Fees and Costs
Fees and costs associated with mortgages
All mortgage lenders will need a survey report. Prospective purchasers need to make their own checks as to general condition of any proposed house purchase. To safeguard your purchase further a Homebuyers Report may be instructed at the same time as the lender's survey. This is a more in depth report and establishes a contract between you and the valuer, whereas the lender's report is done entirely on the lender’s behalf.
An arrangement fee may be payable by you in order to secure a particular rate of interest. This may be added to the loan, increasing the borrowing and therefore the repayments. Alternatively, the arrangement fee can be paid to the lender by cheque.
Higher loan to value Fee
Where your loan is for a higher percentage of the property value, most lenders charge a one off fee (sometimes referred to as a higher lending charge or HLC), which allows them to buy insurance to protect themselves against potential future losses, called a mortgage default. This insurance is not designed to cover the homeowner and will not protect you if your property is taken into possession and sold for an amount less that you owe. This fee can usually be added to the mortgage.
Your solicitors will advise you of their fees and any other disbursements which may be payable, such as land registry fees.
Financial Adviser Fees
Your financial adviser may charge you a fee, particulalry if the case requires more work than normal, e.g. if you are having difficulty proving your income, or have an adverse credit history. Our typical fee for arranging a standard mortgage is £250 (this can vary, depending on personal circumstances) or we can receive commission from the lender. The fee should be agreed before any work is undertaken.
As of 25th March 2010, the chancellor scrapped stamp dufty on all homes costing £250,000 or less for first time buyers only. The new stamp duty threshold will last for 2 years from that date. However, the tax break will be funded by an increase to 5% stamp duty on all houses costing £1 million or more. Stampt duty is now payable on the following basis:
Up to £125,000 0%
Up to £250,000 (first time buyers only) 0%
Over £125,000 & up to £250,000 1%
Over £250,000 & up to £500,000 3%
Over £500,000 & up to £1,000,000 4%
Over £1,000,000 5%
If fees are added to the mortgage amount you will pay interest on that amount for the full term of the mortgage. If you are consolidating existing debts you must be aware that you will be replacing a short term unsecured debt with a long term debt that is secured on your property and that you will be paying interest on the whole amount for the term of the mortgage.
Being "on the housing ladder" is usually a positive thing in the long run, but you shouldn’t overstretch yourself in trying to get on the first rung. The warning which appears at the bottom of most mortgage adverts is; “Your home may be repossessed if you do not keep up repayments on your mortgage”.
The stresses and strains of such an event will leave those involved with financial and emotional scars, so don’t be tempted to borrow more than you can afford. Take advice from an independent expert on the costs of Mortgages. Contact The IFS Group for Advice
Your home may be repossessed if you do not keep up repayments on your mortgage.