Mortgage/house costs/advice.

Glaucus

Glaucus

Glaucus

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Joined
11 Mar 2004
Posts
76,637
Looking to buy a house, with the new government scheme. 5% deposit, 4.99% zero fees. Looking at the very bottom end of the market in not so nice places. 100-110k so £555-610 a month I make it using calculators with those figures, Currently pay £400 in rent.

But wondering the other costs are and how much they are.
Obviusly you have:
Solicitor fees
Surveying fees? Theres several different ones.

Then once moved in things like:
House insurance
Boiler insurance, worth bothering with?

Rented for over a decade, so I know the usual bills, just anyone give figures for the others, and what I need to look out for.

The other worry is how do they view overtime/higher grade duty. As my basic is 10k lower than my actual amount i take home. Almost 5 years of consistent yearly earnings though, other than one year, where i was injured, even that was 5k more than basic.

The other thing, am I right in saying that once you apply and get accepted they'll give you that offer for three months, then you have to reapply once that expires?
As i'm not in any rush and looking for somewhere which is structurally fine but hasn't been decorated since the 60s. So may take a while to find somewhere.

If they reject me, I assume that will affect credit rating? Are we talking like 6months before you can realistically reapply, or can you just go ahead and try a different bank? Is it worth seeing a mortgage advisor, although there's only three banks offering it at the moment, and at least another two banks starting up in Jan.

If I wanted to rent the spare bedroom out, would this cause issues for the mortgage? And would I have to pay tax on it.

I don't want to miss the boat, last time they had a scheme like this, they ran out of funds in months and got a letter saying sorry all funds gone. It doesn't look like they will with this scheme, they saying it runs till jan 2017.
As it would be better for me to leave it till march, will of paid of student loan, which means I'll be £120+ a month better off and hoping to pay one of my credit cards off by jan/feb time, which will mean another £130 a month. And sky contract runs out in march iirc. Which I wouldn't renew so another £110, minus what ever broadband on its own costs. Easily making up the extra in mortgage.

So yeah any help appreciated, or a good newbie guide. As the guides I've found are extremely basic and not particularly helpful.
 
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Building insurance will likely be a requirement of the mortgage - contents won't be.

Personally, I have never bothered with boiler cover. In the past 7 years my boiler related costs have totalled £120 (£40 service and 2 issues fixed @ ~£40 each). That doesn't mean I wouldn't consider it in the future and I do know lots of people with it.

I believe income from live-in lodgers is tax-free.
 
Kemik said:
You can rent out a room for up to £4,250 per year (split 50/50 if house is jointly owned).

Mote info: http://www.hmrc.gov.uk/individuals/tmarent-a-room-scheme.shtml
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Thanks, it would be well under that. Probably 200-300 a month including all bills, due to state of house. I wouldn't need to rent it out, but would make life a lot easier and speed up redecorating.

Also is there a way to see what house where advertised at and what price they actually sold for in a given area.
 
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Once moved in>

Water
Gas
Electric
Council Tax
Home insurance

You can get boiler / electrics / gutter insurance from the likes of British gas, costs £15-40 pm.

Be weary of taking their regular boiler health checks. A friend who is a landlord got caught out by them 'suggesting' things be changed when they were fine and even going as far as to condemn two boilers (that he later proved were totally fine and received written apologies).
 
Solicitor fees including disbursements but not stamp duty will be around £1200. Survey will be around £600.
 
Glaucus said:
But wondering the other costs are and how much they are.
Obviusly you have:
Solicitor fees
Surveying fees? Theres several different ones.
Click to expand...

Shop around and get some quotes, we paid around £1000 for ours

Surveying fees were included in the above :) - We did get a very good deal on this though! (haggling works!)

Glaucus said:
Then once moved in things like:
House insurance
Boiler insurance, worth bothering with?
Click to expand...

House insurance, I'm pretty sure we paid it in one lump sum, as it worked out cheaper, and wasn't breaking the bank. Think it was around £110 for the year? give or take. (I guess about £10-20 per month?)

