Guide Options
The House Hop Guide to Mortgages
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*£850 is the average saving on a typical sale and purchase through our panel of conveyancing solicitors compared to using a high street solicitor (Survey of 52 high street solicitors, September 2010).
Click here for free conveyancing quotes
*£850 is the average saving on a typical sale and purchase through our panel of conveyancing solicitors compared to using a high street solicitor (Survey of 52 high street solicitors, September 2010).
Set Up Costs
Valuation
Before a lender will offer you a mortgage they will require that the property be valued. This is to ensure that the property will provide them with adequate security.Normally, the borrower pays the cost of the valuation, though sometimes the lender will refund the fee if the mortgage completes. Prices start at around £200, though larger properties will cost more.
Bear in mind, however, that buyers cannot rely on a valuation survey that is addressed to the bank and not to them. Furthermore, the purpose of the valuation is to confirm that the bank will have adequate security — not to see if you will be paying too much.
The answer is to get your own Homebuyer Survey and Valuation (also known as a Homebuyer's Report) done. Your lender may accept this in lieu of their own valuation survey, in which case it may not end up costing you any extra. For more information on surveys see our separate "Guide to Buying".
Arrangement Fee
You are likely to be charged an arrangement fee of hundreds, or even thousands, of pounds to get your mortgage set up. Bear in mind that low arrangement fees do not always mean the best value — it's important to weigh up the costs of both the arrangement fee and the interest payments before deciding on a mortgage product.Legal
Lenders incur certain legal fees in connection with their interest in a property over which they have a mortgage. These are likely to be around £200 and are usually passed on to the buyer.Insurance
Lenders will want your property to have an adequate buildings insurance. Buildings insurance covers the fabric of your property and will pay for it to be repaired in the event of fire, flood or structural damage.If your buildings insurance policy is not with your mortgage lender they may check to see if it is adequate and charge you a checking fee of around £25.
You will also be expected to have contents insurance, which will cover things such as furniture, carpets and appliances.
Higher Lending Charge
A Higher Lending Charge pays for insurance to protect the lender in the event that a property in negative equity (ie, it is worth less than the outstanding mortgage) is repossessed. It will cover the shortfall between the sale price of the property and the outstanding mortgage.
Typically Higher Lending Charges are required on mortgages with a loan to value (LTV) of 90% or more, though this will vary. The higher your LTV the more expensive the charge.
