Services: Costs and Fees - What to expect

On top of the monthly mortgage amount there can be many costs involved when buying a property or even when you re-mortgage. Listed below are some of the charges you may be expected to pay. It is worth remembering that many lenders will include these fees on some of their mortgage products meaning a separate bill does not need to be paid. Typically these arrangements will have a higher monthly charge but they are more suitable for some clients. Our Mortgage team will be pleased to discuss your own circumstances with you and advise accordingly.

Stamp Duty 

For residential property purchases (not re-mortgages) the government imposes Stamp Duty Land Tax on all properties over a certain value. The value of the property you are buying will determine the amount of Stamp Duty payable. For the 2007/2008 tax year the limits are as follows: 

You solicitor or conveyancer will advise you on how this needs to be paid.

Lenders Arrangement Fee

The majority of mortgage lenders now charge an arrangement (or booking) fee, especially if you would like a fixed or tracker rate mortgage. Arrangement fees vary from a few hundred pounds up to a percentage of the mortgage amount, meaning thousands of pounds. Most lenders will allow you to add this fee to the loan although you will be charged interest on this for the term of the mortgage.

Higher Lending Charge (HLC)

Some lenders still charge HLC when you take out a mortgage that is large compared to the value of the property. These charges normally only appear when you wish to borrow more than 75% of the property value so if you have a large deposit this charge should not apply.  The good news is that most mortgage lenders do not charge this HLC at all anymore, particularly if you are not borrowing more than 90% of the value of the property.

Valuation Fee

All mortgage lenders require a suitable valuation of the property before they will produce a formal mortgage offer. The lender needs to ensure the property forms adequate security for the money they are lending against it.

In most cases the applicant will pay the valuation fee but it is becoming increasingly common for lenders to offer to pay this valuation fee or to refund (or partially refund) this to the applicant when the mortgage completes.

It is possible to arrange for a more comprehensive survey at the same time as the basic mortgage valuation. This often proves to be better value for money and will give you a better insight into any potential problems the property may have. The different survey types include a Homebuyers survey and a Full Structural survey.

Legal costs

When arranging a mortgage or a remortgage, a conveyancer or solicitor needs to be appointed to act on your behalf and they will charge a fee for their work. They will also usually charge for disbursements which may include the following:

·          Legal costs (for handling the case)

·          VAT

·          Search fees

·          Land registry fees

·          Bankruptcy check

·          HMLR final search

·          Local water and drainage search

·          Telegraphic transfer

Again, some lenders will offer to pay these legal costs on your behalf as long as you use their appointed solicitor and some lenders will offer a cashback facility to help you out with these charges.
Tisco can help you find and instruct a conveyancer if you do not have one, or you choose a mortgage where one is not included.

Life Insurance and Payment Protection

Some lenders insist that you take out life insurance, particularly if you are buying with your partner. In the event of death this will enable the surviving partner to pay off the mortgage.

You should also consider protecting your mortgage payments in the event that you are unable to work through either accident or sickness. As Independent Financial Advisers we can help to arrange this for you, please see our life insurance and mortgage protection section for full details.

TISCO Financial Planning fees

TISCO Financial Planning are fully independent so we offer our clients the choice to pay a fee for our services but in our experience most clients prefer not to as most lenders pay an introducers fee or commission to the arranging or introducing broker. For loans over £100,000 this usually covers our basic costs. In certain circumstances it is necessary for TISCO  to charge a small fee to ensure that our overheads are covered. If the latter is the case you would be advised of this prior to any work being undertaken. If you prefer to pay us a fee (we will refund you any commission we are paid) this is typically £500.