When you see the mortgage deals that are offered by lenders you will soon start to notice that many deals have mortgage fees associated with them. There are also some mortgage fees that you don’t see until you get a full mortgage illustration. What are these fees?

Let us review the common mortgage fees that you are likely to encounter and what they are for.

What are mortgage fees for?

Arrangement fee

Many deals on offer have an arrangement fee and usually as a rule of thumb the better interest rates have a higher fee. This can be expressed as a percentage of the amount that you are borrowing or a flat fee for example £999 no matter what size the loan is. Arrangement fees are generally deducted from the mortgage advance on completion day or added to the loan.

Booking fee

This is a fee that is paid on application for the mortgage with the intention of reserving your mortgage deal. In reality it is an arrangement fee or part of the arrangement fee paid in advance. Quite often these fees are not refundable once you apply for your mortgage.

Valuation fee

Before a lender can offer you a mortgage they need to make sure that the property is suitable for securing a loan against it. A qualified valuer will inspect the property to do this and in most cases a lender will charge a fee. You will see some mortgage deals with a free valuation or a refund of the valuation after you have moved home. Your mortgage broker will take into account any free offers when comparing deals as a free offer may be at the expense of a higher interest rate or arrangement fee. Also be aware that a valuation report is not a survey although it is carried out by a surveyor.

Legal fees

If your solicitor does not meet the requirements of the mortgage lender you need to be aware that the lender may appoint another solicitor to handle part of the conveyancing and charge you the fees involved. Ask your solicitor and mortgage broker to ensure that you will not incur this charge.

Insurance fee

Lenders would like you to buy from them buildings and contents insurance which although good is usually quite expensive. If you don’t use their policy they will charge a fee to ‘examine’ your policy to ensure that their interests are protected should your home be severely damaged or destroyed. In our experience they charge the fee but very rarely examine the policy.

Telegraphic Transfer fee (TT Fee)

To make sure that your mortgage money gets to your solicitor at the right time on completion day there is a fee called the telegraphic transfer fee and this is paid to your solicitor as the lender will deduct this from the advance.

Redemption Penalty

If you redeem your mortgage in full or in part early during the special deal there will often be a fee for doing this so please be aware of the penalties involved in any mortgage. These can be quite high mortgage fess, for example it could be 5% of the amount redeemed. Many deals will allow you to overpay in part by up to 10% of he amount outstanding without a penalty. Be aware too of redemption penalties that extend beyond the end of the special deal.

Closing down fee

When you repay your mortgage in full or make the last payment there is a fee to release the deeds and place the property firmly in your ownership or if selling to simply close it down. This fee can be several hundred pounds and your mortgage illustration and offer will show this amount. Some lenders let you pay it on purchasing your home and therefore you can forget about paying it later.

Make sure which mortgage fees you have to pay

These are the most common fees that you will see but there may be others that can occur so always look carefully at your mortgage illustration, talk to your mortgage broker and solicitor and read your mortgage offer carefully. Here are The Really Useful Mortgage People we will ensure that you are aware of all the mortgage fees and explain them to you.

Independent Mortgage Brokers: Directly authorised and regulated by the FSA reg no 438462
Your home is at risk if you do not keep up with repayments on a mortgage or any loan secured against it

You need to practice the art of negotiation!

Here are some essential points that you need to keep in mind when making an offer on a property.

The estate agent is working for the vendor to get the highest price

No matter how nice and friendly the estate agent is and what they say they are duty bound to get the best offer from you for their client (the vendor). An estate agent may say things like, “I’ll put this offer forward for you and encourage the vendor to accept however will you go up if they don’t accept the offer?” Now guess what will happen if you say “yes”? Of course the agent will tell the vendor that they have an offer that they have been asked to put forward but as a clever and good estate agent they can get the client to go up.

Show little emotion

When you look around the property don’t seem too keen on buying it. Look for and point out any genuine downsides to the property to either the vendor or the estate agent. If they ask if you like it just say that it would have to be at the right price so that you could make the changes /renovations / repairs that you feel are needed. This gets them to lower their expectation of the amount likely to be offered. If you are too enthusiastic they may assume that they can push you for higher offers.

Be prepared

Let the estate agent and vendor know that you have made advance preparations to buy a property. Your home is sold or about to be, you have a mortgage agreed in principle all ready for your final instructions (or cash is accessible) and your solicitor is also waiting for your property details. Have proof like a mortgage certificate (mention it but only show when asked) but be careful if the amount on the certificate indicates that you can afford a much higher offer. Ask your mortgage broker to give a certificate with a lower amount that is more suitable to your offer. You can add your deposit to this figure to make the total purchase price.

Research property values using websites like Rightmove and Zoopla. Look to see what properties have sold recently and for how much. Use lower comparisons to help strengthen your offer. Use words in your offer like you have seen another home for £x and that another house sold for £y which to you means that this offer you are making is very fair.

Offer an unusual amount that makes the vendor and estate agent really think about your offer. For instance the usual sort of offer would be:

Market price £250,000. Offer £240,000. Both the vendor and estate agent can see clearly that you have knocked off £10,000 and respond with £248,000. You then go back £243,000 and so on until you settle on £245,000.

However think about this scenario.

