Buying a Home? Beware the hidden extras

Surprises are good but not when you’re house buying, so…

Plan ahead
The price you pay for your new home is not what you will pay to eventually live there, there are a number of additional costs that you need to be aware of.

Before you are even awarded a mortgage you usually have to pay an arrangement fee and a lender's valuation fee, and if you are borrowing more than 90 per cent of the property's value you could be charged a Mortgage Indemnity Guarantee.

This is a one-off insurance premium which can run to thousands of pounds, and the higher the percentage of the property's value borrowed, the more you will have to pay.
What do you get for this money? Well, nothing, the policy protects the lender if you default on your payments and offers you no protection whatsoever. However, there are some mortgages available that don't carry a MIG for high-value loans.

What else will you pay for?
It is advisable to also pay for a more extensive survey, which will provide a really thorough inspection of the property's state of repair and structural soundness and could uncover a major problem that you would have been lumbered with further down the line.

You are obliged to pay for buildings insurance when you take out a mortgage (unless you are buying a leasehold flat when it becomes the freeholder's responsibility), to protect the lender's interest in the unlikely event of your home burning down.

Then there are legal fees. These can be hundreds or even thousands of pounds, so what do you get for your money? Well, your solicitor will see to the gritty details of your move, including arranging searches, contracts and Land Registry, checking finances and making sure Stamp Duty is paid.

Stamp Duty is payable to the government and the percentage you pay is determined by the purchase price of the property you are buying: Up to £125,000, 0%; £125,001-£250,000,1%; £250,001-£500,000, 3% and £500,000+, 4% of the purchase price.

Home and dry
It's nearly time to move but, before you go, if you are selling a property you need to remember that the estate agent will take a fee (typically 1.5 per cent to 2.5 per cent of the selling price). Then, of course, the removal company will need to be paid and if you are a first-time buyer you will need money to pay for furniture and fittings once you have moved in.

Good luck and good house hunting!