The Costs of Buying a Home in Derby
First Time Buyer Mortgage Advice in Derby
A question that we regularly get from customers, is how much will their process actually cost? Generally speaking, first time buyers in Derby are the ones who reach out to ask this question the most.
Because of this, we have put together a handy list of the different fees you can expect to pay throughout your mortgage journey, and the different points at which they become payable.
Estate agency fees
Estate agent fees will generally only be payable if you are selling a home. With general interest in online estate agents on the rise constantly, you can sell your home with much lower fees on a basic Rightmove listing.
On the other hand, if you are looking for a more localised and personal service provided by a dedicated sales negotiator in a local branch, you will be looking at a fee somewhere around 1-2%.
Valuation fees
Your mortgage lender will require that you have a valuation carried out on your new home. This is to determine the value of said property, to confirm that it is worth the amount you’re looking to borrow.
The costs of a valuation can vary from nothing at all (for a basic valuation with some lenders), all the way up to well over £100 for a much more detailed Home Buyers’ Report. A full Building Survey can potentially cost more than that.
Really, being able to choose which report you would like is the key here. The valuation you decide will vary based on the age and type of the property you’re looking to buy, as well as any concerns you have.
If it’s a newer property, you may want a basic valuation. If you are buying a period property, you’ll probably want a more in-depth report.
Mortgage arrangement fees
Some of the mortgage products that you will find, will have cheaper rates. Occasionally though, the arrangement fee can outweigh how cheap it is.
This isn’t always the case, as there are products that won’t have a fee, meaning they cost nothing. That being said though, some might have a fee and they could be quite costly, depending on your lender or product.
You may have the choice to either add these to your mortgage balance or pay these upfront. If you add these to your mortgage, you may incur additional interest charges.
Solicitor’s fees
You will need to hire the services of a solicitor, and the fees for these can be very different depending on who you speak to. With a local company and a straightforward property purchase, you may find it’ll be around the mid hundreds.
When dealing with a solicitor, you will need to give them your property address. This will apply whether leasehold or freehold. In order to obtain a quotation, they’ll also need to know the purchase price.
The key points to cover when asking for a quote are:
- Ensure the firm includes VAT
- Is your Solicitor on your mortgage lenders panel?
- Ensure the firm includes the cost of any “disbursements.” These are fees such as Land Registry Fees and Local Authority Search Fees.
Stamp duty
You may need to pay an extra tax on your home, which your solicitor will collect on the completion of your purchase of the property. Further details about who this applies to can be found here: https://www.gov.uk/stamp-duty-land-tax.
Mortgage broker fees
A trusted and experienced mortgage broker in Derby will typically charge their own service fee. The fee amount will vary depending on the case and the mortgage advisor.
Removal fees
The cost of removing your furniture from your home can vary depending on who you use and the service you are looking for. Hiring a van to do it yourself may be a cheaper option than hiring a removal service, though they will be more efficient.
Book a Free Mortgage Appointment
To learn more about your mortgage options or to get started on your mortgage process, book your free mortgage appointment to speak with one of our mortgage advisors in Derby today. We usually have a great selection of appointments available, at times that are convenient for you.
Can I Get a Second Mortgage in Derby?
Can you have more than one mortgage?
The idea of having one mortgage can stress people out, never mind two! That said, some people weren’t aware that it was possible to have two or more mortgages.
Many various costs come with a second mortgage, and there are many different reasons why someone might want more than one mortgage.
Common Scenarios for Wanting a Second Mortgage
- Do you want a second mortgage to raise money for your existing home?
- Are you looking to rent out your current home and purchase a new one?
- Are you looking to help your children out with a second mortgage?
- Do you require a buy to let mortgage to secure a property in Derby?
- Is your name on an existing mortgage, and you are looking to buy a new property?
Second Mortgage to Raise Money
If you have a large amount of equity built up in your home and are looking to release some to fund for a second mortgage to purchase a new home, home improvements or on another property for your portfolio.
Then this is something an experienced mortgage advice team in Derby, like ourselves, can look into for you.
You’ll often find towards the back end of your mortgage that you will be heading onto or potentially already are on a lender’s Standard Variable Rate (SVR).
Our team of advisors may be able to shop around to find you a more competitive deal. Another potential option could be an advance with your current lender.
Second Mortgage to Rent out Existing Home to Purchase a new one
If you are looking into the possibility of moving house but securing full ownership of your current property to let it out, this is another case where having a second mortgage would be suitable.
Your second mortgage will be a new residential one, taken out on a property after raising funds from renting out the previous home. This particular process is known as a let to buy mortgage.
