Buying or selling a home

Your home is likely to be the biggest investment you will ever make and it is easy to focus on making as much from your bricks and mortar as possible or simply on getting a mortgage – but the price of having your own roof over your head doesn’t stop there.

These tick lists are designed to remind you of the easy-to-forget costs you are likely to face, while the Tips for buyers, Tips for sellers and ideas about Moving and storage could help to keep your spending down.

Buyers:

• Survey
• Legal fees, including search fees
• Stamp Duty Land Tax
• Fees and charges associated with mortgage – for example, broker’s charge, lender’s valuation fee, arrangement fee
• Mortgage indemnity guarantee – a one-off premium that may be required on mortgages that cover a high proportion of the value of the home
• Moving costs
• Rental costs while you are looking, if applicable
• Repairing/redecorating/refitting your new home

Sellers:

• Estate agent’s fees – can include extra for marketing, such as brochures or feature articles in relevant media
• Legal fees
• Moving costs
• Storage costs, if you’re moving somewhere smaller or have a gap between leaving your old home and moving into the new one
• Bridging loan, if you move to a new home before receiving the money for your old one
• Home Information Packs
• New fixtures and fittings to replace those left at your former home
• Early redemption penalty – may be levied if you pay off your mortgage before it’s due

Tips for buyers

• When you buy a property that is more than ten years old, you can opt for a mortgage survey or choose a more expensive full structural survey. It might be a false economy to buy only a mortgage survey. A full structural survey should highlight any potential problems, which can give you a bargaining counter in negotiations and could provide you with some redress if major problems are found with the property later on. You can find a surveyor at www.rics.org
• If you buy a new or nearly new home built by one of the 20,000 National House-Building Council-registered builders, you can benefit from a ten-year guarantee on the structural fundamentals, although wear and tear and items such as carpets and fridges is not covered. You will still be covered if the builder goes out of business. For details, go to www.NHBC.co.uk.
• Shop around for legal fees – licensed conveyancers can be cheaper than solicitors if it is a straightforward deal.
• If you have time, carry out your own searches, instead of using a legal firm that charges by the hour.
• Housing auctions can provide bargains but examine the property you are interested in thoroughly, get a survey and builder’s estimates in advance and go to a few auctions as a spectator to gain experience. Then set yourself a price ceiling and stick to it. If you are the winning bidder, you have entered a legal contract – you must have your finances in place.
• In Scotland, if you buy under either the offers over (closing date) or fixed price methods, and if your offer is accepted, it is a legal contract. You must pay a solicitor to place the offer and must have your finances in place.
• Buying just under a Stamp Duty threshold will save you a lot of money in tax.
• A good broker should have access to loans that you do not – the terms could be better than you can get on the High Street. Compare several offers before committing yourself.
• Weigh up the total cost of different mortgages over time, including the arrangement fee, interest rate, any introductory rate, exit penalties and any sealing fees at the end of the mortgage period.
• If you need a mortgage indemnity guarantee – effectively an insurance policy that pays the lender in full if you default on the mortgage and your home is repossessed and sold for less than the value of the mortgage – check if you can arrange your own. It is often cheaper than buying an indemnity from the lender as part of a mortgage package.
• Remember that time is money. If you love a particular property but it is slightly over your budget, you could end up spending more than the difference looking at lots of other properties rather than upping your offer.
• If you are currently renting, try to make sure that completion day fits with your letting terms, so you do not waste rent.

Tips for sellers

• Get multiple valuations of your property and find out how much similar properties sold for in your area – websites can help, as can the Land Registry.
• Be realistic – you will waste time and money if you hold out for too high a price.
• Sole agents are generally cheaper than multiple agents but they deal with fewer buyers. Haggle for a good deal. You can specify a length of time for a sole agency.
• Check what you are getting for your estate agent fee – some include advertising and marketing but others will want an extra fee for special brochures and so on. Those might be worthwhile expenses but if you are computer-friendly, you may be able to produce your own.
• Make sure you understand your estate agent’s contract. It may allow an agent to claim fees, even if the home was sold by someone else or to a buyer who was introduced to you by a friend.
• In Scotland, many solicitors act as estate agents and can parcel up legal services with estate agency services, which could save you money.
• Decide what fixtures and fittings you want to include in the house price and what you want to take with you – taking white goods, curtains and carpets with you can save you thousands in equipping your new home but it may jeopardise a sale.
• You can test the water by advertising privately or setting up your own sale website, if you have the skills.
• A good estate agent works for you, not for the buyer, but should also point out any off-putting aspects of your home and tell you if your expectations are unrealistic – estate agents will not put their hearts into it if they feel there really is no prospect of a sale.
• You do not have to accept a home information pack (HIP) from your estate agent but you do have to have one before it goes on the market, so shop around. You could save hundreds of pounds.
• Be honest in your answers in the legal documents when it comes to a sale – you can be sued if you know they are untrue.
• Setting a price just above a Stamp Duty threshold but accepting a price just below is attractive to buyers, if your home falls into one of those brackets.
• Shop around for legal fees – licensed conveyancers or specialist solicitors can be cheaper than standard solicitors.
• Check any redemption penalties on your mortgage. If they are heavy, ask if you can take your mortgage with you to your new property, topping up with a second or extended mortgage if necessary.
• If you need a bridging loan, a broker may have access to cheaper funds than you can find. Remember that bridging finance is expensive.

Moving and storage

• Move yourself in a hired van – compare prices before committing yourself. Your move may not be fully insured, even if you buy a separate removals policy. With a professional removals company, you’ll be covered.
• If you have too much stuff to move yourself, get at least three quotes from reputable removal companies and check their insurance policies for excesses or exclusions. Use a specialist remover if you own expensive or unusual items, such as a grand piano.
• If you have pets, lodge them with friends rather than kennels or a cattery on the moving day.
• If you are moving a long way away and need to stay in a hotel en route, check prices in advance.
• If you need storage, check rates at self-storage companies. Find out what insurance they offer and take out your own policy if you are not happy.