Mortgage buyers guide, conveyancing, property surveys, property valuations, stamp duty. Guides, advice, conveyancing, property surveys, property valuations, stamp duty when taking out a mortgage.
This mortgage buyers' guide provides a simple overview of some the things you'll need to be aware of when applying for a mortgage to buy your new home.
The property guide covers conveyancing, surveys, valuations, and Government stamp duty.
If you are remortgaging your property, rather than moving home, you may find this
guide to remortgages very useful.
Conveyancing is the term used to describe the legal work involved with buying and selling a property. Conveyancing is normally carried out by either a solicitor or a qualified licensed conveyancer.
There are several stages involved in the conveyancing work, your solicitor or licensed conveyancer will request contract papers from the vendor's solicitor, undertake various searches such as a local authority search, check the title to the property you are buying to see who legally owns it, organise exchange of contracts, obtain the necessary funds from your mortgage lender, and arrange for these to be sent to the seller on completion of the sale.
The legal fees payable for the conveyancing work are made up of the solicitor's or licensed conveyancer's own fees (typically £300-£500) plus "disbursements". Disbursements 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 mortgage packages where they will meet some or all of these costs.
When choosing a solicitor or licensed conveyancer to handle your conveyancing, it is advisable to find a firm that offers a no exchange, no fee promise. This means that if the purchase of your property falls through before completion there will be no fees or charges for the work the solicitor has carried out up to that point.
Property Surveys & Valuations
There are three types of property survey: a Basic Valuation, a Homebuyer's Report, and a Full Structural Survey.
A Basic Property Valuation is normally the minimum that is required by the mortgage lender before they will proceed with your mortgage or remortgage. This type of property survey gives very little detail about the state of the property and so is not recommended for older properties. The cost of a Basic Property Valuation is normally around £100-£500. Again, this is something that the lender will sometimes pay as part of a special deal for remortgages or first-time buyers.
A Homebuyer's Property Report provides more detail about the condition of the property, and will highlight any structural problems that may require attention. The Homebuyer's Property Report follows an industry-wide format and covers areas such as: wiring, evidence of damp, the heating, subsidence, condition of the walls and roof structure, etc. Costs for this type of survey are usually in the region of £300-£600.
A Full Structural Property Survey is the most comprehensive type of property inspection, covering every aspect of the property from the foundations upwards. Obviously, it is also the most expensive - normally 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 property you are buying, and its age and general structural condition.
Government Stamp Duty
Stamp duty is a Government tax levied on the purchase of a property. The level of stamp duty varies depending on the purchase price of the property.
For purchases of up to £120,000 there is no stamp duty due.
Between property purchases of £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%.
Government stamp duty is not usually payable on a remortgage, except in cases where an additional name is being added to the title deeds.
You can use our free mortgage calculators to calculate your borrowing limits for mortgages and remortgages, by