies significantly
- Mortgage Valuation – before a company lends you a mortgage to remortgage your current property or buy a property, they’ll usually want to be sure they’re happy to provide a mortgage for the property (based on its current state) and decide how much they think it’s worth before offering a sum. They’ll have been given an estate valuation but need to check for themselves how much the property is worth. This fee pays for your lender to survey the property. Lender sometimes offer special ‘deals’ with free basic valuations. Lending companies can allow you to upgrade the mortgage valuation that your lender carries out to a homebuyer’s report, which looks at the property in a bit more depth. If your lender is happy to do this, you could save some money. You can opt for a full structural survey; you would need to instruct this yourself with a surveyor and the lender would still carry out a basic valuation.
An upfront fee, starting around £300 (some lenders include this for free).
- Survey – A full structural survey is optional but strongly advised. A survey tells you if there are any structural problems or hidden problems with the property that could affect its value and your decision to buy. These usually start at around £400, but could be more dependant on the type you choose. Please see the point on mortgage valuation as lenders may allow you to upgrade the mortgage valuation to cover this.
- Legal fees – If purchasing a property you will need to pay for a conveyancing solicitor to do the legal paperwork. Conveyancing solicitors specialise in residential property. They will liaise with the seller’s solicitor, mortgage lender and Land Registry to arrange your contract. If you are arranging a remortgage on your current property, the lender may instruct a solicitor and cover the costs. If they don’t you will need to instruct one. For a purchase, legal fees are likely to start at around £1000-£1500. For a remortgage, it can be free to around £350
- Stamp Duty – if you’re a first-time buyer, you don’t need to pay stamp duty if the property’s value is below £300,000. If you aren’t a first-time buyer, it’s mandatory to pay stamp duty tax to the Government when you buy a property in the UK which has a value over £125,000. See more on stamp duty The amount of tax you pay depends on the property value.
- Land Registry – the Land Registry charges a fee to register the property in your name on the title deeds. Your solicitor should arrange this for you and the include the cost within your legal fees. This tool can help you work out how much you’ll need to pay (https://www.gov.uk/government/collections/fees-hm-land-registry-guides) but it’s likely to start at £200-£500.
General Mortgage FAQ