Costs when buying a house

sunil237

I've done some research but still a bit unsure I have all the potential costs and also what value to put to them.

I am looking to buy an auction lot that has 3 houses.

Here's a list of what I think I'll need to pay for once I buy it (or anything)

Solicitors fees, including searches and land registry; 1k (3k for 3 houses?)
Mortgage fees to set up; 2k
Survey/valuation; 500
Insurance: 200
Stamp duty according to the bracket



First house.. want to make sure I bid only what I can, don't want to get caught off guard.

Mickygg

How on earth do you expect people to comment when you don't give the cost, area or size of these houses?

IronWolf

At auction you typically pay fees of 10% of your bid to the auction house (on top of your bid)

Yorkie1

Thread from Mortgages Board for fuller picture:
https://forums.moneysavingexpert.com/discussion/4750237

I think this is a complicated situation where you run the risk of getting yourself into a mess.

Are these properties being sold as a single lot? Are they actually 3 completely separate residences, or one main building with sub-outbuildings?

If 3 separate residences then I guess you need to factor in survey x3, plus arrangement fees x3 (assuming properties are mortgageable, and only 1 likely to be on residential basis), and mortgage broker fees. Not sure if there's likely to be auction fees too. Insurance x3 also.

If you are a first time buyer this is a very ambitious project and has nightmare written all over it - there are so many things which could go wrong and which you have to get sorted out before the auction as you are legally committed once the auction hammer comes down.

Your solicitor will need to review the legal pack in advance, and you'll have to get surveys done too. It is not a usual purchase process.

sunil237

Mickygg wrote: »

How on earth do you expect people to comment when you don't give the cost, area or size of these houses?

All 3 are centre terrace, 2 bed houses. Low value. Sorry don't want to give value and especially not the area. Can't see them being important information.

IronWolf wrote: »

At auction you typically pay fees of 10% of your bid to the auction house (on top of your bid)

Thanks, I had a quick look on the website and couldn't find a mention of it, will have to give them a call and find the details.

Yorkie1 wrote: »

Thread from Mortgages Board for fuller picture:
https://forums.moneysavingexpert.com/discussion/4750237

I think this is a complicated situation where you run the risk of getting yourself into a mess.

Are these properties being sold as a single lot? Are they actually 3 completely separate residences, or one main building with sub-outbuildings?

If 3 separate residences then I guess you need to factor in survey x3, plus arrangement fees x3 (assuming properties are mortgageable, and only 1 likely to be on residential basis), and mortgage broker fees. Not sure if there's likely to be auction fees too. Insurance x3 also.

If you are a first time buyer this is a very ambitious project and has nightmare written all over it - there are so many things which could go wrong and which you have to get sorted out before the auction as you are legally committed once the auction hammer comes down.

Your solicitor will need to review the legal pack in advance, and you'll have to get surveys done too. It is not a usual purchase process.

Yep, it's a single lot, 3 seperate buildings (terrace connected is all). Ouch, I'd hope it's not 3x mortgage fees, may need to get that done as a fee free. Will have to get a mortgage advisor in I think.

I am a first timer, but helped on a few renovations so getting advice from my family as I move along too.
Pretty sure I can mitigate the nightmare scenario, just need to get some basic calcs done so I know how affordable it is.

Thanks for the advice, I'll get a mortgage advisor to help me with the specifics of the property. could bump the cost up by few a bit if everything is 3x

Yorkie1

As it is 3 separate properties, then it will be 3 separate mortgages for sure.

Also, if they are going to be let out then most of the BTL mortgages are available through a broker.

Given the auction restrictions you will have to have this all sorted out before the auction. You cannot leave it until afterwards.

Annisele

sunil237 wrote: »

All 3 are centre terrace, 2 bed houses. Low value. Sorry don't want to give value and especially not the area. Can't see them being important information.

Well, costs of £2k or £6k on three properties worth £1million each make very little difference to the overall viability of the plan. If the properties are worth £10k each, then £6k of costs might blow the whole thing out of the water.

Thanks, I had a quick look on the website and couldn't find a mention of it, will have to give them a call and find the details.

