There are a significant number of additional fees/costs that many first-time buyers may be unaware of until they get charged them. This article outlines ten such fees.
Survey Fees
A valuation fee is to cover the cost of a survey to confirm that the property is worth the mortgage amount. This will usually be a desk-based survey.
The Home Buyer’s Report involves a check of the condition of a property and a valuation. This involves an inspection that checks for and highlights any major faults.
A structural survey (often referred to as the ‘building survey’) is a more comprehensive and detailed survey. This is usually for older, unusual or listed buildings. This intrusive survey checks all parts of the property for any faults and recommends if any further reports are required. It also highlights any remediation needed and associated costs.
Companies such as Sam Conveyancing use local RICS surveyors to carry out either a home buyers survey or structural survey for you.
The mortgage application fee is a charge for the ‘reservation’ of funds or a particular mortgage product.
The mortgage product fee is an additional charge (sometimes just called a product fee). This can be as much as £2,000, but some lenders now allow it to be added to the total value of the mortgage.
The Higher Lending Charge (HLC) is an extra charge for buyers who have smaller deposits and need to borrow a large percentage of the purchase price.
Legal Fees and Searches
Legal fees are those paid to solicitors/conveyancers, who deal with the legal side of the purchase. This includes dealing with the contracts, agreeing on any monies that are to be held ‘on account’ and negotiating which fixtures and fittings are included.
Fees for searches will also be common. Searches are needed to find out about any planning/environmental issues such as flood risk or restrictions on extensions, etc.
Stamp duty is essentially a tax that is paid when buying a property. This goes into HMRC’s coffers. At present, first-time buyers do not need to pay any stamp duty on a property that is bought for under £300,000.
Upon the completion of the mortgage, there is usually a funds transfer fee that is payable to the lender for transfer of the mortgage money. This cost varies but is usually under £75.
