Fees - FTB confused

FortunePig

We've just started looking for a house to buy and having not done this before, are unsure as to how much the total cost to get the keys to a house if going to be. Hoping someone can help as at the moment I am stressing over budget and what we can and can't do.

We have an AIP with Halifax for £224,000 but would not go over £199,000 at the most. We have a deposit of £10,000 and are looking at a 95% help to buy mortgage on an existing property.

Halifax told us that the next step is going to be looking for a house we want to buy, so we've looked over the last month. We have now found two potentials, one at £175,000 and a second at £199,000. For various reasons with both properties we think we are in a position to start at 5k under the asking price on each.

Now we have starting prices, I am looking at if this is feasible. Please bear in mind that we have never bought before and have no parents with knowledge of buying either so some of these questions might seem basic...

Roughly how much would we be looking at for fees based on these property prices and a basic survey? I have estimated using tools online anything from £1-6k. If it is 6k then we can't go any further and need to save for another year at least. I know everyone is different but it seems like a wild difference and I'm just wanting to know roughly where we stand.

Can fees sometimes be added to the mortgage? If so, which ones? I would plan to overpay the mortgage at the end of the year to get the value of the fees off the loan but bundle them in just to get the ball rolling at the start (money would be available for this in December from a regular bonus)

Stamp duty - I understand this is payable upfront and on these properties we are looking at about £1.5k - just checking I'm right that the payment would be upfront.

Sorry for sounding so clueless! I'm really new to this and have been trying to piece the process together from the internet and what Halifax has advised us to do.

ACG

The main fees are:
Arrangement/Booking fees - Between £0-999 usually (can sometimes be added), will depend on the lender/product.
Valuation fees - £355 with halifax at that sort of price range (paid up front)
Legal fees - Circa £800-1000 paid usually on completion
Stamp duty - 2% above £125k. So approx £1500 paid on completion.

Those are ball park figures - apart from the valuation which I have supplied a link for you.

FortunePig

Thanks ACG. I guess that is a lesson not to trust the Internet on estimations! Your figures look much more doable than what I've been getting!

We will be getting a comparison on the Halifax mortgage from London and Country as we initially got the AIP to get possible figures and see if we passed credit checks. Could you tell me when in the application stage the total cost becomes clear? My other fear is putting in an offer, getting so far and then having to pull out due to fees constantly appearing that we weren't aware of at the start.

ACG

You will get a KFI - section 8 will mention the fees, how much and when chargeable.

The one exception is that on the KFI it will mention legal costs... ignore that, its a figure that is rolled up in whatever fee you agree with your solicitor.

So the only other fee to your KFI is the legal costs. You should be ringing around solicitors now to get some quotes. Just make sure you do not start any processes until you have found a property and have your mortgage offer. Also ensure the solcitiors are on the lenders panel.

GMS

FortunePig wrote: »

We will be getting a comparison on the Halifax mortgage from London and Country

L&C should be telling you the processes and advising as to which product is most suitable, i.e if a product with a fee is a better deal than one without, whether to add the fee, quote valuation fees and generally explain the whole process to you.

FortunePig

Thanks again! So the process for us in theory now would be;

- Choose one of the two properties
- Get a mortgage agreed (for the asking price? Or make an offer to the vendor, get it accepted and then get a mortgage agreed for the price we've negotiated?)
- Simultaniously start phone round solicitors for fee quotes (is there a name for the services we need them to provide?)
- in an ideal world, we get accepted, have enough money for deposit and fees, solicitors do their thing and we start on the process of paperwork and valuations up to completion.

And for costs, we would have the KFI for everything bar stamp duty and legal fees.

Then;
-Legal fees go to solicitor on completion
-Stamp duty goes to government on completion (but we'll know what that is from the outset
-Areangement fees are dependent on the mortgage

And no nasty surprises after that?

That's probably the simplified version!

One last question - once an offer is accepted are we locked in both ways? (ie: us and the vendor) unless something goes wrong? If we needed to pull out, would it hurt us financially? Both properties are no onward chain so I'm not expecting a chain to collapse on us.

I understand this is all in theory but it's good to know what we're getting into and what the pitfalls might be!

Malmo

In addition to the previous posts, these links should also point you in the right direction, in terms of typical costs and when they are payable:

https://www.moneyadviceservice.org.uk/en/articles/estimate-your-overall-buying-and-moving-costs

http://www.moneysavingexpert.com/mortgages/mortgage-fees-stamp-duty

ACG

If your in england your only tied in once you have exchanged contracts.

Find solicitors now, the estate agents will want to know who your using when your offer is accepted. Just ensure they are on panel with mortgage lenders.

Did you not ask your advisor these questions?
These are the sort of things we would expect to be asked by a first time buyer. No need to be embarrassed, the only daft questions arethe ones not asked (there are some exceptions to that :P but in the main your asking fairly normal questions).

Malmo

FortunePig wrote: »

One last question - once an offer is accepted are we locked in both ways? (ie: us and the vendor) unless something goes wrong? If we needed to pull out, would it hurt us financially? Both properties are no onward chain so I'm not expecting a chain to collapse on us.

In England, the transaction is not legally binding until exchange of contracts, so up until that stage, neither the buyer nor the vendor are "locked in" and anything can happen. Any upfront costs that you commit to such as the Arrangement Fee, Booking Fee (if applicable), Valuation Fee or Survey Fee (if you commission either a Homebuyers report or a full Structural Report) could be lost if you don't get as far as exchange of contracts. One way to mitigate against the potential loss of the Arrangement Fee is to add it to the loan, instead of paying it upfront.

stator

Solicitor's fees are due on completion but you'll have to pay a deposit to them for the searches, usually £250 before they start work

DreamerFTB

ACG wrote: »

Stamp duty - 1% above £125k. So approx £750 paid on completion.

shouldn't be 2% above £125k? So in his case 2% of 199k-125k = ~1.5k