Not only is taking out a mortgage a big financial commitment, there are also other fees and charges that you may be required to pay as part of the process of putting your mortgage in place.
In this section you will find information about some of the likely costs you can expect to incur. These costs come under a variety of headings and the exact amount you will pay will, of course, depend upon your circumstances and the type of property you’re mortgaging.
It’s a good idea to discuss this with your advisor. They will be able to help you draw up a budget to cover all the likely costs you can expect to incur.
Your lender
Here are some examples of fees and costs that could be charged by your lender.
Type | Scope |
| Deposit of between 5% and 40% | Based on the purchase price of your property.
|
| Valuation fee | This could be anywhere between £150 and £1,500 depending on the value of your purchase.
|
| Arrangement fee | This charge is for the mortgage product you are taking out and can vary from nil to over £2,000. |
| Booking fee | If this is charged by the lender it is normally payable on application and is non-refundable. It’s a way for lenders to cover expenses for cases that cancel during the application process.
|
| Mortgage account fee, also referred to as a Redemption Administration Fee | This administration fee is charged by some lenders for the running of your mortgage account, and is often deferred until full redemption of the mortgage.
|
| Early repayment charge | As the name suggests, this is a charge made to cover a lender’s costs if you repay all or part of your mortgage before the end of your mortgage deal. |
Stamp duty
The higher the purchase price of a property, the more stamp duty you will pay. Furthermore, if the property you are buying is a buy-to-let or second home the stamp duty increases further. You can also claim a discount (relief) if the property you buy is your first home. Please see the below table and accompanying examples (figures correct as of 23/09/22):
England, Wales & Northern Ireland
Property Value | Standard | Buy-to-let/Second |
| Up to £250,000 | 0% | 3% |
| The next £675,000 (the portion from £250,001 to £925,000) | 5% | 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 10% | 13% |
| The remaining amount (the portion above £1.5 million) | 12% | 15% |
Example A
– Primary Residence
If you buy a house for £295,000,
the stamp duty land tax (SDLT) you owe is calculated as follows:
- 0% on the first £250,000 = £0
- 5% on the final £45,000 = £2250.00
- Total SDLT = £2250.00
Source : www.gov.uk
Example B
– Buy-to-Let and Second Homes
If you buy a Buy-to-Let or Second House for £300,000, the SDLT you owe is calculated as follows:
- 3% on the first £250,000 = £7500.00
- 8% on the final £50,000 = £4000.00
- Total SDLT = £11,500.00
Scotland
| Purchase Price | LBTT Rate | Additional Dwelling Supplement (ADS) |
| Up to £145,000 | Zero | 4% |
| Above £145,000 to £250,000 | 2% | 6% |
| Above £250,000 to £325,000 | 5% | 9% |
| Above £325,000 to £750,000 | 10% | 14% |
| Over £750,000 | 12% | 16% |
* For additional dwellings (e.g. Buy-to-Let and Second Homes) if the total property price is £40,000 or less, it will attract zero tax. If the total property price is over £40,000, the ADS rates will apply based on the full property price.
Source: Revenue Scotland
Example A
– Primary Residence
If you buy a house for £280,000,
the Land and Buildings Transaction Tax (LBTT) you owe is calculated
as follows:
- 0% on the first £145,000 = £0
- 2% on the next £105,000 = £2,100
- 5% on the final £30,000 = £1,500
- Total LBTT = £3,600
Example B
– Buy-to-Let and Second Homes
If you buy a Buy-to-Let or Second House for £280,000 (so total property price is above £40,000) the LBTT (including ADS) you owe is calculated as follows:
- 4% on the first £145,000 = £5,800
- 6% on the next £105,000 = £6,300
- 9% on the final £30,000 = £2,700
- Total LBTT = £14,800
Legal costs
Your solicitor or conveyancer will charge you for carrying out all the legal work involved in your purchase. You will also have to pay for any searches that are required.
Type | Scope |
| Legal fees in connection with your purchase | Typically around £500 to £1,500. |
| Local searches | These can be around £80 to £250. |
| Water/Drainage search | These can be around £30 – £60. |
| Land Registry fees, bank transfers etc. | These should be itemised in the quote provided by your legal advisor. |
| Environmental | These can be around £50 – £80. |
Survey Fees
Depending on the type you choose, you could be paying anything from £250 for a basic report to around £1,000+ for a more detailed structural survey. Your surveyor will discuss your requirements with you.
Other costs you may incur
If you’re selling a property and you use an estate agent, you will typically be charged a fee usually equating to 1% – 3% of the sale price, plus VAT.
You may need to use a removal firm. They will provide an estimate of the cost based on the amount of furniture and possessions that will need to be transported and the distance you’ll be moving.
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