There are many ways in which a mortgage broker can help you when you are first looking at taking out a mortgage. One of these is by helping you to be clear about the extra costs involved.
When you are working out how much you can afford to borrow, it�s crucial that you take these extra costs into account. Otherwise you may find you have over-extended yourself without meaning to. And that�s no way to start off your life as a home owner.
� Arrangement fee. Most lenders will charge a fee for arranging the mortgage, and these fees seem to have risen sharply recently. Some lenders may waive the fee to get your business, but you would be wise to budget for �300-�500. In some cases, lenders will hang on to the fee you paid even if the purchase falls through. Get your mortgage broker to help you check whether the fee is refundable before you commit yourself.
� Valuation fee. The lender will insist on doing a survey, for which you should budget about �250. Remember that although you pay for it, it�s for the lender�s benefit not yours. It is so that they can be satisfied that the property exists and that it offers sufficient security for the loan. It is not a full structural survey and often fails to show up quite serious structural problems. So you really should commission your own structural survey as well � it�s expensive but it could save you a lot in the long run. Your mortgage broker can help you find a surveyor if you don�t know where to look for one.
� Legal fees. Some lenders will help you with legal fees, in which case you would have to use their recommended solicitor. This isn�t always a problem as you may not have your own solicitor anyway, especially if you�re a first-time buyer. If you do have to find your own, your mortgage broker can help you. Budget for about �500-�700.
� Stamp duty. This is a government tax and it is becoming more and more common to have to pay it as house prices rise. You will have to pay it unless your purchase price is less than �125,000, which doesn�t often happen nowadays.
Do talk to your mortgage broker for more clarification of these costs. And when you have a property in mind, sit down and add them all in before you decide whether you can afford the property or not.
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Sean Horton is a Director of
Enhanced Wealth Limited who are a specialist
mortgage broker
