With the Bank of England lowering the base rate to 0.1% and the current circumstances making us all consider our living costs is it time to consider a remortgage? What does remortgaging mean? A remortgage is when you change the mortgage you currently...
The Real Cost of Buying a House for First Time Buyers
It is very difficult to budget accurately for the purchase of any house but if you are a first time buyer you will no doubt receive lots of advice from friends and family who have already purchased their own home. As much as you want to take on board advice and tips from others, you need to be prepared for a realistic budget and the ‘what ifs’ of the individual property that you hope will be your first home.
There are several steps that you need to take before you can put in an offer on any property. Firstly you will need to ensure that you can find a lender who will provide the mortgage funds that you require, together with any deposit you have managed to save, to facilitate your purchase.
Finding a Mortgage Advisor and Mortgage Product
Finding a qualified mortgage advisor should be top of your list and preferably a mortgage advisor who can offer whole of market products i.e. products from all lenders. Some advisors will charge a fee for sourcing a mortgage for you. There could also be arrangement fees and valuation fees attached to some mortgage products which will be charged by the lender. These are often set fees and will be disclosed to you by your mortgage advisor. Some fees can be added to your mortgage and paid for over the term of your borrowing so you do not have to pay for them upfront, but be aware you will be charged interest on any fees that are added. Some lenders will also charge a ‘TT’ (telegraphic transfer) or ‘Chaps’ fee, these are banking charges and will be deducted from the funds that are released to your solicitor on the day of your completion. This is usually in the region of £20 to £40.
Choosing Your Property Surveys
You can choose to have your own survey carried out which gives a more detailed report and can cost anywhere in the region of £350 to £750. This will reveal any potential defects that you may not have seen on your viewings of the property but it does not include any structural issues. You can obtain a further structural survey and the cost of such could be in the region of £1,500.
Employing the Services of a Solicitor
Once your offer to purchase has been accepted and your mortgage agreed you will then need to employ the services of a Solicitor or Conveyancer to carry out the legal work on your purchase. These can vary somewhat and it is always advisable to obtain up to three estimates. This not only allows you to compare the main charges, but also to be aware of any additional charges that may be referred to in any small print. For example; charges for dealing with Stamp Duty, acting for your mortgage lender, or obtaining any insurance indemnity policies that may be required for your purchase. You will also need to ensure that any Stamp Duty payable is included and you can use the online Stamp Duty Calculator that can be found on Her Majesty’s Inland Revenue website to obtain an accurate figure.
There are two other factors that first time buyers often forget to include in their budget. The first is removal costs although family members often ‘lend a hand’. It is worth bearing in mind that if you need to employ the services of a removal firm, you check the terms of their estimate. Sometimes on the day of the actual completion of your purchase, there can be delays due to monies not moving through the banking system quickly enough. You can therefore be left with additional removal costs if the removal firm are not able to unload your belongings within the time frame they have quoted you for.
The second factor is when you receive the keys to your new home and you do eventually start unpacking your belongings, there will always be a few practical items that you have left off your ‘bottom drawer’ list. Ensure you have a small budget left to enable you to at least buy the essentials that have been missed.
Buying your first house can sometimes be a very stressful time when you are so keen to move into your new home. Ensuring you are aware of any additional costs that could potentially arise can ease the journey slightly, and make other matters that may occur throughout the transaction more manageable – helping to ease the worry of spiralling costs that you have not accounted for.