Mortgages - Associated Costs

A Mortgage Is Just One Of Many Costs

In addition to future mortgage payments and any redemption or penalty fees that may apply, there are a number of additional costs associated with buying or remortgaging a property that should be considered:

- Deposit: Although some lenders used to offer mortgages up to the full purchase price of a property, it is usual of the borrower to contribute some of the amount. The size of the deposit will affect the amount you need and are able to borrow as well as the cost of your loan. So the larger the deposit in relation to the loan, the better the rate available.

- Solicitor Fees: Charges for 'conveyancing' will depend on a number of things including the value of the property. It is advisable to get a quote from a number of solicitors for this service. The following costs are usually also payable via your solicitor:

(i)   Local Authority Search: An application to the local authority for information about the property and any planned development which could affect your home.

(ii)  Land Registry: You must pay a fee to register yourself as the new owner with the central record of land ownership.

(iii) Stamp Duty Land Tax*: This one-off tax payment is based on the purchase price of your home: 0% up to £125,000, 1% of the purchase price between £125,000 - £250,000; 3% £250,001 - £500,000, 4% over £500,001.

First Time Buyers are currently exempt from Stamp Duty up to £250,000

- HIPS - Home Information Packs: anyone selling a property must prepare a HIP which is available to any potential buyer. The Government has stated what should be within the pack and nothing else is allowed within it. This includes an; index, sales statement, energy performance certificate, official title register & plan, local authority searches & water and drainage searches. Leasehold properties also need to include a copy of the lease in the HIP.

- Valuation and Surveys: For their own benefit lenders will want to check the condition and marketability of your chosen home. They will use a qualified surveyor to make this assessment and provide a current valuation. This type of survey is called a 'Valuation report'. The fee is usually based on your home's value. For an additional cost you can get a more detailed 'Homebuyers report' or for much older properties or those with defects a full Structural Survey may more appropriate.

- Lenders Fees: Depending on the lender and the product, additional fees may be payable. Our advisors will stipulate whether or not these are included in the mortgage application:
- Lenders Arrangement or Completion Fee
- Lenders Legal Fees
- Lenders Valuation Fees
- High Lending Fee

- Mortgage Broker Fees: At Harrington & Horne charge a minimum fee for our mortgage advice of £500. However, this is only payable where we are not remunerated to this level by the lender we recommend.

- Building & Contents Insurance: The insurance of the property against fire and other risks will normally be a condition of the mortgage loan. You may also wish to insure your contents.

- Personal Insurance: To ensure that in the event of death, illness, accident or unemployment you, your family and home are protected.

- Removal Expenses: The cost will depend upon the quantity of your possessions and the distance involved.

- Utility Costs: Gas, Water, Electricity and Telephone connection or transfer costs may be payable.

- Council Tax: Find out from your local authority what band your property is to determine what your payments will be.

- Home Improvements: Consider the costs of any immediate work that may need to be undertaken e.g. Damp Proofing, Roof Repairs, Plumbing, Rewiring.

- Mail Redirection: The costs of redirecting your existing mail to your new address.

- Emergency Fund: Things always cost more than you bargained for!

*correct as at May 2010

Partners: Kenneth Harrington & Katherine Harrington
Harrington & Horne Financial Services are Independent Financial Advisers which are directly authorised and regulated by the Financial Services Authority
Head Office: 31 Southdown Avenue, London W7 2AG