Buying a home is an exciting prospect for the majority of first-time buyers but, of course, it is likely to be the most expensive purchase they will ever make and there are a number of associated costs which need to be included in the moving budget as well as the cost of a residential conveyancing solicitor’s services.
Finding a new home
If you have decided on the area where you want to live in, there are a variety of options in finding a suitable property, such as looking on the internet, in a local newspaper or, the most usual way, visiting an estate agent.
Estate agents are paid by sellers, not buyers, so it costs nothing to use their services when inspecting a potential home and any work involved such as providing an Energy Performance Certificate, which is mandatory, to confirm how the property meets energy conservation requirements.
Under the Estate Agents Act, an estate agent is legally bound to present any offer promptly and in writing to the person selling the house unless the seller has stated some offers will be unacceptable.
A buyer’s offer is not legally binding in England and Wales, even if it is accepted “subject to contract”, so that if other offers are made before the contracts are exchanged the seller may still consider them.
Mortgage lender’s fees
When credit of all sorts was easy to obtain, mortgage lenders often offered 100% of the cost of a property to encourage borrowers to become home-owners without them needing a deposit of their own money as well. This is no longer the case and large cash deposits are needed in most instances, especially in areas of high demand for property with commensurate prices, such as London and Brighton.
Aside from that cost, a mortgage lender, usually a bank or building society, will require various fees for its work before releasing the borrowed amount.
First, it will ask for a valuation survey fee, which should be less than £500 for an average property, to be paid up front. This means a brief report on the proposed new home will be prepared and will be for the benefit of the lender to check that its investment in lending the money is reasonable, based on the condition of the property and its market value.
If the mortgagor is satisfied that its funds will be safe, and subject to the mortgagee’s ability to repay the loan, depending on income, a mortgage offer will then be made.
Lenders may also impose a booking fee and/or a completion fee which can be added to the overall cost of the mortgage. Costs of these vary enormously from less than £100 to more than £1,000, depending on the lender’s current policy and, sometimes, on the particular property or buyer.
Shopping around between various mortgage providers or by using a broker may help to find the most suitable deal for individual circumstances.
If a first-time buyer is seeking a particularly high percentage loan or the house concerned needs work doing to it to bring it up to the lender’s required standard, additional insurance or other charges may be added to protect the lender from this liability.
It is not compulsory and home buyers on a tight budget often do not seek a full property survey before completing their purchase but spending a few hundred pounds before fully committing to the contract could save thousands afterwards.
The cost of a qualified surveyor carrying out a homebuyer survey or, the more detailed version, a building survey will vary depending on the size of the property. Getting quotes from three different firms should ensure a value-for-money figure.
The costs of employing a conveyancing lawyer cover the legal administration of drawing up the contract, making searches and generally representing the interests of the buyer.
Charges vary according to the value of the property and, to some extent, market conditions in the area and residential conveyancing solicitors should be happy to offer an estimate of their fees before a buyer makes a commitment.
House purchase is a service carried out by most high street solicitors’ practices and, by using a firm which is monitored by the Solicitors Regulation Authority (part of the Law Society), consumers are protected through official supervision.
Stamp Duty Land Tax
Stamp duty is a tax imposed by the Government to raise money and is charged on all property sales above a minimum amount as percentage of the total purchase price.
As of January 1, 2010, the threshold for paying the tax was £125,000, then 1% for properties up to £250,000, 3% for properties between £250, 000 and £500,000 and 4% for properties costing £500, 001 or more.
However, first-time buyers who have never owned a house or flat in the UK or anywhere else in the world, between March 25 2010 and March 25 2012 have a higher starting threshold of £250,000
Where a property is mixed use, such as a shop with a flat above it, or is in an area defined as disadvantaged by the Government, there are different levels of stamp duty.
Other costs and fees
Other costs which may be incurred by first-time buyers before moving in to their new home can include insurance of the building, which is mandatory if a property is mortgaged, charges for furniture removing and any immediate costs of refurbishments.
Healys solicitors can help first-time buyers
Most first-time buyers are unsure of the procedures and legal complexities involved in buying a home but Healys’ lawyers offer not just a cost-effective and straightforward service but also pride themselves on communicating regularly with you to ensure the property transaction proceeds smoothly.
When it comes to charges, we will do our best to keep fees to a minimum and give you an estimate of how much they will be so that you can budget accordingly.
To find out how Healys can help you buy your first home, why not call for friendly no-obligation legal advice on our residential conveyancing solicitors’ services.
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