First Time Buyer: What Other Costs do I Need to Budget for When I Apply for my Mortgage?

The monthly repayments are not the only cost you need to consider when getting a mortgage. There are other fees like solicitor costs, valuation fees and Stamp Duty Land Tax to cover.

People often underestimate how much these additional fees stack up, so we have compiled this article to fill you in on some of the other costs you need to budget for.

What charges are involved in getting a mortgage?

The amount you pay to arrange a mortgage depends on the lender and the type of mortgage you choose. Here are the most common costs you need to be aware of:

  • Arrangement fee – this is sometimes known as the product fee and sometimes can be added to the mortgage.
  • Valuation fee – the mortgage provider will have a valuation survey carried out for the property in question, usually at your expense.
  • Transfer fee – this is when you pay your mortgage provider to carry out the transfer of funds to your solicitor.
  • Mortgage account fee – this covers the lender’s admin costs for the opening, maintenance and closing of your mortgage account.
  • Missed payments – you may be charged an additional fee if you go into arrears with your mortgage.
  • Broker fee – if you work with a mortgage broker, you may have to pay their fee (if they charge one).
  • Early repayment charge (ERC) – this fee often applies if you wish to remortgage before the end of the tie-in period. Always check if an ERC applies, and for how long, when comparing mortgages.
  • Exit fee – this may apply when you finish repaying your mortgage, covering the admin involved in closing the account.

What other costs do I need to be aware of?

Additional mortgage-related charges need to be budgeted for when you look to take out a mortgage. These can run into thousands of pounds in some cases, so it is important to plan effectively. Associated costs include the following:

  • Moving costs – renting a large vehicle or hiring a removals company costs money, and most people will not be able to move their possessions into their new home without this.
  • Legal and survey fees – there is a great deal of legal work involved in a property transaction, and the solicitor who carries it out must be paid. It is also strongly advised that you have a building survey carried out to assess the condition of the property before you buy it, and this costs money too.
  • Stamp Duty Land Tax – first time buyers purchasing a property for less than £300,000 currently pay no Stamp Duty.

Can I get help to plan for mortgage costs?

An experienced mortgage broker is an expert in their field and can offer advice and guidance on every aspect of getting a mortgage. This includes planning and budgeting for the expenses and seeking out lenders with minimal fees if this is important to you.

P&M Financial are a professional mortgage brokerage based in the Luton area. You can reach us on 08006349250 or email prabs@pm-financial.co.uk to tell us about your situation, and we will let you know how we can help.

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