Saving for a house deposit can feel like a significant milestone, as you squirrel away every spare penny and pound you have to offer to your mortgage lender in a bid to gain their acceptance. However, as well as that hefty deposit amount, have you also considered the additional costs that come with purchasing a house? Don’t get caught out in 2017 – learn about the additional costs listed below and ensure you save just that little bit more to ensure you’re covered when buying a new home.
Mortgage arrangement fee
To cover the cost of setting up your mortgage, some lenders will charge you an ‘arrangement fee’ and the cost can vary between £999 to £2,000. Of course, this fee won’t be present on all of the lender’s products, so you can simply choose another mortgage that doesn’t feature it. However, you may discover that the products with the best rates are the ones featuring a product fee and over time it may work out cheaper to simply pay this. It’s recommended that you don’t add any additional mortgage fees on to your monthly repayments, otherwise you will be paying interest and a lot more than initially anticipated.
Another fee issued by lenders, this covers the valuation of the property you wish to secure a mortgage on. It allows lenders to confirm that should something go wrong they have a profitable property to fall back on. This fee can vary, the Money Advice Service notes that it can range from £150-£1,500, so check with your lender first.
Removal services cost
You could hire a van and do this yourself but for those with a large home it takes the stress out of things to hire a removals company to do all the hard work for you. However, be aware that these services are not cheap and while your quote will be bespoke – based on what you have to move and the size of your home – costs usually vary between £300 and £600. Try out this calculator to get a rough idea of how much it will cost you to move your belongings.
This additional cost is usually combined with your legal fees, however many people don’t realise what a substantial expense this can be. Based on the value of the property, homes worth over £125,000 start to become eligible for this land tax. The amounts are fairer now, since the Government changes made in 2014, however if you are purchasing a property valued at the UK national average of £214,000 you will be paying nearly £800 extra in Stamp Duty.
These are additional costs your solicitor may present you with at the end of their service, on top of their fees. These include things such as a drainage search (costing between £30-£40 plus VAT) which checks the sewage connections of the property and a telegraphic transfer fee (costing between £25-£40 plus VAT) which covers the cost of sending the money from your lender to the solicitor to purchase the property. You may also need to pay for things like an environmental search (costing between £30-£35 plus VAT) which is an additional search as well as the normal Land Registry Search and seeks to discover if there are any concerns regarding flooding or subsidence in that area.
If you are purchasing property in 2017, whether you are a first time buyer or moving to a larger home, bear these additional costs in mind and ensure you have enough money in the bank to make that big purchase.