Costs before completion
Lender Arrangement fee
This can be called many things including product fee or arrangement fee. This can be a percentage of the loan or can be a flat fee. Typically, the flat fees will be £995 or £1,995. These will be included in the cost of the mortgage and it is our job as a broker to work out if it is cheaper to pay them or to choose a different product with no fee. These can normally be added to the loan, but you will pay interest on them by adding any fees to the loan. If paid up front and the mortgage doesn’t go through for whatever reason, then the fee will be refundable.
Some lenders have a booking fee which is to cover their administration costs of processing an application. Generally, these are not refundable and are usually a lot smaller than the arrangement fee. It is unlikely these will be more than £300. Most lenders do products without a booking fee now, but some lenders will still charge them.
Lenders may charge this for the to send their own valuer to any property you are wanting to use for security of the mortgage. This is not refundable if the application has declined for any reason after the valuation has been carried out. However, they will be refundable if the case is cancelled prior to the valuation being carried out. These are paid upon the full submission of a mortgage application. The fee amount is dependent on the lender and the value of a property but on average they will be around £250. Some lenders do allow you to upgrade a ‘standard valuation’ to a homebuyers report or a structural valuation, if you wish for a more thorough inspection. Also, a lot of lenders are now covering the cost of a valuation especially on re-mortgages so often these can be fee free.
Costs at completion
Solicitor/ conveyancing costs
Generally, you will clear any invoices up with a solicitor upon completion for the work they have done. You may have to pay a balance on an account before completion for searches to be carried out, but the bulk of the costs will be covered on completion as standard fees for a purchase of a property are usually around £1,000. The costs for a sale of a property are typically around £700 and the costs of a re-mortgage for solicitors are around £500. Some lenders do now offer free standard legal work as part of re-mortgage products, but you have to use a solicitor of the lenders choice, other lenders will offer cashback for you to cover the cost of your own solicitor.
We, as a brokerage, only charge on completion of the mortgage. Some brokers will still charge up front, so this is always worth checking with any broker. Our fee can be anywhere up to £495 for a standard mortgage, whether this be residential or buy to let. This can vary on more specialist products such as commercial mortgages/secured loans or bridging finance.
Stamp duty land tax is payable on completion of a mortgage if you hit the threshold, the stamp duty payable changes as per government budgets/announcements and a solicitor or tax adviser will give you accurate figures of how much stamp duty is payable.
Costs after completion
Whether it be a van hire company or buying all new furniture, if you are moving house there will be some costs to budget for. These will obviously be up to yourself to get quotes for, but it is always something to bear in mind. If you are currently renting a furnished property then remember you’ll need to buy everything from sofas and beds to lawnmowers and carpets (if needed).
It is the law that you have buildings insurance on any property you own/are purchasing. On a purchase this will be set up prior to completion but generally you will pay after completion if you are paying monthly. Also, bear in mind the costs for protecting the mortgage in terms of life/critical illness insurance and income protection. We can provide you with figures for these as and when we go through the mortgage process.
Your mortgage repayments
The most obvious one is your monthly mortgage payments, these will be taken on a date of your choice between 1st and 28th of every month, out of your nominated bank account. Failure to keep up with your mortgage payments may lead to repossession of your property. The payments will be outlined to you various times before completion of your new mortgage and generally the final confirmation of payments will be confirmed to you on your mortgage offer, which your broker will send to you. You should also get your own copy through the post and your solicitor will get a copy also, that will include any legal wording they need from the mortgage lender.