We don't have boiler insurance but its not a requirement. If you do want it, you can get this through your energy company normally.

Glaucus said:
The other worry is how do they view overtime/higher grade duty. As my basic is 10k lower than my actual amount i take home. Almost 5 years of consistent yearly earnings though, other than one year, where i was injured, even that was 5k more than basic.
Click to expand...

Can't help on this one I'm afraid! somebody else might be able to shed some light though. My assumption is that if its consistent they will take it into account

Glaucus said:
The other thing, am I right in saying that once you apply and get accepted they'll give you that offer for three months, then you have to reapply once that expires?
As i'm not in any rush and looking for somewhere which is structurally fine but hasn't been decorated since the 60s. So may take a while to find somewhere.
Click to expand...

That is correct! expires three months after you get accepted, and then you must reapply.

Glaucus said:
If they reject me, I assume that will affect credit rating? Are we talking like 6months before you can realistically reapply, or can you just go ahead and try a different bank? Is it worth seeing a mortgage advisor, although there's only three banks offering it at the moment, and at least another two banks starting up in Jan.
Click to expand...

It does effect your credit rating, but if you go into a bank/building society they can do all sorts of calculations while you are there which don't effect your credit rating. Then, with your permission they will run basic credit checks, then send off your applications.

When we brought our house, as first time buyers, we preferred to go into banks to see people rather than go online etc, we just found it made us feel a lot more comfortable and the process is explained much more clearly.

You are free to try as many banks as you like. To be sure, We signed up to Experian(??) - so we could see our credit ratings etc. It costs a monthly subscription but you can pay it once then cancel the account when your done. (£14.99 IIRC)

Glaucus said:
If I wanted to rent the spare bedroom out, would this cause issues for the mortgage? And would I have to pay tax on it.
Click to expand...

I guess if you do it privately to a friend etc it doesn't matter, just get them to pay you directly.

A couple of our friends do this and it seems to work fine.

Not sure how it would work if you went through all the proper methods though.

Hope this helps!
 
Wow that much for solictor. So this price list isnt realistic?

Solicitors Fee £195.85
Land Registry Fee £220.00
Search Fees £130.00
Telegraphic Transfer £23.00
Total £568.05

Basic survey £240
Full structural survey £450
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Edit - Indie just re-read yours included a survey, so about the same then.
 
If the house your looking for is of that age and you want one that hasn't been redecorated then the boiler may not even be serviceable. You may however qualify for some form of scrappage scheme type affair. New boiler installed of a decent brand would have a decent warranty tho. We went for a WB, 7 yr warranty new boiler and around 7 rads cost us about 2.5k I think it was.

As above buildings insurance quite possibly mandatory however contents isnt, Think we pay about 200 a year with accidental damage cover on both building and contents.

If theres a chance this will end ealry and you think your in a good position for it now I'd jump at the chance :)
 
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~Divine~Wind~ said:
If theres a chance this will end ealry and you think your in a good position for it now I'd jump at the chance :)
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I think its just possible, it would be extremly tight.
Suppose theres no harm going and talking to natwest and see what they say.
In march my finaces will be so much better, which would mean despite higher cost mortgage/bills i would be the same total monthly im paying know.
 
the only other thing I can think of is if you tell the bank you will have X amount (including your above basic wage) and that amount doesn't hit the account they might kick up a fuss
 
Glaucus said:
Wow that much for solictor. So this price list isnt realistic?



Edit - Indie just re-read yours included a survey, so about the same then.
Click to expand...

Yeah its about realistic! the breakdown is good :)

All solicitors quotes you get will come with that breakdown, but you have to get it anyway, so they are always between the £925 - £1200 price range. (at least, thats what our quotes reflected.

We picked a mid-way quote, and one that some family members had used in the past. We were very impressed by the service we got!
 
