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purchase price on the strength of what a survey reveals or to ask the vendor to put right any defects. A survey should be able to tell you important things such as if there is any damp, structural issues or plumbing problems, plus any other potential snags. There are different levels of survey and fees vary depending on the level of detail requested and the size and value of the property you are considering buying. The HomeOwners Alliance hoa.org.uk has information and detail on what kind of survey you should commission, as different house types might need more investigation than others. For example, if you are buying a new build property that comes with a 10-year building guarantee, you may just decide upon a snagging valuation, or if you are buying an old or unusual property you may prefer to pay for a fuller more detailed survey. In 2021, the Royal Institution of Chartered Surveyors, RICS, launched new formats for home survey reports and renamed them according to three levels of survey.The HomeOwners Alliance give examples of survey cost. For example, if the property you’re buying is worth £200,000 and you want a RICS Home Survey Level 1 – the most basic type – it could cost around £400. But, if you’re buying a £1m home and you’re seeking a RICS Home Survey Level 3, also known as a full structural survey, you’re likely to be paying upwards of £1,500.
face a cost of over £2,000. That’s why it’s so important for prospective homeowners to be aware of the fees associated with a mortgage. It’s a similar situation for legal fees.” STAMP DUTY COSTS The survey found that 79% of buyers were unaware of Stamp Duty costs.When you buy property or land, you typically pay tax, called Stamp Duty Land Tax, SDLT, in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales. All parts of the UK now use a “progressive Stamp Duty rate system” which means that, instead of paying a single rate on the whole purchase price, you could end up paying one rate on a portion of the property and a different rate on another. Buyers in England and Northern Ireland pay no Stamp Duty on the first £250,000 of a residential property but the threshold rises to £425,000 for first time buyers. If a first time buyer is buying a home priced up to £625,000 they pay nothing up to £425,000 and 5% on the remainder. However, if the house is more than £625,000 they pay nothing up to £250,000 then 5% up to £925,000. Rates increase after this. VALUATION FEES If you are getting a mortgage, lenders will want to establish if the property you are buying is worth what you are paying for it, so they charge a valuation fee, paid directly to them. They do this for their own security, so that they can be sure that – if things go wrong and you can’t afford to pay your mortgage and therefore default on payments – they can repossess the property and sell it for a decent amount. Sometimes this is also called a valuation survey, not to be confused with a regular survey, see below. Cost varies according to lender and purchase price but is typically around £300.You must pay this fee upfront, before you get your mortgage. Not all lenders charge for this and sometimes they are included at no extra cost. SURVEY COSTS Surveys are not mandatory, but buyers usually arrange for one so that they know more about the property they intend buying. They are carried out by surveyors – not linked to your chosen lender – although it is possible to ask for a more detailed survey when arranging for the lender’s valuation. Surveys assess the condition of any property that you are buying and can also assess its current value. It can be useful to know what is potentially wrong with a property and how old costly items like roofs and boilers are and, when you have your survey’s results, you may decide to try to renegotiate the
Before becoming a rst time buyer you’ll need to assess whether you’re nancially prepared, and what support you may need. Mortgages come with additional admin fees, and costs like surveying and Land Registry fees are unavoidable. There are also outgoings to account for once you’ve moved into the property, such as insurance, utilities and council tax. Factoring these into your budget early on will ensure you’re prepared and can afford to buy.
Kellie Steed, Mortgage Expert Uswitch
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Fees can add more than 10% to the total bill and owning a home also costs more than you might expect. Make your savings work for you. A Lifetime ISA gets you a 25% Government bonus, but be sure to read the T&Cs and get nancial advice. If you have space, think about the rent-a-room scheme, even short-term or when you are away. Consider taking out Homebuyers Insurance. Over a third of property transactions fall through, this insurance will reimburse you for your survey, mortgage and legal costs if the sale falls through.
MORTGAGE BROKER FEES
Some first time buyers use a mortgage broker for access to a wider range of mortgages. Some charge a fee while others receive their commission from a lender. If you do pay, fees vary widely, from fixed fees, often around £300, to up to 1% of the loan amount. Some brokers may reduce your fees if they are getting a commission from a lender, but it is sensible to establish what you will pay before appointing a broker. At moneysavingexpert. com you will find advice on whether to use a broker and the potential cost.
Paula Higgins, CEO HomeOwners Alliance
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London Square actively offers assistance to rst time buyers, often tailored to individual circumstances. It could range from help with legal fees, providing furniture packs, to assisting with deposit boost. Buyers get a 10-year Building Warranty and two-year London Square Customer Care Warranty. Our customer service team is exemplary, providing support at every stage of the buying journey to make the buying and moving in process seamless and hassle-free.
CONVEYANCING AND LEGAL COSTS
Conveyancing, the legal process of buying, can be carried out by either a conveyancer or a solicitor. Solicitors are registered with the Law Society and have a wider breadth of knowledge, making them able to deal with any complicated issues that may come up. Licensed conveyancers are lawyers specialising in property law who deal mainly with straightforward matters but typically, they are cheaper.The Uswitch survey found that only 40% of first time buyers were aware of conveyancing fees, which vary widely but which can cost between £800 and £2,000.
Jo McDonagh, MD London Square North
First Time Buyer April/May 2024 89
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