5 Ways to Save Money when Buying a Home

September 21, 2018 5:53 pm

Buying a home isn’t a simple process even if you’re buying with cash and while many feel overwhelmed by the process, the vast majority of stages are there to ensure both parties to the trade are protected: this is reassuring given the relatively large sums of cash involved!

Now naturally you can find ways to ‘hunt for a bargain’ and/or save money on the acquisition itself, however there are also various things you can do to economise regarding key parts of your conveyancing process and here we present 5 worthy suggestions.

  1. Stamp Duty

You pay stamp duty (Stamp Duty Land Tax/SDLT in England or Land Transaction Tax/LTT in Wales) as a property buyer; how much you pay depends on your property’s selling price.

If you’re a first time buyer in England, you won’t have to pay any stamp duty as long as property’s selling price is £300,000 or less and you’ll pay a reduced stamp duty amount as long as your property’s price does not exceed £500,000.

Shared ownership trick – look at a ‘Market Value Election’ to get your first time buyer waiver

With shared ownership, you can opt to pay stamp duty in stages or pay what you’d have to pay if you owned the entire property at the outset of your ownership.

Whereas the latter option- known as a Market Value Election – used always to be the most expensive option, if you are a first time buyer in England and you choose it, then you’re eligible for the same stamp duty relief described above.

If, however, you opt to pay your stamp duty in stages, you won’t get the first time buyer stamp duty relief.

So a fine judgement regarding property values might save you thousands on stamp duty when aligned with being eligible for first time buyer stamp duty relief.

Finally you should be aware that if you’re jointly buying with someone else (joint mortgage or both on the title), if that person isn’t a first time buyer then you won’t get the relief and if that person owns a property already, you may end up having to pay higher rate stamp duty.

  1. Mortgage Valuation

It’s extremely unlikely that you’ll be able to negotiate the cost of your mortgage valuation with your lender however we always recommend that you pay for it up front rather than adding it onto the cost of your mortgage.

Okay, you’ll be more out of pocket initially, but over time, as interest accumulates on your mortgage debt, you’ll end up paying perhaps 10% more for your mortgage valuation.

When these valuations cost perhaps £600, £60 is not inconsiderable.

  1. Conveyancing Solicitor Fees

It’s reasonable to look to save money on conveyancing solicitor fees, but we advise that you should be very cautious about this.

The first rule is to be wary of any ‘quote’ that is actually an estimate. The offer might read ‘conveyancing from £99’ but when you examine it further, you’ll find that the initial estimate actually classes many items that you’ll always require during any conveyancing as ‘extras’ such that in virtually all cases you’ll end up paying substantially more.

Ideally you should examine quotes which have the following:

  • Fixed fees with all the legal work needed included in the quote such that you know exactly what you’ll have to pay from the outset
  • No Sale No Fee guarantee: perhaps 1/3 of all conveyancing matters fail before completion so having a protection like this ensures that you won’t pay any extra should your attempted purchase fall through

Finally, if you are buying shared ownership, using Help to Buy or Right to Buy or any other specialised scheme, you should choose solicitors with experience in it.

Following these guidelines might end up saving you hundreds of pounds – and plenty of stress!

  1. Home Buyers Survey

By this we mean when you book a RICS surveyor to look over the property you’re thinking of buying particularly to check for any suspicions of property defects like subsidence and rising damp.

This is not the same as a mortgage valuation, which, although you have to pay for, is carried out for your lender’s benefit and is more about establishing the value of the property than looking for defects.

We’d always advise you to get your own survey because the average cost of fixing defects people discovered after buying a property when they didn’t get a survey has been estimated as being more than £3,000 on average.

Although you can expect the cost of any survey to increase the larger the house you’re buying, the fact is that surveyors vary their prices frequently.

You should always hire a RICS surveyor who is highly experienced in surveying properties in the area you are buying in and shop around for quotes – this might save you perhaps £200.

  1. Property Searches

If you’re buying with a mortgage, your lender will always expect you to get at least four property searches, namely the Local Authority Search, the Environmental Search, the Water and Drainage Search and the Chancel Search.

These searches concern the land a property is built on and factors nearby which might affect it. Even if you’re not buying using a mortgage, you are still well advised to get these four searches at the very least because when you come to sell, if the person buying your property is using a mortgage, they will have to and if the searches uncover issues, this might hinder your property’s saleability.

Solicitors normally order these searches on your behalf but what they charge for them can vary, perhaps by up to £200.

You should check what you might be charged for searches when examining solicitors’ quotes and see if they are included in the overall cost. You should also check whether all the searches you’ll need are included in the quote or not.

Marcus Simpson

Editor

SAM Conveyancing

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