These are the 'moving fees' I paid a couple of years ago:

Solicitor fees:
Legal fee on purchase £395.00
VAT thereon @ 20% £79.00
Land Registry fee £280.00
Local Search fee £200.00
Miscellaneous Search fee £30.00
Telegraphic Transfer fee £36.00

Plus optional drainage survey (£45), environmental search (£50).

Total = £1020.


Mortgage product fee. We paid £400 but obviously this varies between products. Could be from 0 up to £1500. No idea how this works with the government scheme.

Stamp Duty. We didn’t have to pay for this as we were first time buyers and there was a government initiative on so we didn’t have to pay. Not sure if this still exists or not. Again, no idea how this works with the government scheme.

Survey fees. As you know there's multiple levels. Ours were around £100, £400, £1000 as a ballpark figures for the 3 levels (basic valuation, can't remember the name of the medium level one, and the full structural survey). We went for the middle one.

I'd always get the boiler and the electrics checked after moving in as that could be very expensive. We managed to get our seller to do it before we signed as they didn't have any recent documentation.

As for the how mortgage affordability. A few lenders websites have a affordability calculators that give you a ball park figure of how much they will lend you. Are you close to the threshold on you basic rate? If not, then I don't think you have much to worry about.
 
Get the boiler and electrics checked BEFORE moving in, should cost maybe £50 from a local registered engineer.

He might say it needs a rewire and the heating needs replaced, things you''d probably be doing anyway but if you have proof they NEED done then maybe you could use that as something to justify a lower offer than asking ;)
 
Stamp Duty wise... You don't pay any if your buying a house worth less than £125k. If you are paying £125k - £175k (don't quote me on the bracket, as there are different notches o nthe ladder) then you pay +1% of the price.
 
Glaucus said:
The other worry is how do they view overtime/higher grade duty. As my basic is 10k lower than my actual amount i take home. Almost 5 years of consistent yearly earnings though, other than one year, where i was injured, even that was 5k more than basic.
Click to expand...

I wouldn't have thought this would be an issue. If you've got three years worth of P60's with consistent earnings then they should accept the numbers on them rather than your basic salary.
 
We completed on our house purchase a couple of weeks ago and spent:

Solicitors Fees - £375.83
Bank Transfer - £15
VAT on Fees - £78.17
Land Registry - £270
Panel Fee - £48
Searches (inc VAT) - £244.17
Total - £1031.17

We were quoted up to £1600 for solicitors but HSBC do a panel thing that has a flat rate (although they completed on time they weren't great).

On top of that we paid:
Home buyers Survey - £450
Mortgage Fee - £1499
Buildings insurance - £22pcm

When we applied for our mortgage they asked us about average overtime (we had none) and would have accepted pay slip evidence for these.

With the mortgage we chose the cheapest product over the 2 year fixed period we could get, but that did result in higher up front costs.

One thing I was really concerned about was the affordability of mortgage repayments - what the bank will lend you and what you can afford to pay back are not always the same. We took £100k less than offered because I didn't think we could afford to go higher, especially once interest rates start increasing.
 
Indie said:
Stamp Duty wise... You don't pay any if your buying a house worth less than £125k. If you are paying £125k - £175k (don't quote me on the bracket, as there are different notches o nthe ladder) then you pay +1% of the price.
Click to expand...

1% threshold goes up to £250k, above that it is 3% up to £500k(?) I think.
Effectively this means that spending over £250k will cost you over £5k in additional stamp duty (i.e. over £7.5k instead of £2.5k), but the fact that may scare off some buyers could mean that there is less competition for houses costing slightly over £250k. In other words if someone has a house on at say £280k (assume this is a realistic valuation) they probably get plenty of offers at £250k but not many at £255k.

Market forces should level out this sort of thing anyway but unlike income taxation it's kinda weird in that you have to pay the extra duty on the full value of the property, not just the proportion that is over the threshold. A sale at £255k only nets the vendor an extra £5k but costs the buyer £12.65k more. I do wonder sometimes how often dodgy deals get done whereby it goes on the books at £250k but there are further payments for fixtures and fittings etc.
 
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