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This is another fee that comes in many guises: you may hear it described as a higher-lending charge, mortgage indemnity guarantee (MIG), additional security fee or mortgage advance premium.
But whatever it’s called, it’s basically a fee that covers your mortgage lender if you borrow a high percentage of your property’s value and then find you can’t keep up the mortgage repayments.
About two-thirds of lenders charge it and the usual threshold is 90 per cent of property value.
Costs vary dramatically, but you can expect to pay roughly £1,500 per £100,000 of purchase price.
So the MIG for a £150,000 flat might be £2,250.
And it’s not as if you benefit. If you do default, the lender will still come after you for its cash.
The best way to avoid this charge is to go to a lender that doesn’t apply it, or to come up with a slightly larger deposit.
For more details, see Higher-lending fees explained and What is mortgage indemnity insurance?)
Read more about Mortgage Indemnity insurance
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Your mortgage lender will insist that you take out a buildings insurance policy, so it won’t lose out if your home burns down or some other calamity occurs.
Expect it to try to sell you its own policy – and be ready to say no, unless you’re sure it provides unbeatable cover for an equally unbeatable price.
It may offer to charge a slightly lower interest rate on your mortgage if you accept.
But even taking this into account, you’ll generally find it’s much cheaper shop around elsewhere for cover.
In
this case, don’t be surprised if your lender slaps
on an ‘admin fee’ of £25
to £35 by way of punishment.
Depending on the size of your new home, its projected rebuild cost and the risk profile of your local area, you could pay anything from £150 to several thousand pounds a year for buildings cover,
...but
most people pay a few hundred.
It’s up to you whether you also invest in insurance for your possessions – known as contents cover – but you’d be daft not to, as if there’s a fire, a burglary etc, you could be left with nothing.
You’ll
often find it’s cheaper to buy a combined
buildings and contents policy – but get
quotes for separate cover just to be certain.
To read more about this and get a quote from a good broker we know of, click here
Read more about Building and Contents Insurance
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Your mortgage lender will probably try to sell you mortgage payment protection insurance (MPPI), also known as accident, sickness and unemployment (ASU) cover
– but don’t go for it !
It may even offer it free for a few months – in this case, remember to cancel the policy before it starts to charge.
You may not require MPPI, and your lender’s price is likely to be horribly inflated.
This cover is designed to meet your monthly repayments if you are too ill to work or lose your job, but you won’t need it if you have other insurance or a good level of emergency savings.
Also, these policies don’t tend to suit contract workers, the self-employed and various other groups.
If you do want this kind of cover, you’re likely to get it for half the price or less from an independent provider.
Expect to pay less than £2.50 for every £100 of monthly cover with an independent insurer.
That
means protecting an £800 repayment should cost a
maximum of £20 a month.
Read more about Mortgage Payment Protection Insurance
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Land Registry Fee
The Land Registry is responsible for registering all properties in England and Wales.Its records show who owns every house and flat and which mortgage lender, if any, has a ‘charge’ on the property (in other words, has provided any outstanding mortgage).
Naturally, there’s a fee for changing the register to show the new details each time a property changes hands – and as the purchaser, you have to pay it.
The cost depends on the property's price.
Purchase price / Registration fee
Up to £50,000 = £40
£50,001- £80,000 = £60
£80,001-£100,000 = £100
£100,001-£200,000 = £150
£200,001-£500,000 = £220
£500,001-£1,000,000 = £420
£1,000,001 and over = £700
Local Authority Search Fees
Your solicitor or licensed conveyancer will commission a range of searches on your behalf, to ensure there are no potential problems facing the property you’re buying.
Your mortgage lender will insist on a local authority search, which will cost you between £100 and £200 – up to £250 in London – depending on the authority involved.
It will also want to see the results of a water search, costing about £50.
And depending on the property’s location, your solicitor or conveyancer may also recommend a coal or other mineral, metal or environmental search – and you’d be wise to agree.
This may cost another £50, but it’s better to know before you buy if, for example, an old mineshaft might one day open up under your house.
To be on the safe side, budget around £300 for searches.
Read more about the local authority search
The cost of the local authority search varies but averages 100
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