Articles:
Extra Costs of a holiday home mortgage
SB May 2007
If you are looking for a
holiday home mortgage, you know it can
seem like a long and stressful process. When at
last you find the right mortgage and your dream
holiday home finally seems within your grasp,
there is a huge sense of relief. So it’s easy
to forget that there are other costs involved.
But if you don’t budget for all these extra
costs, you could be in for problems.
Stamp duty.
Stamp duty starts at £125,000. You will be
very fortunate to find a holiday home for
less than this, so you will have to budget
for at least 1 per cent of your purchase
price.
Survey fees.
The lender will probably arrange the survey
for you and will add the fee to your
mortgage. If you are arranging it yourself,
shop around for a good deal, as fees do
vary. Even if the lender arranges it, you
are very strongly advised to arrange your
own as well, especially if it’s an old or
unusual property.
Legal fees.
Some people try to dispense with a solicitor
and do it all themselves. But this is very
unwise, especially for a holiday home
mortgage. You may well have fallen in love
with the property because it’s very old, or
very isolated, and there could be all sorts
of legal complications you don’t know
about. Whether you use a solicitor or not,
you will still need to pay land registry
fees and local authority search fees.
Mortgage indemnity guarantee.
Generally, This will be added to your
holiday home mortgage if you are borrowing
more than 75 per cent of the purchase
price. It could be anything from a few
hundred pounds to a few thousand pounds.
Insurance.
You will very likely have to arrange for
life assurance cover to go with your
holiday home mortgage, and in addition
the lender will almost certainly require you
to have buildings insurance, either with
them or with your own insurer. Both of
these are extra costs. And of course you
would be most unwise not to take out a
household contents policy, which is likely
to be more expensive than the one on your
main home.
These are all the unavoidable costs that go with
your holiday home mortgage. Of course, you will
also need to furnish and equip your holiday
home, but this can be done at your own pace.
It’s essential that you budget for all these
additional costs at the outset when you are
arranging your
holiday home mortgages. Otherwise, at
best they could come as a nasty shock, and at
worst they could cause the whole transaction to
collapse.
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