Mortgage Costs

Initial Costs

How much will you need to budget for?

There are three areas to consider:

• Your deposit

• Mortgage Expenses

• Legal charges and fees

Your Deposit

Most lenders offer mortgage loans up to a percentage of the purchase price. These percentages typically run at intervals of 5% ie. 90% loan to value or 95% loan to value. You may be purchasing a property of value £100,000 with a deposit of £7000. If raising a deposit of £7000 (7%) leaves you financially stretched, consider reducing your deposit to £5000 (5%).

Mortgage Expenses

These may consist of some or all of the following:

• Valuation fee            - Usually payable up front

• Arrangement fee        - Can often be added to loan      

• Booking fee                - Can often be added to loan

• Higher lending charge*    - Can often be added to loan

• Completion fee**        - Can often be added to loan

* Higher lending charge : also known as 'mortgage indemnity premium' or 'higher percentage advance fee' . This is a form of insurance to protect the lender in cases where there is a high percentage loan to value. This is normally applied as a single premium which is often added to the loan. Paying this premium does not protect you from being sued by the lender in the event of repossession. (can often be added to the loan)

**Completion fee: A small number of lenders may charge a completion fee

Legal charges

These may consist of some or all of the following:

• Stamp Duty                - Payable on completion (see the table below)

• Search fees etc            - Your solicitor/conveyancer may require an up front payment 

• Legal fees*                   - Normally payable on completion

*Legal fees may include lenders legal costs.

Stamp Duty (Only applies to purchases)

Monthly Costs

These may consist of some or all of the following:

• Mortgage Payment (compulsory)

• Investment (If you have chosen an interest only loan backed by an endowment or ISA)

• Life Assurance (may be compulsory)

• Buildings/Contents Insurance (compulsory)

• Mortgage Payment Protection (optional)

Finally

To help you in planning your finances, we have prepared a mortgage costs sheet for you to complete.

This sheet is provided for guidance in budgeting for your mortgage. We cannot be held liable for errors and omissions. We recommend you confirm the actual costs as soon as possible.

Your home is at risk if you do not keep up repayments  on a mortgage or other loan secured on it.