The Real Cost of Moving House – Part One
Buying a home can be an exciting experience which often marks a new phase of life. Perhaps you and your partner will be living together for the first time? Or are you relocating to take up your dream job? As well as being exciting, though, moving home can be expensive and those costs extend far beyond the price tag on the property itself. To help you avoid unpleasant financial surprises and to help you prepare for the damage to your bank balance, here are some (but not necessarily all; every situation is different) of the costs you might need to pay as you buy your home.
The Mortgage: Let’s start with that price tag on the property. Unless you are sufficiently wealthy to pay the whole sum yourself, you will probably need a mortgage. (First-time buyers might ask: “We hear the word all the time but what exactly is a mortgage?” The answer: a legal agreement by which a body such as a building society lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon payment of the debt.) The mortgage repayments will represent the largest expense in the long term but you should also ensure you understand any fees charged by your lender (such as fees to arrange and book the mortgage). Talking to an independent financial adviser might be helpful, as multiple mortgage options will be available to you. You might, for example, want the certainty of fixed rate repayments, whereby you pay exactly the same amount to your lender every month. Whichever mortgage product you choose, understand the scale of the repayments ahead. You must be sure you can meet the long-term financial commitments. Remember, as everyone who has ever enjoyed or endured commercial television or radio knows: “Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.” If you fail to meet your financial commitments, your mortgage lender could repossess your home.
Conveyancing: Another expense when moving house will be the conveyancing fee paid to your solicitor. (Conveyancing is the legal process of transferring property from one owner to another owner.) This fee will be money well spent. If problems emerge, you will need the correct legal paperwork. Remarkably, first-time buyers have been known to start down the road of buying a property without realising the need for conveyancing. Buying a home without help from an experienced and skilled conveyancing solicitor is extremely risky.
The seller is the party responsible for drawing up the legal contract to transfer ownership of the property. (More specifically, the seller’s solicitor or conveyancer will draft the contract.)
If you are selling your current home as well as buying a property, your solicitor’s fees will be divided into separate costs for each of those transactions.
Alongside his or her direct responsibilities, a good conveyancing solicitor will be able to offer you an intelligent perspective on many of the challenges of moving house.
Estate Agent’s Fee: As mentioned above, you might well be selling your current home as you buy a new property. If that is the case, you will need to pay a fee to your estate agent for arranging the sale of your house or flat (unless, for example, you have independently organised the sale and are not using an estate agent). Typically, you will need to pay 1-2% (plus VAT) of the sale price of your home to the estate agent as the fee. For that money, the estate agent’s responsibilities include valuing, photographing and then marketing your property in the company’s branches, online and through a ‘For Sale’ board.
Unfortunately, we have far from completed our review of the costs involved in moving home. Remember, though, buying property can be very profitable in the long term. Look out for ‘The Real Cost of Moving House – Part Two’, coming soon.
Guillaumes offer homeowner-friendly conveyancing services to help our clients buy and sell their properties with ease. If you need assistance, contact us today for more information."