Solicitor’s fees are more expensive for processing buying, than for selling property. They have more to do, so they say. Quotes from firms, should include stamp duty, when you buy a property. Deduct stamp duty, so all quotes are legitimate, and legal fees are accurate. Added extras, maybe concealed in the contract.
Below, is a check list that should be included in your quote:
* Land registry fees
* Drainage searches
* Mining searches
* Land registry searches and office copies
* Professional indemnity cover
* Mortgage lenders legal fee
* Local authority searches
* Bank telegraphic transfer charges
Recommended lawyers, are listed and updated constantly, to make sure the latest information is available.
Criteria, looked for, in a conveyancing firm, are to uphold policies that govern all the costs upfront. A disclosure, within quotes given, and the operation of very strict policies concerning this. It is also, important to consider quotes from differing solicitors, who have been recommended, ultimately choosing a conveyancing solicitor to suit you.
Stamp Duty Tax – What it involves
You may already be aware, of what is involved concerning stamp duty tax, but we will look again at it.
If you buy a property in the UK over £126,000, you are liable by law, to pay the Inland Revenue, and this is known as stamp duty land tax.
It is payable on all:
Stamp duty rates momentarily are set at:
£125,001 – £250,000 1 percent
£250,001 – £500,000 3 percent
£500,001 – £1 million 4 percent
£1 million – £2 million 5 percent
Over 2 million 7 percent
Depending on which part of the country, you are buying from, some properties less than £151,000 have a ‘disadvantaged area relief’ tax with a saving of perhaps up to £1,600.00 it is useful to use H.M. Revenues and Customs website to find out which part of the country qualifies for this reduction.
The cost of the Mortgage Broker
Fees for a mortgage broker vary greatly. Some, may charge only a set fee, while others charge a percentage of a mortgage, that they are concerned with and arrange. Whatever the scenario, it is standard to pay no more than 1 percent of the mortgage. Maybe, a little more if bad credit issues are involved. If a fee, is charged, it should be no more than 0.25 – 0.5 percent. If the broker, receives commission, from the lender, he must account for this. A professional and reputable broker, will take off the commission from the arrangement fee.
The legal fee for your Mortgage Lender
There is no standard fee scale, for a solicitor selected by your lender,be aware of this. It is in your own interests, to sort out a solicitor, from your lender’s panel of legal firms, that have been approved by them. Your lender, will choose to instruct their own solicitor, to process the legal side of your mortgage. This cost, will be picked up by you. Do your homework, research, and find a solicitor who you trust, and can work with. Don’t accept the run of the mill solicitor, who your estate agent may have an arrangement with.
Valuation fee from the Mortgage Lender
A surveyor, will take a trip round, to value the property, a service which you will have to pay for. The lender, must make sure the property, you are going to buy , is worth the asking price, and a good bargain. It is beneficial, to ask your mortgage broker, or lender for the cost in total. You can use the free quote service supplied by Rightmove to give an idea of impending charges.
Arrangement fees imposed by a Mortgage Lender
The lender, will make a charge for sorting out your mortgage. A lender, may charge, but on the other hand, may not. If it is a fixed rate or capped mortgage, that is being arranged, they will mostly charge. Their fee, could be between £300 .00 – £460.00, but your mortgage broker, or lender will advise. There has been a trend recently, for lenders, to bump up the arrangement fee to perhaps reduce repayment rates. An experienced broker’s knowledge can pay dividends.Watch out for mortgages with a cheap rate, which look great, and a good deal, but it may have a higher arrangement fee. You may be better off, taking a deal , that may have a more expensive repayment rate. Also the broker, may want to charge you an arrangement fee, even if your purchase falls through, check it out! because, no doubt they will charge.
MIG – Mortgage Indemnity Guarantee
This is another charge, to take into consideration, when budgeting your monies. I touches on first time buyers, that can’t afford to put down an extensive deposit. It is known, as a fee for a high lending option.
The MIG for short, is an insurance policy, that covers your lender’s losses, if the loan isn’t paid. This policy, however, doesn’t have any impact on you, it has no coverage for you. A payout, will be made by the insurance company, to your lender. But the insurance company, will reclaim, any loss from you. You could easily pay between £500.00 – £1,000.00 if you are borrowing at a high loan value ratio. So, again, check this scenario out with your adoptive mortgage broker.
Looking back, to re-iterate. Listed below, are three main types of survey. It is your choice, after considering your options, which one to use and cost implications.
* Home buyers Report – £350 – £1,0000 + vat
* Full structural survey £500 – £1500 + vat
* Valuation report £250 – £350 + vat
Mortgage lenders, sometimes think that a valuation report is quite basic and not enough information is given for a purchaser. So, an extended survey, maybe offered in the form of a home buyer’s report. This report, is more extensive, and will highlight damp, structural and visible defects. Include, a costing for what is needed in the way of repairs or replacement. Provided, in this report, are insurance valuations. It may even tell buyers, enough about the property, for price negotiations to come about. The surveyor, however,will not:
* Test any services
* Take a detailed look at the roof
* Lift carpets.
If the property, is more than 60 years old, perhaps it would be in your best interests, to get a full structural survey. Older properties are high risk. if you make a written offer on a property, make sure, it is subject to survey and contract. Make it clear, that you may need to re-negotiate your offer, if the survey is not satisfactory.
Building and contents insurance
Depending on whether, you are buying freehold or leasehold, there are differences in insurances. Freehold property, is automatically insured when you exchange contracts. A leasehold property, is different because, it is the landlord’s responsibility, and he will make sure the property is insured, but you need to contribute via a service charge. Don’t cancel your policy on the property you are selling, until the sale is finalised. Your lender, need confirmation, that you have building insurance, and may suggest that you use them, but resist. They are after commission.
It is important to budget, and have a fund , in case anything goes wrong, or unexpected costs. Experts, have recommended to have an excess of 2 – 3 percent of the purchase price available. Unexpected costs, that may crop up are:
* Drainage and electrical engineering reports
* More than one survey
* More than on mortgage arrangement fee
Extra money can come in handy if problems arise.
Costs, overlooked by Home Movers
A question to ask about selling your property is : Could your property sell at a higher price on the market, if you spent money, making it more buyer friendly? Improve, by refurbishing your property, which is costly. Bridging loans, may help you afford to use professionals to do work, or provide money for work to be done by yourself. Lastly, but very importantly, is the subject of life insurance. You must ask questions, about life insurance policies. Your mortgage lender, will try to sell you insurance, but don’t be swayed, do your research and find out the best available deal, applicable for you. You may need insurance to cover, mortgage payments, in case of being made redundant, or suffer a serious illness.
There are lots of policies available. It is necessary, to research and decide, which is best for you. Make sure, your mortgage is covered, at least for the amount of money you are borrowing on your mortgage. Relax, we have highlighted most concerns you may have about moving home.