THE REAL COST OF SELLING, BUYING AND MOVING HOUSE
Selling and moving costs will take a large chunk out of the purchasing budget. Calculate these figures accurately, so that you clearly understand your financial position.
What you can afford to spend on your new property.
You will need to know exactly what money you have available, and then take away the cost of moving home.
Funds available are:
The mortgage that you can comfortably afford.
It is usually recommended that your monthly remortgage payments are no more than a third of your monthly net income. It is always prudent not to overstretch yourself. Lenders as we well know do not always lend responsibly. An independent mortgage broker is often a good idea; they will find the cheapest and best deal for you.
Readily available assets and savings.
It is vital that you know exactly what readily available funds you have, as these will cover all your costs until your sale is completed.
The profit expected from the sale of your property.
There are two numbers that you need to know, the amount you think your house will sell for and the balance on your current mortgage. The selling price of your home can be obtained from a recommended Estate agent (always a good idea to have a couple of quotes). The amount still owed on your mortgage can be sourced directly from your lender. When you have these two figures, simply subtract what is still owed from the amount you think your house will sell for. This will then give you the profit expected from your house sale.
The cost of moving House:
Cost of selling your property.
Estate agents will cost between 0.75% to 2.5% + VAT
Property portals are quite popular, for a private house sale the cost will be between £500-£620. This will help reach the maximum number of buyers.
Auctions are another way of selling, this will cost a minimum of 2.5% + VAT your solicitor will have to be paid for being present at the auction.
Solicitor’s fee
These can vary enormously; some charge on a fixed fee basis others on a percentage of your homes value.
If the property is free or leasehold can make a difference, leasehold is more work for your solicitor.
Experts advise that your budget for legal fees should be between 0.5-1% of your properties value. The internet has added more competition on this front, so it possible to have a great service for more of a reduced price. Your relationship with your solicitor is vital; this ensures that the experience is stress free and as quick as possible.
Mortgage redemption fees
If you are thinking of paying off your mortgage early it is good to check if there is a redemption fee payable. Recently, with such fierce competition in the mortgage market and borrowers switching deals midway for a cheaper alternative they have started to impose steep exit fees.
Where this fee seems totally exorbitant, seek advice from an independent mortgage advisor.
Cost of the removal
There is not a definitive price for professional moving firms, it varies on the following:
Is storage required?
The distance of the move.
Is the property easy to access?
Are you packing yourself?
Quantity of possessions to be moved.
Of course you could always move yourself, a cheaper option, but there are a few points to consider:
Cost of hiring a van.
‘Goods in transit’ insurance. (Check that your household insurance covers your move)
Diesel.
Suitable packing materials. (Boxes, bubble wrap etc)
Cost of purchasing your home.
Solicitor’s fee
These are usually higher as there is more work involved.
Stamp Duty may be added to your quote when you purchase your property, just remember to deduct this so that you can compare all quotes accurately.
Be vigilant for hidden costs, cheap quotes may not be what they seem. The following should be within your quote:
Professional indemnity
Mortgage lender legal fee
Telegraphic transfer fees
Land registry fees
VAT
Land registry searches and office copies
Mining searches
Drainage searches
Local Authority searches
Stamp Duty Land Tax
This is what you pay to the Inland Revenue when you purchase a property worth more than £125.000. This is payable on Land, houses, flats and buildings.
Mortgage Broker’s fee
This can vary, some charge a fixed fee, some a percentage of the mortgage arranged and others a fee for consultation.
Most will charge 0.25-0.5%, you should never pay more than 1.5% of the mortgage.
If the broker receives a fee from the lender, this must be disclosed to you.
Mortgage lender’s valuation fee
Your lender will send a surveyor to value the property that you are purchasing, to ensure that it is worth the amount being paid. This is a fee that will be incurred by you; a few competitive lenders waive this fee.
Mortgage lenders legal fee
The solicitor that you are using needs to be on the lenders approved legal panel, if this is not the case your lender may appoint their solicitor. This will be at your cost, they can charge what they wish, so be careful.
Lenders arrangement fee
This is the fee for setting up your mortgage. This is charged for arranging a capped or fixed rate mortgage. This fee can be between £300-£450.
The Survey
There are three types.
Valuation Report
This will cost between £250-£350+VAT. This does not impart enough information to base a purchase on; so many lenders will appoint their surveyor to carry out a Homebuyers Report. This will cost between £350-£1000+VAT. This report will give a good indication of any defects (damp, subsidence, structural problems) and the approximate cost in rectifying these. At times, a thorough more detailed analysis is required. Carpets will be lifted, the roof examined, services tested. This may be required for an older, expensive property.
Building and contents insurance
A freehold property needs to have insurance in place from the moment of exchange.
Leasehold is different, as it is the landlord’s responsibility to ensure that the building is insured. This policy needs to be valid until the day the removal van moves you.
Shop around for you insurance, the best deals are rarely with your lender.
Rainy day fund
It is always an unpredictable time, and the unlikely can often crop up, so it’s always prudent to have a little extra money put aside for such eventualities.
For a low cost conveyancing quote please click "GO".
| < Conveyancing Resources |  |