For most people, getting that dream property is a long-term commitment, which basically means that they have to apply for a mortgage at a bank or other financial institution. Mortgages can be complicated affairs, however, and it’s always wise to think ahead and be prepared before submitting that mortgage application. In fact, the mortgage is not only about deciding what the best interest rates are, what amount to pay per month, and over which period of time (how many years?) you should settle for. There are actually a lot of expenses which the average mortgage applicant is not familiar with. Here, then, is a detailed list of the main upfront expenses you need to know when applying for a mortgage.
Your deposit – the amount of money you yourself can put down for the property – will greatly affect the mortgage in three important ways. Firstly, the more you can pay yourself, the less you have to borrow. Secondly, the more deposit you have ready, the more favourable your interest rates will be. Thirdly, your chances of getting that application approved are much better because you can show the mortgage lender that you are more committed as well.
Getting the property evaluated
You’ll need to get the property evaluated, which entails two major expenses:
- The purveyor fee. This is to make sure the property doesn’t have any unexpected flaws, or at least to inform you of whatever flaws there are.
- The valuation fee. You’ll need to present the mortgage lender with a valuation of the property, so the bank will know how much the property is actually worth.
Legal and administration fees
Yes, the lawyers and the government will want to get paid, too. These costs are also unavoidable and you should be ready for them as well. The main expenses for signing that contract (contract of sale, deed of sale, and so on) are:
- Stamp duty
- Legal fees
There will be other costs that you should be aware of – some of them you, as a person getting the mortgage or buying the property, will have to shoulder. The other costs could be on the account of the seller or the mortgage lender. Either way, you should be aware of them. Some examples: brokerage fees, removal costs, electronic transfer fees, and so on.
Buying your own property and securing that dream home is an exciting adventure, but it is probably one of the most important financial decisions anyone ever makes. It’s always recommended that you seek advice from experts (such as a qualified and experienced mortgage broker from Flagstone.co.uk) before taking the plunge – there may be tricky aspects or costs which you might forget or never even considered. Get informed and make sure you know what you can expect.