Four steps to make sure you are mortgage ready when it comes to buying a home in Sheffield

by Rob Hollingworth

Buying a property is stressful, especially if it’s your first time so here are four top tips to help the city’s homebuyers get mortgage ready ahead of a potential purchase.

We have teamed up with Stipendium, the platform which simplifies life’s complex events, to try and make buying a house as easy as possible. Here are four steps you can take:

Preparation is essential

Rather than wait to find a home you want to make an offer on before starting the mortgage process, and certainly before making an offer, buyers need to get a mortgage agreed in principle as soon as they possibly can.

Sellers love buyers who are well-prepared and can move quickly.

Understanding mortgage costs

The biggest of these is the mortgage arrangement fee, sometimes called a product or completion fee. Some lenders require upfront payment of the fee, some allow customers to add the fee onto their repayment plan, but in such instances, interest will be applied.

Buyers should expect to pay an arrangement fee of at least £1,000 to secure an attractive mortgage rate and, in some cases, must also agree to a mortgage booking fee of up to £200 to secure a fixed-rate, tracker, or discount mortgage deal.

Valuation fees average £300, which lenders charge to double check how much the property being purchased is worth.

For buyers who are using the services of a mortgage broker, there can be an additional broker fee of around £300.

FInally, there’s the conveyancing fee - money paid to a solicitor to cover the cost of the legal work associated with buying a home. This can cost around £1,500, though the precise amount will be dictated by the price being paid for the property.

The cost of remortgaging

Remortgaging is the process of moving a mortgage from one lender to another, often done to reduce the size of the loan and perhaps secure a better mortgage rate. Over the course of a 25-year mortgage, many people will remortgage roughly every five years.

This means that during the lifetime of the mortgage, they will be required to pay a significant sum to cover the remortgaging costs. These include £4,000 in mortgage arrangement fees; £400 in mortgage booking fees; £600 for valuation fees; and £1,200 in broker fees, not to mention the additional conveyancing fees required each time the mortgage needs to be registered with a new lender.

Reducing mortgage costs

All of these fees combine to mean that the average person pays at least £1,550 in initial mortgage fees and a further £6,200 when remortgaging over a 25-year mortgage lifespan.

However, utilising the Merge platform from Stipendium can reduce these costs. Merge membership costs £395 which includes mortgage arrangement fees, booking fees, and broker fees. Subscribers also receive a lifetime of free remortgaging with no hidden costs or small print clauses.

This means the homebuyers can save as much as £1,155 on their initial mortgage fees and then a further £5,805 every time they look to remortgage.

Christina Melling, chief executive officer of Stipendium, said: “With the cost of living increasing and interest rates also climbing, many will be understandably worried about the cost associated with their mortgage and so it really does pay to arm yourself with all of the information you can.”

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