Buying a house - what costs can go on a credit card/loan/mortgage?

[arwenearlythereyet]

Hello all - some very basic advice required please.

If the bank has offered us say 400 grand and the house we're buying costs 375, can we still borrow 400 and use some of that money to pay legal fees, stamp duty etc?

Can we take out a separate loan to pay for stamp duty, or pay for that on a credit card (I know you can't pay legal fees on a credit card.)

If you recently bought a house, how did you manage it?

If the bank has offered us say 400 grand and the house we're buying costs 375

There are banks giving 107% mortgages? Where? If the house costs £375k, how many banks will lend more than £355k or so (ie, 95%)?

no to both questions.

the mortgage is the house price minus the deposit.
so you should have that (ideally 25% or more) plus the stamp duty & legal fees.

No it doesn't work that way. That £400k will be dependent on a maximum loan to value (LTV) eg 90% and the rest is your deposit eg 10%.

Most mainstream lenders require you to put down at least 5% deposit on the property and the better rates start at 10%. There are some lenders still doing 100% mortgages but they are a tiny number and have many additional requirements and restrictions.

You need to factor in stamp duty and legal fees from your available cash. If you use a other loan that will have an impact on what you can afford to borrow.

Fees relating to the mortgage can usually be capitalised (ie added on) but this can be very expensive.

Why not have a look at MoneySavingExpert or MoneyFacts websites for this sort of info? It's all there on Google.

If the bank has offered us say 400 grand and the house we're buying costs 375, can we still borrow 400 and use some of that money to pay legal fees, stamp duty etc?

No. What LTV was the offer for?

Can we take out a separate loan to pay for stamp duty, or pay for that on a credit card (I know you can't pay legal fees on a credit card.)

You could but it will have an effect on your affordability and probably result in a reduced mortgage offer. It's also putting you in a very tenuous financial position.

You really need to save the deposit plus stamp duty, legal fees and removal costs.

If you give us some figures, we could help a bit(?) What do you have saved, what are your salaries and why the big rush?

Anyone else having a flash back to 2006/7?

I doubt the bank did offer you a £400k loan. I think they would have said you could borrow up to £400k based on your income, but what they actually offer will depend as others said on the value of the house, size of your deposit etc. We did buy a similar value house with a 5% deposit, stamp duty, solicitors fees etc came from savings. You can pay stamp duty on credit card, but there is an additional charge (2% I believe) and your mortgage lender may not like it.

In response to your question how did we manage it - the bank initial offer was a theoretical X amount, assuming a certain LTV as some of the PP have mentioned. This assumed a certain level of deposit that you have available to hand that you would have told them plus your salaries etc

We looked at the monthly payment that would represent and decided we would want something more manageable so reduced the X to Y, which also changed our presumed deposit

Once we had our more comfortable Y, I put together a spreadsheet adding up the total cost of purchase: including legal fees (got a quote), mortgage fee, stamp duty (there is a website that calculates it based on purchase price), moving costs (quote), buildings insurance (rough estimate) - and updated this as we went along with the final house purchase

Then we double checked we would have enough money to cover the deposits plus all other immediate costs by the time we would need to pay them (so likely 1-3 months in the future, so a few more pay packets)

If you recently bought a house, how did you manage it?

We've been saving ever since we bought our current house knowing we were moving from a cheap part of the country to a very expensive one. We've used an excellent financial advisor to help us work out what the savings and equity from our house sale will pay for (solicitors fees for sale and purchase, stamp duty, survey, mortgage arrangement fees and moving expenses) and we've taken out a mortgage for the rest. I think it's about 50% LTV. We're very lucky to have family help to buy a home forever rather than another small house we'd outgrow in a few years. If we didn't have that we'd just buy a project, live in it and do it up while saving as much as possible then look for a bigger house in a few years.

You are all very nice to worry about my financial position! :)

"You can pay stamp duty on credit card, but there is an additional charge (2% I believe) and your mortgage lender may not like it."

• Thanks just5mins that was the sort of answer I was looking for - about the legal possibilities.

I am trying to work out whether it would be more cost-effective to reduce our deposit by 20k (or whatever it will cost for stamp duty, legal fees) or to have bigger deposit and try and pay for some of those costs through other loans (like 0% credit card.)

But the stupid question part is whether, for a mortgage loan, the bank only lends up to the cost of the house + deposit (ie won't bung on an extra xk on the mortgage for whatever reason - an extension, say).

which you have all answered. Thank you.

In answer to your stupid question , the bank agree to the loan with very specific conditions, which will almost certainly not include what you are describing. I did wonder the same but as others have alluded to, banks used to do this and got their fingers badly burnt. So doesn't happen now, sorry!

bears Sad tho I am that the bank will not lend me a vast amount of cash for a vague extension plan - yes, I can see how this new system is better than the bad old cowboy subprime days :)

You could google all this stuff but google never makes you laugh.

Assuming this thread is for real struggling to believe anyone thinks they can still borrow more than the house is worth , planning on putting all incidental buying costs like stamp duty on your credit card is a huge risk.

The mortgage lender could credit check you right up the to point the funds are drawn down, and, if your credit commitments have suddenly rocketed they could well pull their offer.