Second Mortgage for a Buy to Let
Some homeowners may look to release the equity sitting in their property, using that income to buy an additional property to add to their portfolio.
Second Mortgage to Purchase a Home for Your Children
We are now seeing more situations where a homeowner may wish to take out a remortgage to release equity to gift their child a substantial deposit.
Gifted deposits are a widely popular option for many first time buyers in Derby who otherwise wouldn’t have gotten on the property ladder any other way.
Named on Existing Mortgage and Want to buy a new Home
A second mortgage may apply to other circumstances, such as financial complications present with a divorce or separation.
You may not always be able to get out of your joint mortgage straight away, if at all, but may wish to take out a mortgage on a home of your own once you’ve moved out.
If you have any questions regarding second mortgages, please do not hesitate to get in touch.
You can now book yourself in for a free mortgage appointment to speak with a dedicated mortgage advisor in Derby at a time that suits you and your lifestyle.
How to Get a Mortgage Agreement in Principle in Derby?
A Mortgage Agreement in Principle (AIP) is essentially a document which provides an insight to the written estimate you have received from a mortgage Lender. It proves you have a mortgage in place.
To the Estate Agent, it proves you are creditworthy as you have in theory, passed the lenders credit score. However, it is not a guarantee that you will definitely get a mortgage as a full application will require further background checks.
The value of a Mortgage Agreement in Principle
A Mortgage Agreement in Principle is not a guarantee that you will definitely get a mortgage as your full application will require further background checks (such as evidence of income) and a satisfactory valuation of the property itself.
However, it is a good idea to get one done at the earliest opportunity for the following reasons:
- Negotiating Power
- Avoiding Disappointment
- Knowing Your Limits
Negotiating power with a Mortgage Agreement in Principle
When you are ready to make an offer on a new home most Estate Agents will undertake due diligence and ask you to produce evidence that you have funds available to complete the purchase. This will take the form of bank statements and also an Agreement in Principle certificate that we can provide for you. Once you have provided them with all this documentation the Estate Agent will then normally stop marketing the property and put a “Sold” or “Sale Agreed” board up.
If you already have a Mortgage agreed before you make an offer you are making yourself appear as an attractive proposition as this proves you are not making an offer on a “whim”, you’ve thought about how you’re going to fund the purchase and do something about it. This might persuade a seller to accept an offer you put forward on their property underneath the asking price.
Avoid disappointment with a Mortgage Agreement in Principle
When it comes to buying a house some clients have always “put the cart before the horse”. They go full steam ahead and make an offer on a property without first checking that they can actually proceed. This can lead to terrible disappointment if the mortgage application fails. By that time they have really got their heart set on their new family home. This disappointment can be avoided by contacting us at an early stage. Sometimes there are things that are causing a mortgage to decline that can be overcome given a little time.
For example, there may be a niggling issue on your credit report, perhaps a disputed mobile phone bill which can be easily rectified. Maybe you thought you were on the Voter’s roll and you’re not – once again that can be sorted out given a few weeks.
Or maybe you can’t get a mortgage at all! But if that’s the case it’s better than you know now rather than mess people about and we’ll be able to tell you what you need to do to improve your credit-worthiness for the future.
Knowing your limits with a Mortgage Agreement in Principle
So you know you’ve got a good credit rating because you’ve never been turned down for credit, you’re registered on the Voter’s role and you’ve always made your credit card payments on time and this all good for getting your Mortgage application on its way but there are other potential problems you are yet to have to overcome.
For example, you could approach 10 different Lenders these days and get 10 different maximum mortgage amounts as they all calculate affordability in their own unique ways. If you’re self-employed it can be even harder for you as an applicant: some Lenders take your net profit, others your salary and divided whilst some others use your latest year, others an average over 3 years.
Knowing your borrowing limits is important as then you know for sure what your price range is. We’ll be able to advise you of the maximum mortgage available to you and together we’ll work out how much you can afford to pay back each month.
Our Mortgage Advisors in Derby are available for same-day appointments which is handy if you’re after a Mortgage Agreement in Principle and then you can proceed to make an offer on the property you have spotted. You will then be better placed than other people viewing the property as you have taken the next step already and the Estate Agent can put your offer down as a ‘qualified purchaser’. From this, you’re in a good position to proceed.
Buying as a Sitting Tenant in Derby
Sometimes we receive calls from tenants when they have been notified that landlords are considering selling their properties. For landlords, it is much easier for them to sell to their existing tenants rather than the open market. This leads to tenants being offered the “first refusal”, a chance to buy before the landlord takes it to an agent to sell.
Why is my landlord selling up?
