Apart from a home deposit, UK home buyers also need to pay government charges and stamp duties, fees for the lender, legal fees and building inspection fees.
The most pressing issue that UK home buyers face is the ability to raise enough home deposit to buy a house. Unfortunately it isn’t just the cost of paying for a removal firm you have to consider. Ideally, save up at least 20% of the purchase price of the intended property. Unfortunately, the house deposit is not the only big sum of money that home buyers need to pay in the early stages of buying a house.
There are other various expenses associated with purchasing homes – government levies, lender’s charges, legal fees and inspection fees. Here’s a quick look at the costs of buying a house.
Stamp Duties Related to Property Purchases
Government charges like stamp duties on the purchase price and on the mortgage can be quite a sizable amount of money. In the UK, each county has its own stamp duty levels. They can range from a few hundred pounds to £15,000, depending on which state the property is located in and the value of the property. Most states will have stamp duty concessions for first time home buyers and again, these rates differ from state to state. There will also be land transfer fees too. Check with the state revenue office for the latest and updated information on stamp duties related to property purchases.
When a home buyer gets a home loan, he not only has to pay back the loan plus interest to the lender, he’ll also have to pay a mortgage establishment fee that covers the costs of processing the mortgage, a valuation fee that includes the cost of valuing the house as well as other service fees to maintain the home loan account. The good news is that these fees are sometimes negotiable, especially if the borrower uses other financial products offered by the lender or has bought shares in the company.
The costs of buying a house also add up if a home buyer borrows more than 80% of the purchase price. This is because he needs to buy mortgage insurance, designed to protect the lender in the event that the borrower defaults on the home loan.
Legal or Conveyancing Fees
Buying a house also involves lots costly legal processes and paperwork. The home buyer will have to pay a lawyer for transferring the property from the seller and the cost of other services carried out during the transfer. These costs, known as disbursements, include title search fees, the land transfer fee paid to the state government, checks with the local council on outstanding issues and even charges of the lawyer’s phone calls and faxes. This whole procedure is called conveyancing and it ends with a settlement, when the house is finally handed over to the new owner.
Building Inspection Fees
A home buyer interested in a property should get a building inspection done before buying it to identify potential faults or even hazards the house may have and to estimate the costs of any necessary repairs. The home buyer should also arrange for a termite or pest inspection if the property is located in an area known to have pest-related problems. A building inspection fee may range from $250 to $500 while a pest inspection from $200 to $400.
When saving for a home deposit, don’t forget other costs of buying a house. If these are not considered, the dream of owning a home can quickly go up in smoke. In addition to a house deposit, other expenses associated with purchasing homes include stamp duties, lender’s fees, mortgage insurance, legal fees as well as building and pest infection costs.