That bit is absolutely standard with auctions. Another standard thing is that once you've won the auction, you're required to complete on the purchase (usually within 28 days). That means that if you need a mortgage, you effectively need to get the mortgage offer and valuations done before the auction - but if you don't win the auction, the fees you've paid are wasted.

Yep, it's a single lot, 3 seperate buildings (terrace connected is all). Ouch, I'd hope it's not 3x mortgage fees, may need to get that done as a fee free. Will have to get a mortgage advisor in I think.

You'll not get fee free on this sort of deal - because you'll have to get the legals done before you even know if you'll win the property.

I am a first timer, but helped on a few renovations so getting advice from my family as I move along too.

Pretty sure I can mitigate the nightmare scenario, just need to get some basic calcs done so I know how affordable it is.

Does that mean you're a first time buyer? That will seriously restrict the number of buy-to-let lenders available to you.

Thanks for the advice, I'll get a mortgage advisor to help me with the specifics of the property. could bump the cost up by few a bit if everything is 3x

It could be more than 3x - if you pay all the costs to see if you can get a mortgage on this property and are then outbid, you'll need to pay out all over again on another property.

sunil237

Yorkie1 wrote: »

As it is 3 separate properties, then it will be 3 separate mortgages for sure.

Also, if they are going to be let out then most of the BTL mortgages are available through a broker.

Given the auction restrictions you will have to have this all sorted out before the auction. You cannot leave it until afterwards.

Yep, I've got a broker coming tomorrow morning, and phone calls to solicitors asap.

Roughly should I work to this?

Solicitors fees; 3k for 3 houses
Mortgage fees to set up; 2kx3 = 6k (most likely will have to go to the fee free mortgage though to keep it affordable)
Survey/valuation; 1500
Insurance: 600
Auction fee 10% (until I find out specifics)
Stamp duty according to the bracket

Annisele

How much deposit do you have? I know you don't want to give figures, but you could give it as "£10k for fees, enough to cover stamp duty, and then 40% of the property values".

I'm a little worried you might be trying to do this with a 15% deposit...which is highly unlikely to work.

sunil237

Annisele wrote: »

Well, costs of £2k or £6k on three properties worth £1million each make very little difference to the overall viability of the plan. If the properties are worth £10k each, then £6k of costs might blow the whole thing out of the water.

I think from the size of the property it's possible to give a decent opinion on the "administration" type costs. Also I just want to keep certain info like that secret so I don't attract people looking at my deal.

That bit is absolutely standard with auctions. Another standard thing is that once you've won the auction, you're required to complete on the purchase (usually within 28 days). That means that if you need a mortgage, you effectively need to get the mortgage offer and valuations done before the auction - but if you don't win the auction, the fees you've paid are wasted.

You'll not get fee free on this sort of deal - because you'll have to get the legals done before you even know if you'll win the property.

Looking to do a 50% LTV, might make my chances better. Just trying to calc how much money is going to be tied up in fees and renovation costs, so I can prepare my finances accordingly. As you say, I'll be required to complete the deal so trying to make sure I got the value covered.

Does that mean you're a first time buyer? That will seriously restrict the number of buy-to-let lenders available to you.

It could be more than 3x - if you pay all the costs to see if you can get a mortgage on this property and are then outbid, you'll need to pay out all over again on another property.

I've had a mortgage in principle earlier this year for different values ect, but that was provided for free from HSBC. If I understand you, you're saying to get the valuation survey ect done so I know 100% I have the finances secured?
If that's the case I can understand where you are coming from, but isn't that a little bit too far. If you do this for every property you could end up spending 15k before you buy a property and might aswell overbid on the first one.

On a side note, if I take out a personal loan and then a mortgage, how much of an impact will it have? I don't have a bad credit rating, no black marks on my record.

sunil237

Annisele wrote: »

How much deposit do you have? I know you don't want to give figures, but you could give it as "£10k for fees, enough to cover stamp duty, and then 40% of the property values".

I'm a little worried you might be trying to do this with a 15% deposit...which is highly unlikely to work.

Thanks for the concern, I've written it in the previous reply. I'm looking at a 50%LTV to make things viable.