This property buyers' guide gives a quick overview of some the things you'll need to be aware of when taking out a mortgage to buy your new home.
The guide covers conveyancing, surveys & valuations, and stamp duty.
If you are remortgaging, rather than moving home, then you might find this guide to remortgages useful.
For a conveyancing quote, please click here.
Conveyancing is the term used to describe the legal work associated with buying or selling a property. It is usually carried out by either a solicitor or a licensed conveyancer.
As part of the conveyancing work, your solicitor will request contract papers from the seller’s solicitor, undertake various searches such as the local authority search, check the title to the property you are buying (i.e. who legally owns it), organise the exchange of contracts, obtain the required funds from your mortgage lender, and arrange for these to be sent to the vendor at completion.
The legal fees payable for the conveyancing work are made up of the solicitor's own fee (typically £300-£500) plus "disbursements". These are fixed amounts that the solicitor pays to others on your behalf, for example fees to the land registry, local authority search fees, etc. Some mortgage lenders offer packages where they will meet part or all of these costs.
When choosing a firm to handle your conveyancing, it is a good idea to look for one that offers a no exchange, no fee promise. This means that if your purchase falls through before completion there will be no charge for the work the solicitor has carried out up to that point. To get a quote from a conveyancing firm who offer this type of guarantee, please click here.
Surveys & Valuations
There are three types of survey: a Basic Valuation, a Homebuyer's Report, and a Full Structural Survey.
A Basic Valuation is usually the minimum that is required by the mortgage lender before they will proceed with the mortgage or remortgage. This type of survey gives very little information about the state of the property and so is not normally recommended for older properties. The cost of a Basic Valuation is usually around £100-£500. Again, this is something which the lender will sometimes pay, for example as part of a special deal for remortgages or first-time buyers.
A Homebuyer's Report provides more detail about the overall condition of the property, and will highlight any problems that require attention. The report follows an industry-wide format and covers areas such as: the heating, wiring, evidence of damp, subsidence, condition of the walls and roof structure, etc. Costs for this type of survey are typically in the region of £300-£600.
A Full Structural Survey is the most comprehensive type of inspection, covering every aspect of the property from the foundations upwards. It is also the most expensive - often around double the cost of a Homebuyer's Report.
The type of survey you opt for will depend to a large extent on the type of house or flat you are buying, and its age and general condition.
Stamp duty is a Government tax on the purchase of a property. The level of tax varies depending on the purchase price.
For a purchase price of up to £120,000 there is no stamp duty.
Between £120,000 and £250,000 the level of stamp duty is 1%.
This rises to 3% for properties from £250,000 to £500,000.
Properties with a purchase price of £500,000 or more attract stamp duty at 4%.
Stamp duty is not normally payable on a remortgage, except in cases where an additional name is being added to the title deeds.