Everyone knows that buying a house incurs a massive amount of money, especially in terms of a deposit.
The steps to buying a house are not taught at school, and that means many people reach adulthood and assume they need a deposit and that’s it, only to be stung when the hidden charges come rolling in.
Don’t be left shortchanged – read our guide to hidden buying fees and stay one step ahead of the game.
Applying for a mortgage costs money. A booking fee is typically non-refundable, even if your mortgage application doesn’t succeed. Not every lender will charge a booking fee, but it’s good to budget for it as it could cost up to £250.
When you go to the bank to ask for money to buy a house, they will conduct a valuation to determine whether the house you wish to buy is actually worth the amount you want to borrow.
They will conduct a range of surveys to determine any issues that might drive the value of the house down.
There are a few types of surveys such as the new build snagging survey which deals with brand new houses, or the HomeBuyer report which combines the structural survey and damp survey cost, alongside a valuation.
Mortgage Broker Fees
Not everyone will choose to hire a mortgage broker, but if you need advice with your mortgage or help in arranging it, you’ll likely need to pay a fee.
Some mortgage brokers work on commission, in which case you won’t need to directly pay them, but if you do hire one, you’ll need to clear this up first to understand if you’ll be liable to pay for the service.
It can cost as much as £500 for a mortgage broker which is a considerable sum you might not have thought about budgeting for.
You’ll need to pay for a solicitor to deal with the legal side of buying a house. They will deal with the paperwork as well as conduct surveys and check if there are any works in the local area that could deplete the value of the house.
Telegraphic Transfer Fee
You will be liable to pay a fee for the mortgage lender transferring money to your solicitor.
Like the booking fee, the telegraphic transfer fee might be non-refundable, even if the mortgage falls through.
Luckily, it’s usually a maximum of £50 so isn’t too much to lose out on compared to some of the other fees.
Mortgage Account Fee
When you apply for and get approved for a mortgage, there will be some admin fees incurred regarding setting up the mortgage.
The mortgage account fee covers this, as well as the cost of maintaining the mortgage and eventually closing it.
Higher Lending Charge
If you approach the bank with a small deposit, you might have to pay a higher lending charge which usually sits at 1.5% of the mortgage.
This fee covers the lender in the event that you fail to pay the mortgage and the lender has to sell the property – potentially at a loss.
Early Repayment Charge
When you pay off your mortgage early, you may have to pay an early repayment fee to account for paying off the mortgage before your agreed terms with the lender.
The fee can vary in percentage, and it could be as much as 5% of the original mortgage.
If incentives were offered in line with the mortgage, the lender could ask for them to be repaid as they were part of a legal contract which was not strictly adhered to.
If you’ve paid a mortgage account fee, you might not be liable to pay an exit fee, but if you haven’t, you will likely pay an exit fee. This fee covers the cost of closing your mortgage.
This is a long list of hidden fees associated with buying a house, but hopefully it’s helped first time buyers understand all the costs associated with buying a house outside of the initial deposit.