Expenses property buyer in the UK

Calculator the novice investor. Or how much additional costs the buyer of property in the UK, who wishes to take a mortgage loan. ( Mortgage UK )

You have decided to buy property in the UK with the aim of renting it out and receive rental income. ( The procedure of purchase of real estate ) First of all, do not be fooled by the titles prices. You have to understand that this is not all expenses that you have to make. In addition, you will need to make a very substantial Deposit to obtain a mortgage loan, you must consider a number of costs to eliminate unpleasant surprises for your budget.

Calculated, for example, that the average additional expenditure associated only with mortgages (preparation of documents, assessment, design) was 0.51% of the purchase price in the second quarter of 2013.

In your article, we will try to give a brief overview of the additional expenses incurred by the buyer of real estate in the UK, with mortgage lending.

1. The participation fee.

Charged by the lender for processing and issuance of the mortgage loan and can be calculated in two ways – “fixed” or “based on the interest rate”. The average size of fixed rate in the UK is £1513 lbs, and 53% of lenders use the fixer. The interest rate averages 1% -3 % of the amount of the reported loan.

Fee for loan maintenance is another cost factor. It can be included in the contract price and may be charged gradually during the entire period of service credit. Only 7 % of creditors not include in the contract this expenditure, but that doesn’t mean they have a mortgage product is cheaper – more likely just a higher rate on the loan, the Bank covers the costs of servicing the loan.

2. The reservation service of the loan.

The borrower is usually charged a certain fee per booking, which is usually not refundable. It is necessary to ensure the receipt of funds by a certain date. A buyer who applies for a mortgage loan associated with the seller’s obligations on payment of the advance or the entire amount, so he asks for this service to the Bank that deal never fell through. Usually the chamber for a reservation is about £150-£200 pounds.

3. Assessment.

To obtain a mortgage loan the Bank needs to know the real market value of the home because it is now a subject of pledge and, in the case of non-payment under the contract, may be put up for sale by the Bank. This mandatory assessment of the property. Price estimates are dependent on the price of the property and the area where the property is located. This report differs from the report of appraisers, which is done with the purchase, because it includes a risk assessment.

4. The services of a broker.

Most of the banks do not work with borrowers directly, but through brokers who are included in the chain, providing a deal. Some brokers do not charge commissions from the buyer, and take Commission only from the Bank. But it is a successful brokers, proven in the market.

5. The legal expenses.

In the UK all transactions on purchase and sale of property are carried out only with the participation of the solicitor – lawyer authorized to engage in such transactions. Paid solicitor – a part of the costs without which the transaction of sale and purchase of property in the UK is impossible. The amount of such expenses may be different, but it is usually £1000 – £2000 pounds. Sometimes the seller assumes the costs associated with legal registration of the transaction.

6. Stamp duty. What “Stamp duty”

The state fee that is paid by all buyers of residential properties valued from £ 125,000. If there is a refinancing, then the stamp duty is not paid.

7. Monthly payment on the mortgage.

The monthly payment highly depends on what type of mortgage loan you prefer. If you want to “return” the loan, you will have to pay more in monthly amount will be included as the “body” of the loan and interest thereon. With this type of loan you will receive after payment of the entire amount of your home property.

The second type of credit – “interest-only”. In this case, the amount of the monthly payment on the loan is almost two times less than in the first case. But at the end of the house does not go into your property if you do not redeem it at its value. However, this method has its advantages. You can accumulate savings every month cash to buy house at the end of the term, or spend them on your own.

Thus, when applying for a mortgage loan, you should carefully weigh all the “pros” and “cons” and how to calculate the costs that you will have to incur. In case you will not be able to estimate the amount of expenditure will help you mortgage broker.

® Maximlevitsky. 16.11.2013 g.