Buying a home in the UK: costs and fees
The cost of buying a home can be quite daunting, especially if you are buying for the first time. As well as the cost of your new home you need to plan for a number of other charges.
Solicitors fees when buying a house
You will need to pay a solicitor legal fees for the conveyancing. In addition, the cost of land registry charges and local search fees will be passed to you. Ensure you ask your solicitor for an estimate of charges before they start work
Surveys
You will have to pay for a surveyor to value your prospective new home. The Lenders Valuation Report is undertaken primarily for the lenders benefit, but you should be allowed to see a copy of the report. The report will tell you if there is something seriously wrong with the property but is not detailed. You may wish to take out a more detailed survey of the property such as a home buyers report or a full structural survey. These will cost you extra but can prove to be money well spent. Keep in mind that a more detailed report can lengthen the mortgage process.
Stamp duty on houses
Stamp duty is a government tax on property purchases above a specified amount. The amount of tax is based on a percentage of the total purchase price and increases in price brands, as shown below:
| Value of property (GBP, £) | Percentage stamp duty payable |
|---|---|
| Up to £120,000 | 0 |
| £120,001 - £250,000 | 1% |
| £250,001 - £500,000 | 3% |
| Over £500,001 | 4% |
Mortgage Indemnity Guarantee Premium
The mortgage indemnity guarantee premium is a payment often demanded by a lender if they feel that they are taking on risk by lending above a certain percentage of the property's value. This is usually a 'one-off payment' paid on completion of the mortgage that is not refundable. It protects the lender against you defaulting on the loan and covers some of the costs associated with having to repossess the property. The premium can vary considerably between lenders. Your Hillhouse adviser will tell you if the lender enforces this payment p>
Mortgage application fees
Some mortgage lenders charge an application fee to cover their initial administration costs. Be aware that these charges may not be refundable if your purchase falls through. Some lenders offer mortgage deals that cover all or some of these fees. Your Hillhouse adviser will ensure you are made aware of the costs involved in your recommended mortgage.
Redemption penalties
Many mortgages have financial penalties for early repayment or switching of mortgage type. These penalties may apply for the entire term of the loan or for a limited period.