There can be many fees associated with mortgages, which will be explained by your adviser. The following provides a list of the most common fees and their general explanations.
Lenders require a standard valuation to be undertaken on a property before even considering a mortgage application. This is to ascertain the true value of the property being purchased or re-mortgaged.
There are two other types of report after the standard valuation, each giving more information.
Homebuyer’s Report: This provides you with information about the general condition of the property.
Full Structural Survey: If the property being purchased is more than 10 years old or there are any aspects of the condition of the building that you would like investigated, a full structural survey will give you the required information prior to making a commitment.
Due to the fact that property prices vary according to market conditions, the value of your property may depreciate as well as appreciate. In future, this could mean that your mortgage loan exceeds the property’s current market value. This is known as a ”negative equity“ situation.
Application / Booking Fee:
This fee covers the administrative expenses incurred whilst processing an application. These include the cost of staff time involved with taking up references, credit checks, voter’s roll checks and any valuation charges that apply. Some of this fee is usually deemed non-refundable from the outset and once the application process is well advanced, it is usually considered entirely spent. The adviser should explain the amount and terms of the fee required.
Existing / Previous Lender Reference Charges:
If you already have a mortgage and a reference is required from that lender, they will usually charge a fee for providing the reference. This can often be avoided if annual mortgage statements and bank statements prove satisfactory conduct.
Booking and / or Arrangement Fees:
These may be charged for specific products and be payable in advance, added to the loan or deducted from the advance on completion. The mortgage adviser should make you aware of any such fees from the outset.
Higher Lending Charge:
The lender may impose a charge if the amount required is higher than a certain percentage of the property value. The charge may be deducted from the advance or added to the loan. The mortgage adviser should make sure that you know whether the charge will apply and if so, the amount and method of repayment.
Your solicitor will complete the legal process (conveyancing), which enables you to purchase the property. They will charge their professional fees plus VAT and associated searches that are required to complete the process. You should ask your solicitor for a quotation that is all inclusive.
In order for your solicitor to complete the conveyancing process for you, they are required to obtain a number of legal searches. These will include bankruptcy search, local authority search.
Stamp Duty Land Tax:
Under current legislation, if your purchase price is above £125,000 then you will pay Stamp Duty Land Tax to HMRC. You should ask your Solicitor how much this will cost you.