The cost of buying a home FAQ

How much are solicitors fees when buying a house?


A solicitor or licensed conveyancer will need to carry out all the legal work when buying and selling your home - their fees vary depending on the property lawyer and your location. Legal fees typically range from £850 to £1,500 (excluding stamp duty).* They’ll also do local searches to check whether there are any local plans or problems, which will cost you in the region of £250 to £300.

They tend to be broken down into standard legal fees and disbursements. Disbursements include: * *

  • Bankruptcy search - £2 to £4 per person taking out the mortgage
  • Land Registry office copies - £4 to £8
  • Electronic ID verification - £2 to £18 per person taking out the mortgage
  • Local authority searches - £100 to £200
  • Water and drainage search - £30 to £40
  • Environmental search - £30 to £35
  • Telegraphic transfer fee - £25 to £45
  • Mortgage handling fee - £60 to £80
  • HMLR final search - £3 to £7
  • Land Registry Charge - £20 to £910

Source:
* Money Advice Service
* * Really Moving

How and when are solicitors fees paid?


You’ll be charged a base fee - usually a few hundred pounds - for the entire case, which may be fixed or by the hour. The conveyancing fees for handling all the standard legal aspects of the transaction are payable directly to your solicitor upon completion - this generally includes their time, registrations, and costs they’ve incurred from start to finish.

Fees to carry out the local searches will usually have to be paid upfront to your solicitor throughout the process, as and when they incur them.

Conveyancing

What is conveyancing or conveyancing searches and how much should it cost?


Conveyancing involves the legal transfer of home ownership from the seller to the buyer - it refers to all the legal and administrative work associated with this process, which starts when an offer on a house is accepted through to the completion of the sale. A solicitor or licensed conveyancer usually manages this process and their fees can vary as widely as house prices.

Property searches (also known as conveyancing searches) are enquiries submitted by your solicitor to various authorities to find out more information about the property you plan to purchase, such as bankruptcy search and local authority searches.

Legal fees typically range from £850 to £1,500 (excluding stamp duty) but, factor in land registry fees, searches, and other disbursements which can cost in the region of £300, there’s no such thing as an average conveyancing fee at all.

Broker fees

What is a mortgage broker?


A mortgage broker is a person or company that can arrange a mortgage between you and a mortgage lender which could be a bank or a building society. Trussle is one such company - its free online service can help you decide what kind of mortgage you need and find you a deal that matches your criteria – whether you’re a first-time buyer or looking to remortgage your current home. It will navigate you through every stage of finding and applying for a mortgage, getting you the most suitable deal available based on your individual circumstances.

The key benefits of using a broker include:

  • To help you assess your financial situation.
  • To find you the most suitable mortgage for your needs.
  • Convenience and expertise - if you don’t have a good working knowledge of the mortgage markets or don’t have the time to spend searching for deals.
  • Access – due to their experience and contacts, a broker will have access to a wide range of lenders. Bear in mind that some brokers have access to more lenders than others - Trussle, for example, has access to over 90 lenders.

Many mortgage brokers won't just advise you about your mortgage. They may also look at any related life insurance, payment protection, and buildings and contents insurance you have. They’ll recommend insurance based on your new mortgage arrangements to make sure you’re fully protected in the event of death, critical illness, and redundancy.

What are typical fees for a mortgage broker?


Mortgage brokers operate independently and must be licensed. Many will charge a fee for their service, which is either paid by you, the borrower or the lender. However, some brokers including Trussle don’t charge a fee at all.

Those that do charge a fee will generally either charge a percentage of the loan amount or a fixed fee - on average this can be in the region of £500.

Other fees and considerations

What is the higher lending charge?


A higher lending charge (HLC) is a charge made by mortgage lenders when the loan-to-value (LTV) ratio of a mortgage is higher than they’re prepared to accept at standard rates. Typically, HLCs are applied to loans in excess of 90% of the property value.

The fee may be used by the lender to purchase an insurance policy designed to protect themselves against loss in the event of you defaulting and ceasing to repay your mortgage. Some lenders may insist upon the fee at the start of the loan - others may not.

HLC fees are typically charged at up to 8% of the amount of the loan being advanced over the threshold. So, for example a 100% loan of £200,000 with an HLC threshold of 75% might have an HLC premium of £4,000 (£50,000 x 8%). Such premiums may be paid as a one off or added to the mortgage advance.

What taxes are payable when buying a home?


Tax is payable when you purchase a property above a certain value. Different rates apply in different parts of the UK.