Market price £250,000. Offer £238,385. This is lower and mentally suddenly unusual and slightly more difficult to calculate the difference. It also creates a figure that the vendor and estate agent believe that you must have given careful thought to. Going lower also can create a value shock that you can use to your advantage. It makes the vendor doubt the estate agents valuation which is a good thing for you.

If the answer is “no” go back with an offer after a little time not immediately and again choose your words carefully with your offer and maybe even a little sigh in your voice. Remind them that at the right price you can buy it with little fuss. Make sure you know the vendors plans before you offer. If they want to move quickly you could emphasize speed, if they want to move in 4 months time you could say (if you can) that you can move to suit them.

You must often be brave to get the property at a good price and hold your nerve. Of course the situation becomes more tense if someone else is also offering. Be very wary of estate agents claims though about they have lots of people interested in a property. This can just be to get you to offer more.

The art of negotiation can seem daunting but it is great fun and profitable when you learn how to do it right.

Independent Mortgage Brokers: Directly authorised and regulated by the FSA reg no 438462
Your home is at risk if you do not keep up with repayments on a mortgage or any loan secured against it

These tips are about the home and area but before you start looking for a home you should know what you can afford so please ask us here at The Really Useful Mortgage People how much you can borrow and know the costs in advance. You will then arrive at a figure that you know you will be able to afford and the maximum offer you can make.

Location Location Location

How often have you heard that saying. The property value and where you want to live is all about location. The most sought after areas cost more! However other less sought after locations may not be bad places to live. In choosing your location you will need to take into account personal things such as:

• The distance from work
• School catchment areas
• Distance from family members
• Shops
• Parks

In addition to these take a look at the crime figures for the area. A website like UpMyStreet.com can provide detailed information about an area.

The next step is if you don’t know the area / street is to visit the area at different times to see if there is a problem with rowdy children, neighbours, parking of vehicles as some streets in the daytime can become workers car parks and others at night have too many cars for the space available. Sporting or other venues and schools can add to car parking problems or noise. Is the street a busy walk way for drunks on their way home for example?

Ask people in the area who don’t have a vested interest in you moving there about what it’s like.

The Property

If you like the area and you have found a property that looks good to you make sure you visit it in daylight even if you have seen it during hours of darkness. Never offer until you have.

Look beyond the decor. Many things in a home can be changed easily. Some are more expensive than others but take these into account in how you value the property. Is it already priced because it needs a new kitchen or bathroom? If not you need to know what an average one will cost.

Take a good look at the condition of the property. Look for cracks inside and outside of the property. Is there any sign of subsidence? Are there trees close by that could be causing damage to the foundations? Is there any sign of leaks, damp, woodworm that could prove to be very expensive to cure? Of course these problems can be overcome and a full professional survey of the property can reveal many things. If though you can already see problems that you would not be happy to deal with a survey is going to be expensive just to confirm these things.

Ask the vendor or estate agent questions about work done to the property and enquire if there are any guarantees, for example double glazing, new boiler, damp repairs and re-wiring. It would be good to insist on seeing these guarantees or other proof  before you make an offer.

These are just a few tips to give you an idea that it is important to do as much research as you can and not let your heart rule your head when it comes to buying a home. For more information about buying and getting the right mortgage please contact us today.

Independent Mortgage Brokers: Directly authorised and regulated by the FSA reg no 438462
Your home is at risk if you do not keep up with repayments on a mortgage or any loan secured against it

The Government has passed laws for England regarding Houses of Multiple Occupation (HMO) and it is essential that landlords understand what constitutes an HMO and when it needs to be licensed.

What defines a house as Multiple Occupation?

A house or flat is defined as a house of multiple occupation when:

A property is an HMO if it is let as a main or only home to at least three tenants, who form more than one household and who share a kitchen, bathroom or toilet.

A household is defined as:

• people who are married or living together
• people in same-sex relationships
• relatives who are living together – including step-children, grandchildren, uncles, aunts, nephews, nieces, cousins and foster children
• certain live-in domestic staff such as au pairs, nannies, nurses or other carers, gardeners, chauffeurs, servants (if certain conditions are met)

Licensing of Houses of Multiple Occupation

Licensing needs to be carefully considered as there is licensing that is mandatory and some which is additional as set down by a local authority. There may also be covenants on certain developments when properties were built that prevents homes being converted to HMO’s even if licensing is not as issue.

Mandatory Licensing

Any property which have three or more storeys and are occupied by five or more persons forming two or more households must be licensed.

Additional Licensing

A local authority can have additional licensing requirements and a landlord should check what these are before letting a property even if a mandatory license has been granted. Covenants on the house must also be checked to see if an HMO is allowed before it is converted / used as one.

Heavy fines can be imposed for beaches to the licensing law so care is needed with HMO’s and of course other safety requirements that other laws impose on landlords.

Mortgages for Houses of Multiple Occupation

If you are a landlord and looking for a to buy or convert a property to an HMO you should take expert advice on getting a mortgage. Here at The Really Useful Mortgage People we are expert at such mortgages so please contact us for a no obligation discussion about your requirements. Houses of multiple occupation can give a good investment return for landlords so expert advice on getting the best mortgage will help you maximize your return.

Independent Mortgage Brokers: Directly authorised and regulated by the FSA reg no 438462
Your home is at risk if you do not keep up with repayments on a mortgage or any loan secured against it