What other costs are there in buying a house?
Apart from the actual purchase price, there are other costs that need to be considered when buying a house
Interest, fees and charges on the mortgage
Most people take a mortgage when buying a house and interest is the cost incurred with this option. In 2003, people with mortgages were paying an average of 17.7% of their income in mortgage repayments. (This was less than in 1988 when the average was 20.5%). Fees and charges may be incurred for late payment.
Mortgage indemnity guarantee (MIG)
This is to protect the lender against defaults on repayments. In the case of the borrower failing to repay the mortgage, the lender has no alternative but to repossess the property. However, in certain cases, the sale proceeds of the property is not enough to cover the outstanding debt. The MIG protects the lender in those type of situations. Very often, the borrower is passed on the cost of the MIG.
Mortgage Protection Policy
This is a life assurance policy specifically taken out to cover the outstanding mortgage if the borrower should die so that the dependants are not left to pay off the debt.
- Removal costs
- Legal fees and contract fees
Try the MoneyBasics mortgage calculator to obtain an approximate figure of the amount you can afford to borrow and how much your monthly repayments would be.
The FSA website provides tables which compare similar products such as mortgages, loans, ISAs and more from various providers.
For more information about mortgages and regulations, visit Mortgages Laid Bare created by the FSA.
The Royal Institution of Chartered Surveyors is the body which controls surveyors who carry out surveys for property buyers. You can search their web site for a local surveyor at www.rics.org
The Office of Fair Trading is a government body dedicated to protecting consumers' rights. Their web site has a section devoted to buying or selling a home.
Go to www.oft.gov.uk/Consumer — and look for the item "buying and selling your home".
The Law Society is the body governing solicitors. On their web site, you can find a solicitor in your locality, and you can also apply for their free guide to buying a home. www.lawsoc.org.uk
EntitledTo provides free calculators to help you work out your entitlement to benefits and tax credits.
The Which? website has an interesting article about mortgages.
Read in-depth articles about mortgages and housing on the BBC website.