As of 17th October 2018
If you’re buying your home in England, Stamp Duty Land Tax and is payable for house purchases above £125,000, though first time buyers are exempt on the first £300,000 of a property worth up to £500,000. The percentage you will have to pay increases, depending on which brackets the value of your property falls into:

  • £0 to £125,000: 0%
  • £125,001 to £250,000: 2%
  • £250,001 to £925,000: 5%
  • £925,001 to £1.5 million: 10%
  • Over £1.5 million: 12%

For example, to buy a property worth £400,000 an existing home owner would need to pay £10,000. This would consist of:

  • 0% tax on the property value up to £125,000 = £0
  • 2% tax on the property value between £125,001 and £250,000 = £2,500
  • 5% tax on the property value between £250,001 and £400,000 = £7,500

To buy a property worth £400,000 a first time buyer would need to pay £5,000. This would consist of:

  • 0% tax on the property value up to £300,000 = £0
  • 5% tax on the property value between £300,001 and £400,000 = £5,000

What are disbursement fees when buying a house?


Disbursements don’t form part of your solicitor’s own costs or charges - they’re all the fees and taxes your solicitor will have to pay out to other organisations as part of the house-buying process. In most cases, the organisation concerned will only accept payment through a solicitor.

Some of these fees can be determined when you ask for a quote, as they are either a fixed amount or are calculated by reference to the purchase price. Other fees may depend upon other factors – councils each set their own fees for local searches and some searches only need to be made if the property is in a particular area or if the buyer wants one made.

When your solicitor collects payment for these disbursements, they’re not making any additional charge to the buyer for making the search or payment and neither to they receive any commission or discount when making payments.

These tend to include:

  • Bankruptcy search - £2 to £4 per person taking out the mortgage
  • Land Registry office copies - £4 to £8
  • Electronic ID verification - £2 to £18 per person taking out the mortgage
  • Local authority searches - £100 to £200
  • Water and drainage search - £30 to £40
  • Environmental search - £30 to £35
  • Telegraphic transfer fee - £25 to £45
  • Mortgage handling fee - £60 to £80
  • HMLR final search - £3 to £7
  • Land Registry Charge - £20 to £910

Mortgage fees

How much are mortgage fees?


Mortgage fees can depend on a number of factors, like your personal situation or the mortgage product you’re applying for. They generally include the following:

  • Arrangement fee - sometimes called a ‘product fee’ usually about £1,000 but varies considerably.
  • Missed payment fee - some lenders might charge a fee if your account is in arrears and the penalty depends on each lender’s rules.
  • Early repayment charge - this charge might not always apply, so be sure to check what the rules are with each mortgage provider, especially if you want to make an early repayment in the future. Typically the charges range from 1 to 5% of the value of the early repayment.
  • Exit/closure fee - a fee to your lender when you repay your mortgage, even if you’re not repaying it early. If you’ve already paid the mortgage account fee then it’s unlikely you’ll need to pay this particular fee as it will usually include set up and maintenance, as well as the closure of the account. Typically £75 to £300.

How much does it cost to get a mortgage?


There are a number of costs you might need to pay if you’re taking out a mortgage:

  • Arrangement fee / product fee / completion fee - typically costs anything from 0 to £2,000, and over
  • Booking fee - sometimes charged when you simply apply for a mortgage deal and is not usually refundable even if your mortgage falls through. Some mortgage providers will include it as part of their arrangement fee, while others will add it on depending on the size of the mortgage. Costs start from £99 up to £250
  • Survey costs for valuation - your mortgage provider will value your property and make sure it’s worth the amount you wish to borrow. Some lenders might waive this fee. You can also pay yourself if you want to have a more thorough survey, such as a Homebuyers report or full structural survey.
  • Solicitor’s costs - to carry out all the legal aspects of the transaction including local searches. Typically £850 to £1,500 and £250 to £300 for local searches.
  • Telegraphic transfer - sometimes known as CHAPS (Clearing House Automated Payment System) - this fee pays for your mortgage provider to transfer the money to your solicitor. Typically costs £25 to £50.
  • Mortgage account fee - pays for the lender’s administration costs in setting up, maintaining and closing your mortgage. If you’ve paid this fee, then it’s unlikely you’ll need to pay the exit fee. Typically costs £100 to £300.
  • Mortgage broker fee - to arrange the mortgage or for advice. Some mortgage brokers are fee-free, such as Trussle. Others will charge on average £500 or a commission depending on the mortgage value.
  • Higher lending charge - not all lenders charge this fee and it’s only likely to be a requirement if you have a small deposit to pay for the lender’s insurance if you can’t pay back the mortgage and they have to sell your property at a loss. The fee is often 1.5% of the mortgage.
  • Building insurance - not all lenders used to charge this but it’s now a condition of the mortgage and is something solicitors check is in place. Usually costs £25.
  • Stamp duty on residential property purchases above £125,000 - first-time-buyers will not be charged on the first £300,000 for properties worth up to £500,000.