Costs of house move

tazgirl

We’re planning to move next year, and as this is the first time we’ll have both sold and then bought I’m getting really confused about money. It was such a horrible experience trying to manage everything last time that I’ve blocked out a lot of the process!

We’ve got around £125k outstanding on our existing mortgage, and similar flats are selling for around £150-160k. We’re looking for a property at around £200k to get what we want. I’m trying to work out how much actual cash we need to fund the move and wanted to check my calculations are right:

If we sell our property for £155, we make £30k. If we buy a house for £200k, a 5% deposit is £10k. However, we will receive £7,750 as a deposit from our buyers, so we will need to find the difference when we exchange contracts?

Am I right in thinking that the following costs need to be paid before we complete:
-search costs to solicitor
-survey costs
-stamp duty
-deposit
-any mortgage arrangement fees

Then once we complete we pay:
-solicitors fees
-estate agents fees

Therefore we can pay solicitors and estate agent fees out of the extra from selling current property?

I’m trying to do this all as cheaply as possible, so will need to get timings and cash flow just right!

charlesh

Hi taz,

I think you're right on most of the charges and when they're due, but the stamp duty is payable on Completion day. Your mortgage arrangement fee (or portion of this) may also be payable on completion day. Estate agent fees may be payable up to 28 days after completion, but the contract will stipulate that these fees should come from the proceeds of the house sale, hence standard practise is to pay these on completion day.

You may also have charges from your existing mortgage provider if you're changing (deeds release fee £125???), or if you're sticking with the same provider and mortgage product then you may have admin charges of some sort.

Check that the house you're buying will be leaving their bins, otherwise you'll have to buy some new ones from the council.

Best way to reduce the financial burden of moving is to negotiate hard on the estate agency fees. There is one well thought out thread in particular about this explaining how to haggle with estate agents and negotiate sensible fees. Can't remember the author or title though - sorry.

Robert_Sterling_3

Looks about right to me.
Solicitors often pay the estate agents fees and deduct their fees from anymoney which would otherwise be due to you and then send you the balance due after the deduction of these fees.

tazgirl

Thanks guys. I will no doubt be back with more money questions nearer the time!

Hawksmuir

Check your postcode, we moved to a stamp duty exempt postcode area, so no Stamp Duty was required, funny how its Gordon Browns Constituency

Fondue_2

Re the deposit, your solicitor can ask the vendor's solicitor to vary the standard contract 10% to a percentage which reflects the deposit you are getting from your buyer. Whether or not they will be willing to do this normally depends on whether they are buying on and need a bigger deposit, and whether their vendor will be equally amenable.

VelvetGlove

tazgirl wrote:

If we sell our property for £155, we make £30k. If we buy a house for £200k, a 5% deposit is £10k. However, we will receive £7,750 as a deposit from our buyers, so we will need to find the difference when we exchange contracts?

Am I right in thinking that the following costs need to be paid before we complete:
-search costs to solicitor
-survey costs
-stamp duty
-deposit
-any mortgage arrangement fees

Then once we complete we pay:
-solicitors fees
-estate agents fees

Therefore we can pay solicitors and estate agent fees out of the extra from selling current property?

Hi tazgirl,

To the best of my knowledge:

Up Front Costs:

* Valuation / Survey Fee.
* Conveyancing 'Out of Pocket' expenses (usual rule of thumb is £250 up front, anything not used would then be knocked off your final bill).
* Arrangement / Booking Fee/s (payable upon mortgage application £100-£699 ish depending on lender and scheme selected).


Exchange / Completion Costs:

* Deposit (typically 5% deposit now acceptable, paid to solicitor probably a few days before exchange. But a higher deposit = lower mortgage (better loan to value ratio) = wider range of mortgage schemes is available to choose from. I have been hearing that the deposit given by the first person in the chain can sometimes be the value used all the way up the chain so check with your solicitor as you may not have to 'top it up').
* Higher Lending Charge (typically only payable if you have very little in the way of a deposit available, some lenders don't charge this fee but pay it themselves, formerly known as a Mortgage Indemnity Guarantee fee, essentially a fee paid to an insurer to protect the lender in the event that your property is taken in possession and the lender is forced to sell at a loss, resulting in not recouping all your debt outstanding; the lender then calls in the policy, obtains funds from the insurer, who then chases the borrower for the money they have had to pay out.) Your LTV looks to be 95% using the figures you have quoted for deposit and likely purchase price, depending upon lender and scheme selected, you may not have to pay this charge.
* Stamp Duty Land Tax (up to £120k is nil band, £120,001 - £250k is 1% of whole purchase price, £250,001 - £500k is 3% of whole purchase price, £500,001 and above is 4% of whole purchase price. There are 2,000 electoral wards across the country where the nil rate band extends up to £150k, this was introduced to stimulate the local economy in areas where large manufacturing (for example) companies had closed down; Corby is an example of this. Stamp Duty Land Tax is paid via your final bill from your conveyancer, it will be an item listed on the final breakdown as it is their responsibility to settle this).
* Conveyancing Final Bill (usually payable on or shortly after completion, this bill should be fully itemised) - don't forget VAT is added onto this service.
* Removals costs (you may be doing this yourself or hiring a small van or employing a company, costs will vary dramatically depending on which method is appropriate for you).
* 'Reconnection' of services (utility companies in some areas of the country charge £20 or £25 for what is essentially just changing the name on the records for that property so they bill to the right person, you'll need to find out if this is the case in your area).
* estate agency fees (I have known these to be paid via the solicitor or direct to the EA themselves, check what your Agents do) - don't forget VAT is added onto this service.

That's all the costs (both upfront and at exchange/completion time) that I can think of right now, but if I think of any others I'll nip back and let you know. Hope this has been of some help, yell out if you need me to clarify anything I've posted