A Complete Guide to the costs of Buying a Property
Purchasing a new property can be more expensive than you think. There are some costs involved in buying a house which might be overlooked. If you’re not careful you can quickly lose control of your budget.
But that’s where haart can help. This guide will take you through all the costs of buying a property and help you to get your budget in perfect order and prepare you for what’s to come.
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Major costs to consider
Deposit
This is the first thing you will save up for when you are planning on buying a home. It’s the amount of money that you will put towards the cost of the property and it averages from 5% to 20% of its price. For example, you might pay as little as £10,000 or as much as £40,000 on a property costing £200,000. Getting this money together is your first step to being ready to find and purchase your home.
Stamp duty
This is the tax that is levied on buying a property and can add as much as 12% extra to the total cost of buying. However, most people will probably only pay 5% stamp duty at the most – and first-time buyers do not have to pay Stamp Duty on properties valued under £425,000 in England and Northern Ireland. Rates of stamp duty will be slightly different in Scotland and Wales.
Valuation fees
Your mortgage lender will conduct a valuation survey. This doesn’t look at the condition of the property but is produced for the lender who wants to know that the property is worth at least what they are lending you. Some lenders don’t charge a mortgage valuation fee but if they do, it is usually around £200.
Solicitor/conveyancing/legal fees
You can either hire a property solicitor or licensed conveyancer to carry out the legal work involved in buying a property. Conveyancing fees include search fees and the cost of having the property registered at the Land Registry. You will also be paying for the legal team’s time spent working on your case.
The total cost will largely depend on the value of the property you’re purchasing. Solicitor and conveyancing fees can vary, but they are normally in the region of up to 1% of the purchase price of the property. The average house price in the UK incurs conveyancing costs of between £1600-£2,240.
Estate agents’ fees
If you are selling a property at the same time as buying a home, you will have to pay your estate agent a fee for their services. This is usually in the range of 1-3.5% of the sale price. If you have instructed just one estate agent, the fee will normally be 1-2%. If you have used two or more agents this will be higher, such as 3-3.5%.
Mortgage fees
Mortgage broker fees
Mortgage brokers use their knowledge and experience to give you access to the best mortgage products available. They work for you, not the lender. This makes them a knowledgeable and trustworthy source of information. Some mortgage brokers don’t charge a fee, but others might charge up to 1% of your mortgage.
Arrangement fee
Arrangement fees are often charged by mortgage companies to set up the mortgage. You will probably be offered the choice of paying the fee up front or having it added to your mortgage. The latter can work out more expensive, especially if interest is being charged on it.
Transfer fees
There is a fee for transferring the mortgage deposit from your lender (mortgage provider) to your solicitor. However, it’s usually no more than £50.
Moving costs
Removals
If you don’t have much furniture and have some generous friends, moving house can be done at little cost. However, if you do have a lot of furniture, hiring a removals firm is your best bet. It can be costly, but with the right research you can select a removals company that best meets your needs and budget.
Storage
Not every house move goes according to schedule. If there is a delay between selling your old home and moving into your new property, you may need to put your belongings into storage. Self-storage companies charge a range of rates depending on the size of the unit and the length of time you need it for. The cost per square meter will be lower the larger the units are.
Mail redirection
It is always advisable to set up a mail redirection service, so you don’t miss out on any important letters that are sent to your old address. Royal Mail offer redirections of 3, 6 or 12 months.
Leaseholders’ costs
If you purchase a leasehold property you may have to pay ongoing additional fees to maintain the grounds or external buildings. This is because the land is owned by the freeholder. Leaseholders usually pay ground rent and a service charge every year.
Ongoing running costs
Maintenance & repairs
Most properties aren’t perfect – there will be repairs you need to make, or improvements you want to do. Appliances will need to be serviced, gutters cleaned, carpets replaced, for example. Any work or regular maintenance will need to be budgeted for.
Home & contents insurance
Buildings insurance is insisted upon by your mortgage provider. It offers peace of mind in the event of any damage to your home that your financial asset will be protected. Similarly, contents insurance covers the value of the contents of your home. You will probably pay somewhere between £150-400 per year as your insurance premium.
Council tax
Council tax is an ongoing monthly payment that is determined by the size and location of your property.
Mortgage payments
Your biggest ongoing cost will be your monthly mortgage payment.
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