One of the biggest mistakes potential homebuyers and sellers make is focusing too much on the purchase price. It is not the final cost of acquiring or disposing of the property.
For example, homeowners who pay less than 20% down payment may have to spend for private mortgage insurance (PMI). It is different from an income or standard mortgage insurance that provides you with coverage if you become seriously ill or lose work.
What is PMI?
PMI acts as a protection for lenders against possible default on mortgage repayments. It does not cost much, but unless you’ve built enough equity on your property, you may have to continue paying for it. If you’re a home seller and the property has gained considerable value over time, you need to pay capital gains tax if you do not meet the criteria.
A huge expense is conveyance fees. Conveyance refers to two different but related things. First, it is an act of transferring the ownership of a property. It may also refer to the legally binding contracts between two parties, the buyer and the seller. These fees can cost as much as £1,500 for the solicitor or the conveyancer.
How to Calculate the Costs
To know the costs, you can do the following:
1. Use a conveyancing calculator.
So far, the most sensible option is to use online tools and sites, such as conveyancingcalculator.co.uk. Tools like these generate quotes based on different factors, including the type of property, the purchase price, and the location. Based on the outcome, they likewise provide a list of solicitors who may give you fixed and negotiable rates in minutes.
2. Do your own research.
You may visit the nearest tax office or call solicitors in your area. Go online and read forums or message boards of other buyers and sellers.
3. Ask your agent.
You can avoid the hassle of completing a long list of to-dos by asking for help from your agent who already has the experience and expertise to provide sound advice.
The costs can significantly vary, but having an estimate can be extremely helpful. You can have a better idea on how to price your house properly. If you’re the buyer, you can prepare better.