It is important from the beginning that you know exactly what your new home will cost you, both the starting-out costs and your monthly costs. To help you, we have included some information here.
Starting-out costs
Once you’ve found a property, you’ll pay a £500 reservation fee to take it off the market. You’ll get this back when you buy your home (it is taken off the purchase price ). You will need to pay the reservation fee to the sales team when you view the home.
In most instances, you will need to pay Stamp Duty Land Tax when you buy your home. You will need to check the stamp duty thresholds with your solicitor, because these can change depending on how much you pay for your home. Your solicitor will be able to tell you the exact cost. You pay the Stamp Duty to your solicitor on the completion date.
You will also need to consider costs for your mortgage valuation and arrangement fees, which are set by your mortgage provider, along with solicitor’s fees.
What share will you buy?
The minimum share you can purchase is generally between 25% – 35% of the total cost of the home. During your financial assessment the independent mortgage advisor will help determine the size of the share you can afford to buy.
As your income rises you can increase the share you own until you eventually own 100%.
You don’t need a huge deposit
Because you start by buying a share of a property, you only need to find a mortgage that matches the size of the share that you’re buying. This means you will need a much smaller deposit than if you were buying 100% straight away.
So if for example you buy a 25% share in your home, and your deposit is 10% of the share you purchase, you’d be paying 2.5% of the full market value.
Ongoing costs
Each month you will pay the following:
- Your mortgage (on the percentage share of the property you own)
- Your rent (on the percentage share that L&Q own)
- Your service charge, which goes towards maintaining the building and its environment to a high standard.
You also pay an annual ground rent.
Example costs
If you decide to buy 35% of a £400,000 L&Q home:
You’ll need a deposit of at least 5% – £7,000
Monthly payments:
- Mortgage – £777.50 (if you have 5%)
- Rent – £595.83 (if you have 5%)
- Service charge – £150 (may vary)
If you have higher savings for a deposit your monthly payments will reduce accordingly or you may be required to buy a larger share.