The government has re-evaluated tax reliefs over the years, leading to many landlords paying more tax than before. This in turn has caused many of them sell their properties, something that is very common for amateur landlords.
On the other hand, more serious investors often keep their properties, as they tend to view it as a long-term arrangement and a sound investment, despite legislative changes.
Why is it better for landlords to sell to sitting tenants?
There is a variety of reasons as to why a landlord might choose to sell their property to you rather than an estate agent.
1) They avoid paying commission with estate agents.
2) It avoids ‘loss of rent’ due to not having tenants in the residence until the sale goes through.
3) No refurb costs: If a tenant moves out then the property will have to be prepared for sale. With potential expenses needed to redecoration e.g. new flooring.
Advantages for you
Not only are there advantages to landlords but there are potential advantages to sitting tenants who are considering buying:
1) You know the property inside out if there are any faults, you’ll already be aware of them. No nasty surprises for you!
2) You won’t be caught up in a chain. You aren’t waiting for the owner of a property you’re after to finish their own process meaning a deal can be done faster.
3) Discounted price when purchasing. Given all the advantages listed above, it’s normal for a Landlord to sell to a sitting tenant at a discounted price. More commonly known as a ‘sale undervalue’.
Some lenders will allow discounts which are offered by the landlord as part of your deposit. If the price that is agreed turns out to be well below the open market value it may even be possible for a tenant not to have to put down any deposit at all.
Specialist Mortgage Advice in Derby
Contractor Mortgages and the Gig Economy in Derby
Contractor Mortgage Advice in Derby
The ‘gig economy’ has an ever-growing portion of the general public working within it. These people are working over short term contracts because of this it means they are not entitled to some benefits which employee’s might be such as sickness or holidays. The professions within this economy are varied ranging from both skilled and unskilled workers, with the highest percentage being in professional services.
Because of the basis of the gig economy, it’s marginally harder for these workers to get a mortgage as lenders perceive these people to be self-employed. If you’re working within this type of economy to give yourself an increased chance of gaining a mortgage is to build up a track record of self-employment. You’ll most likely need one year’s history to qualify for a mortgage unless your contract has gone on for a longer duration.
If a lender decides to view you as a sole trader you will then need to produce evidence of your net profit – this is the amount you have earned minus your expenses in which you may need an Accountant to help you with this.
If you have set up your own Limited Company then most Lenders will focus on the salary that you have paid yourself plus any dividends that are declared.
Flexibility
In contemporary times, Lenders are now becoming more flexible in the way they assess contract workers now that there are so apparent within the economy. If you have been operating this way for a while and are currently in a contract then they will consider your ‘day rate’ as a way to assess your income, depending on the industry.
The way in which Lenders will assess day rates will typically be that they will times the given rate by 5 then 46 weeks. They won’t include a full 52 weeks as Contract usually don’t work the full year and neither do they get paid holidays. This method works really well for IT contractors who tend to have a selection of contracts which they want to take.
Additionally, it is a good idea for any gig workers and self employed in Derby applicants to get organised ahead of time before they start the mortgage application process. Tax can be a bother, but lenders like to see a healthy level of sustainable earnings.
It’s also possible to get a mortgage on zero-hour contracts. Again, lenders will want 12 months’ earnings before you can apply and will consider taking an average of your earnings over a full year.
Contractor Mortgage Broker in Derby
Can I Port My Mortgage in Derby to a New Property?
How does Mortgage porting work?
The majority of high street mortgages which are on the market are portable. A portable mortgage is simply a mortgage that you are able to move from one property to another without paying a penalty. This works out well if you are considering Moving Home in Derby and are currently in the middle of a fixed rate deal because you can potentially avoid an early repayment charge.
Are all mortgages portable?
It’s important to remember that not all mortgages are portable. If you are with a specialist lender then you may not have the opportunity to port your mortgage. The best way to find this out is to drop a quick call to your lender to confirm whether or not this is allowable.
Should I port my mortgage?
Even with the availability of porting being available, not all customers choose to do so. Some reasons as to why customers don’t port could be due to factors including lenders not lending the extra money that a person needs to move or that the additional funds will be on a different rate to the one you have on your current deal. Depending on what new deal you are offered you might decide to overlook the repayment charge and swap to a different lender.
What is a sub-account?
A sub-account will be created onto your mortgage when you port your mortgage and the additional monies end up being on a different deal to the original one. This means that although you only have one mortgage and one direct debit, two different rates of interest apply.
Down the line having sub accounts will lead to the different products overlapping which could get annoying. To get them back aligned at some point will mean one of the sub-accounts having to go onto the lenders’ standard variable rate for a period of time.
Moving Home Mortgage Advice in Derby
