The Deposit

Normally, you'll need to find at least a 5 per cent deposit, which is payable on exchange of contracts. Because of the delay between exchanging contracts and the completion of the sale, you may need to borrow the deposit from somewhere else, temporarily. Second time around it may be possible to find a deposit from any equity you might have made on your first property. A few lenders will give a 100 per cent mortgage, where you borrow the full value of your home. 100% mortgages are more helpful for first time buyers who cannot afford to get a deposit together.

Other Costs

The costs of buying a home can still be pretty daunting, especially if you're setting up home for the first time. Taking into account a deposit, legal fees and other charges, someone buying a £50,000 home needs to find something like £4000 just to get the keys. And that doesn't include carpets, curtains or furniture!

Additional Security

Most lenders are happy to consider lending up to 75% of the purchase price/valuation of your home.

If you want to borrow more than this, the lender may need additional security. This usually comes in the form of an insurance policy known as 'Higher Lending Charge' and is arranged by the lender for their own benefit.

Surveys

Valuation Report

The lender will request you to have a survey done.

This is done for the lender's benefit, to confirm the property is adequate security for the loan. It should tell you if there's something seriously wrong with the property, but it doesn't involve a detailed inspection.

The percentage of the value you can borrow, will be based on the figure in the report, and not necessarily on the price agreed with the seller.

Other Surveys

For your own peace of mind, it is a good idea to arrange your own survey.

If you're buying an older property, or planning to live in an area that has suffered from subsidence in the past, a survey is essential.

You could be able to save money, by using the same surveyor who carries out the lender's valuation.

A 'homebuyer's report' is usually more comprehensive than the lender's report, and tells you whether the property is structurally sound. A full structural survey costs more, but gives the added guarantee of legal protection against incorrect information.

Solicitor's

As well as paying a solicitor or licensed conveyor for the work that he or she does, the cost of land registry charges and local search fees will also be passed on to you.

The whole process ensures that once the sale goes through, the property really belongs to you and that you are fully aware of any factors affecting the property.

Application Fees

Some mortgage lenders now charge an application fee to cover their initial administration costs. Fees are especially common with limited offers like fixed rate deals, and may not be refundable if your purchase falls through.

Some lenders offer mortgage deals which cover some or all of these fees.

Your mortgage adviser or lender can prepare a full written quotation, which shows how much you'll have to pay each month and what the up-front charges are.

It may also be helpful to look at the Annual Percentage Rate (APR) on your mortgage quotation. This should account for the true cost of the mortgage, including everything you have to pay to get the loan, like application fee or higher lending charge charge.

Please bear in mind that the APR spreads up front charges over the whole period of the loan. So if you change your mortgage to a different lender the charges can make more difference than the APR implies.