Mortgage deposit question

GDB2222

I just would like the answer to a theoretical question, please.

Suppose that I am buying a £300k house, with a 90% LTV mortgage. So, I obviously need a £30k deposit.

But, how much more cash do I need to make this go through?  The items I can think of are:

• Mortgage application fee and valuation fee.
• Legal fees, including search costs and other ancillary costs.
• Estate agent fees on any house sale.
• Stamp duty.
• Any removals costs
• Any urgent refurbishment costs.

Are there other significant costs that I have forgotten about?  I assume that none of the above costs can be added to the mortgage?

greatcrested

https://www.amazon.co.uk/HOW-BUY-YOUR-FIRST-HOUSE/dp/B08LNJL6T6/ref=sr_1_4?dchild=1&keywords=buy+first+home&qid=1610040627&sr=8-4

https://www.amazon.co.uk/How-Buy-House-Kirstie-Allsopp/dp/1444790633/ref=sr_1_7?dchild=1&keywords=buy+first+home&qid=1610041545&sr=8-7

MaryNB

Surveys (homebuyers etc)

grumiofoundation

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

Mortgage fee could be 0 could be £2000 depending on the deal you choose.  Can be added to mortgage but will impact LTV (maybe for some mortgages doesn’t?).*

You may also have to pay valuation fee.  

Legal fees will depend on complexity of purchase leasehold etc will be more. 

You also can choose to go for a fixed fee, and/or a no completion no fee option (would still pay for searches and other costs) which may cost a bit more but would give piece of mind. 

Would say minimum £1000 for simplest purchase.
Make sure you get a solicitor on your lenders panel (so they can represent lender as well) otherwise you can be lumbered with paying lenders legal fees too. 

Estate agent - £0 - seller pays.

Stamp duty (assuming Eng/NÍ as you say stamp duty) on 300k purchase. 
- currently £0
if rules revert to what were before holiday
- If FTB £0 
- if not FTB £5000
Stamp duty can normally be added to mortgage but will Impact LTV. 

Removals - depends how much stuff you have and how much will do yourself.

Refurbishments - could be £0, could be tens of thousands - obviously depends on the property. 

Other Costs - budget for overlap of rent and mortgage. 

Could be Mortgage broker fee if you use one. 

Survey - again price depend on property, full structural couldbe £1000+ For older property. 

*To avoid paying upfront you can normally add the fee to the mortgage - this can impact the LTV band you are in but you can “make it up” by borrowing less and paying the same amount as the fee as ‘extra’ deposit. Makes no difference in the end but saves paying upfront meaning of purchase falls though you don’t have to worry about throng to get it back from the lender. 

GDB2222

Thanks for all this. Really appreciated.

I am confused about adding the stamp duty to the mortgage and changing the LTV band.  If the largest LTV you can get is 90%, can you effectively go up to 92% or 93% by adding on the stamp duty?

Mnoee

The other thing you may not have considered is the ratio of wages to mortgage - most banks will lend roughtly 4.5 times your salary as a maximum, so for a £270k mortgage you'd need a salary of £60k. You may end up with a lower multiplier depending on your circumstances. No idea if you know this already, but it never hurts to mention! 

Squeaky9

GDB2222 said:

Thanks for all this. Really appreciated.

I am confused about adding the stamp duty to the mortgage and changing the LTV band.  If the largest LTV you can get is 90%, can you effectively go up to 92% or 93% by adding on the stamp duty?

Stamp duty is a tax paid to HMRC, it is not added to the mortgage so has no effect on the LTV. It’s just another cost for you to factor in to the overall cost of buying. Usually the solicitor includes the SDLT in their fees as they handle the payment of this for you. In other words, you can’t borrow the SDLT by throwing it on to the mortgage, if that’s what you were asking?

Blue_bell_20

Are you a FTB and in Eng/Wales/NI? If so and you buy under 300k then I believe you don’t need to worry about SDLT (unless rules change). Apart from a small ~£100 fee for the solicitor to submit a return form for it. 

Edit: Wales is not included - it was pointed out this is incorrect.

grumiofoundation

Squeaky9 said:

GDB2222 said:

Thanks for all this. Really appreciated.

I am confused about adding the stamp duty to the mortgage and changing the LTV band.  If the largest LTV you can get is 90%, can you effectively go up to 92% or 93% by adding on the stamp duty?

Stamp duty is a tax paid to HMRC, it is not added to the mortgage so has no effect on the LTV. It’s just another cost for you to factor in to the overall cost of buying. Usually the solicitor includes the SDLT in their fees as they handle the payment of this for you. In other words, you can’t borrow the SDLT by throwing it on to the mortgage, if that’s what you were asking?

You can 'add' stamp duty to your mortgage - in the sense you can borrow more from the lender to pay stamp duty (assuming lender agrees. affordability etc) so you will pay interest on it. See link below from Natwest, 
https://personal.natwest.com/personal/life-moments/buying-a-home/stamp-duty-introduction.html

Would impact LTV - for example if you have a 15% deposit and later decided to add stamp duty to mortgage you would then be asking to borrow more than 85% of the property price, meaning you would 'drop' into the 90% LTV band.

in reality all you're doing is borrowing more money though....

[Deleted User]

Blue_bell_20 said:

Are you a FTB and in Eng/Wales/NI? If so and you buy under 300k then I believe you don’t need to worry about SDLT (unless rules change). Apart from a small ~£100 fee for the solicitor to submit a return form for it. 

It’s LTT in Wales rather than SDLT and I don’t think there is currently relief for FTB in Wales. 

Blue_bell_20

Lover_of_Lycra said:

It’s LTT in Wales rather than SDLT and I don’t think there is currently relief for FTB in Wales. 

Thanks for correcting it. I knew Scotland had a different version/rules but I was looking at an old source and didn’t read carefully enough that SDLT was devolved in Wales.