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A guide to the cost of buying a home

When buying a house or flat it’s difficult to budget for all the costs involved - and then there are those you can't predict!

Property purchases are one, if not the, most expensive things you will do in your lifetime and it can be easy to become so focused on saving up for the deposit that you don’t consider the other costs involved. On top of saving for your deposit, there is also the cost of surveys, searches, moving and furnishing your home.

If the house you’re buying is worth more than £125,000 or it is your second home, you will also have to factor in stamp duty costs, a tax that could add thousands to your purchase. 

So, what are the main costs when buying a home?

Deposit

Most mortgage lenders in the UK will require you to put down a deposit of at least 10% of the property’s value. The average house price in the UK is now £225,956 (as of August 2017) that could mean a deposit of £21,000 or more. However, you could have to pay a deposit of up to 25% if you want the best interest rates, and/or to reduce the cost of your mortgage payments. 

Stamp duty

Stamp Duty Land Tax (SDLT) is payable on residential properties or land worth more than £125,000, and non-residential land or properties over £150,000. If the property is your second home then the threshold is much lower at £40,000 and the rate payable is 3% higher. HMRC have a handy calculator so that you can work out the cost of SDLT for your property. 

When paying stamp duty you will have 30 days from the point of completion to pay it. If you take longer than this to pay, you may face interest being added on top, or even a fine. More information on stamp duty can be found in our full guide to stamp duty. 

Mortgage set-up costs

When setting up a mortgage there can be a number of additional costs that are important to be aware of. These can easily add on an extra £2,000 to the overall costs:
  • Mortgage arrangement fee: This typically averages at around £1,000, but it could be up to £2,000 or more if it is charged as a percentage of your loan, which some lenders do. You can choose to add this to the mortgage itself, upon which you will then be charged interest, or you can pay it upfront. 
  • Booking fee: Also known as an application or reservation fee this is typically charged at around £100 and is for ‘booking’ the loan while your application is processed. 
  • Valuation fee: Your mortgage lender will assess the value of your property to establish how much they will lend you. This will not be charged by all lenders, it depends on the type of mortgage you choose, and it can vary in cost from £150-£1,500, based on the value of the property. 
  • There may also administration fees, exit fees (to leave the mortgage), or charges to transfer the mortgage money to the seller’s solicitor, which typically costs around £50. 

Legal costs and solicitors fees

There are many legal aspects to buying a house, and you will need to find a solicitor or conveyancer to handle these for you. For example solicitors will assist with organising the  payment of stamp duty and transferring funds to the solicitor of the seller. They will also carry out property searches, but these may incur an extra cost. It’s best to budget up to £1,000 for legal costs, with around £250-£300 for searches - but prices can vary.

At First4Lawyers we guarantee no nasty surprises when it comes to money, and we will be happy to give you a valuation on costs for your property just contact us for a no obligation chat and we'll take it from there.

Surveys

Your mortgage lender may carry out a survey of your property but this is not an assurance as to the condition of the home you are buying.  It's always recommended to use a  chartered/independent surveyor and there are a number of options to choose from:
  • Home condition survey: This is typically only carried out on new build or conventional houses and will cost around £250. 
  • Homebuyers report: This is a more detailed report of the home and may also include a valuation. Typically this costs around £400. 
  • Structural survey: This in depth survey is the most thorough survey you can get and is good for a house that you may have concerns about. For example if it is old, listed or if it is of an unusual structure. This survey can cost upwards of £600 or more. 

Moving fees

Once all the paperwork is cleared and a moving in date is fixed, there is also the cost of removals to consider. Removal companies can help take some of the stress away from moving, but they can also be costly and as such it may be cheaper to hire a van and do the work yourself. These costs can therefore vary from £100-£1,000 depending on the option you take. 

Furnishing

If you have just purchased your first house or you are upsizing it is also worth considering the cost of furniture and fittings. Depending on what, and how much, you need this can be quite costly, unless you use budget or second-hand shops. It might be a good idea, if you’re on a tight budget, to just buy the essentials to begin with and build from there. 


 

Note: First4Lawyers offers this information as guidance, not advice. Before taking any action, you should seek professional assistance tailored to your personal circumstances and not rely on First4Lawyers’ information alone.
* All details and pricing are correct at time of last update. First4Lawyers and their partners are not tax advisors and we recommend you seek appropriate independent financial advice before making any decisions that relate to tax and property.

 Last updated: November 2017