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What are the Costs of Buying a Property: Part 1

A quaint property on Park street in Rowley Regis

While the world of first-time buyers is filled with swirling confusion and the creeping fear of adult responsibility, it absolutely needn’t be. In the interest of providing the best service to our customers, Love Your Postcode have made it even easier for you to understand the minefield of fees created by buying property. By creating this step by step guide to the costs of buying property, we have removed one more obstacle between you and your future. In two parts, we will help you to understand exactly what it is you’re paying for and how much it could cost.

Step 1.

Mortgages.

The biggest, and most daunting aspect of buying property is quite possibly establishing a mortgage. While signing yourself up to a lifelong contract may not be your idea of a good time, it’s completely necessary if you want to buy a house. While these details may change depending on your own circumstances, here is the basis of what you need to know.

Mortgage Application Fee.

Before you even put an offer in on a house or a flat you must agree to a mortgage in principle. Meaning that you sort of already have it before you decide which house you want to live in. When you decide which is right for you, they may expect an application fee. This is like the extra money you put down when you want to reserve seats on a train. It is none refundable if you decide not to take the train. This fee works in exactly the same way.

Arrangement Fee.

So you’ve chosen your mortgage and paid the application fee, now the money lender will organise for your mortgage to go through. Depending on the lender, it could be a flat fee, just one price, or a percentage of how much you are borrowing. Be warned, you will be given the option to add this fee on to your mortgage total. While this may suit some, when you add this fee on to the mortgage total you will pay interest on this too.

Valuation Fee.

Now your mortgage provider will want to check that the property you want to buy is valued correctly. This just means they are making sure that you are borrowing the correct amount of money. No problem. Some lenders do this service for free. However, most charge and there is an additional admin fee after this evaluation.

Surveyor.

You can choose to pay for a surveyor to inspect your new property. There are three different types of survey and all varying in cost. By doing a survey, you make yourself aware of underlying problems with the property. This is advisable as you may be able to adjust your offer on the property in accordance with the actual state of the house or flat.
The three types of survey are:

Condition Report – Recommended for new and fairly new homes, this is a basic report that doesn’t offer advice or valuations.

HomeBuyer Report – For properties in good condition, this report will outline any immediate structural problems, the property’s value, and advise on any necessary repairs.

Structural Survey – The most thorough of all the surveys, a structural survey is extensive and advises on potentially hidden problems too. It will also outline repair options.

Mortgage Broker Fee.

Your Mortgage Broker has just given you their advice and arranged the biggest deal of your life so far. Now he requires a fee too. This fee is fixed most of the time, having just one standard price but sometimes, the Broker is commission based, which means the more you borrow the more they earn.

EPC.

By law, all sellers are required to have an Energy Performance Certificate when you put it up for sale.

Step 2.

Deposit.

This will probably be your biggest cost when buying property. At between 5% and 20% of the property’s value, this is made payable when you exchange products with the seller. This is what you have been saving all of your money for. Time to seal the deal.

CHAPS Fee.

This is charge made by your bank for depositing a very large sum of money on one day. On the same day as you complete with the seller, you must pay your deposit and your CHAPS fee on the same day as the contracts are signed in order to complete the sale. Likewise, sellers pay the same fee on behalf of their Solicitor when a large sum of money is transferred.

If you are unsure of the estate agents fees and need a strong agent to guide you through the process, be sure to contact us on 0800 862 0870.

Want to know how to help sell your home click here to find out.

What are the Costs of Buying a Property: Part 1
Last Updated: 2017-11-02T10:08:31+00:00
By Heather Adams