Mortgages/Finance

Introduction

There are many fees to pay within the house buying or remortgage process. Below we have taken the opportunity to indicate the majority of these for your benefit.

Mortgage Lender Fee

This is the fee chargeable by the lender in respect of the product being proposed for. It is called an application fee, an arrangement fee, a completion fee or a booking fee and can be payable upfront, added to the loan or deductible from the advance. There are mortgages available that charge no such fee, typically on remortgage products or first time buyer deals. However, in most cases, other than very modest mortgage balances, it is worth paying due to the lower level of interest that you will pay and the greater cost savings that will emanate.

Valuation Fee

As part and parcel of a mortgage application, not only does the applicant require underwriting but also so does the security property. This will be carried out by way of a valuation, of which there are generally four kinds.

Free & Non disclosed – This is found in the course of a remortgage. Where the LTV is less than 75%, lenders will usually carry out a minimal assessment. This is by way of a drive by or external valuation rather than one that requires full access. Because of this simplified approach, and the lack of a fee, the lender will not qualify their findings to the client.

Homebuyer Report – This is a more comprehensive survey, providing the purchaser with information as to the condition of the property. Whilst clearly more expensive, we would recommended this if your property is older or you are committing to a substantial purchase price.

Full Structural Survey – This the most thorough of surveys and is highly recommended for old properties, listed buildings and properties that are in a poor condition or state of repair. Highly recommended if you are a property developer as this provides a comprehensive breakdown of likely works from which you can calculate anticipated costs.

Please be aware that as a result of any of the above, the lender may well require specialised reports, such as electrical, damp & timber, structural, roofing, trees, etc.

Mortgage Indemnity Guarantee (MIG) premium

Also known as a high lending fee, this generally applies to cases above 75% LTV. However, in most cases, upto 90% LTV, the lender shall pay this premium. Above 90% the lender shall pass on this charge to the applicant, which will apply on all lending above 75%. This can be a significant fee and thus where possible we advise clients to put down a 10% deposit in order to avoid this and give them access to better terms. If a client cannot put down a 10% deposit, we can give consideration to the small number of lenders who do not charge this, albeit that they tend to charge a higher interest rate to compensate.

IFA’s own fee

Dependent upon the remunerative structure of the mortgage advisor, this may be upfront and non-refundable or payable upon completion.

Home Information Pack (HIP)

Since14th December 2007, every home put on the market, no matter what size, must have a Home Information Pack (HIP).This document brings together valuable information at the beginning of the house buying/selling process. This includes the following information: -

- Sale statement

- Local searches

- Evidence of title

- Energy performance certificate

For more detailed information on these please take a look at the Government's Home Information Pack website.

Legal Fees

These can be broken down as follows: -

Solicitor’s own fee

This is the solicitor’s fee for his services and can vary from practice to practice. Please be aware that the fee will be subject to VAT and will usually be payable upon completion. Where possible, it will often be deducted within the reconciliation of client monies for which the solicitor is obliged to provide a full breakdown.

Disbursements

Stamp Duty - This is the tax on properties at the time of a purchase, which are as follows: -

Please be aware that the tax is payable at the prevailing %age on the whole purchase price and is not a tapered tax.

If you wish to establish whether your prospective property is within a disadvantaged area, please click on the link.

Local Authority Search – This is a search with the local council to establish any planning permissions or building regulations approvals registered against the property. This will be £117.50.

Land Registry Fee – This fee is to pay for the registration of the property in the purchaser’s name upon completion. The fee will be as follows: -

Environmental Search – A fee for the Environment Agency to report back on any landfills within 200 metres of the property and its proximity to flood plains. This will be £41.95.

Mining Search – A fee of £25.85 will pay for a report on local mines in areas with current or historical mining activity.

Telegraphic Transfer Fee - This pays for the onward transmission of monies electronically to the vendor’s solicitor once received from your own mortgage lender. This will vary from solicitor to solicitor but will be around £25 + VAT.

Please note that fees quoted are correct @ April 2008.