Fees Can Seriously Damage Your Wealth
When Simple Addition Isn't
Inexpensive properties predominate in Hartlepool, on the northeast coast of England in County Durham, but pricier large detached houses are also available.
If you spend more than £150,000 on your property, you will pay stamp duty land tax and also pay a land-registry fee. There’s two fees right there, one substantial, the other modest.
If you are a buyer, your lender transfers money to the seller - and you pay a telegraphic transfer fee.
if you obtain buildings insurance from someone other than your lender, you may have to pay a fee to your lender in any event (an administration fee enabling them to recoup their costs in noting the fact that you have obtained your insurance from someone else.).
No wonder many buyers overlook or underestimate or otherwise miscalculate fees. There are many of them (some of which seem to make no sense and give no warning signs) and it is hard to keep track of all of them at a time when you are also searching for properties, wading through mortgage details, and otherwise swamped.
PWP Tip Make a list of all of the various fees you may have to pay, and include them in your affordability calculator. If your conveyancer does not provide a list as a routine part of the service, ask if they can do so (and ask if you will have to pay an extra fee for it). Make sure the list includes all fees, not just those for the conveyancer.
The Financial Services Administration highlights nine separate fees associated with property conveyancing (opens in new window).
Surveys and Appraisals
Although most homebuyers do not commission a survey, they will nevertheless pay a surveyor. A property-valuation survey is part of the mortgage process: the lender sends out a surveyor to ensure that the property has enough value to justify the loan. This kind of ‘survey’ is more accurately described as an ‘appraisal.’ The surveyor may not even enter the property: a ‘drive-by’ may suffice.
Successful Appraisal
The surveyor gives a green light, you get your mortgage. This is good news except for buyers who think that this appraisal also gives a green light to the property itself in terms of its condition. In fact, a property may literally be on the verge of collapse and still be worth the value of the loan. A mortgage valuation survey is not a substitute for a proper survey.
Failed Appraisal
Sometimes the surveyor reports that the property is overpriced, and the lender refuses to okay the mortgage. This scenario can send many buyers back to square one, frustrated, disappointed and poorer - having paid fees or other expenses that are nonrefundable and unrecoverable.
Fees, Fees, Fees looks in greater detail at the various fees and expenses that await.