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Buying a home - the eight costs you need to cover

Buying a home - the eight costs you need to cover

Getting on and moving up the property ladder can be a real struggle, but at least once your offer has been accepted you know how much you’re paying, right? Well, actually, not necessarily.

Your mortgage repayments are certainly going to be the greatest expense over the term of your mortgage, but many people underestimate, or are simply unaware of the extra expenses when buying a home. Here are the eight costs you may need to cover. 

Deposit

Let’s start with the big one. As a first-time-buyer, saving up for a deposit can be a real uphill struggle.

Typically, this is between 5% and 20% of the purchase price. So if the property you are buying costs £200,000, you will need a deposit of between £10,000 and £40,000.

Estate agent fee

If you are moving up the property ladder then you also need to think about the costs of selling your old home.

Estate agents fees vary and you should certainly shop around and negotiate, but you will normally be looking at 1% to 3% of the sale price plus VAT. Only sellers, not buyers, pay estate agent fees.

Mortgage fees

These fees can include an arrangement fee for the mortgage itself, booking fee for applying for the mortgage, valuation fee to establish the cost of the property you want to buy and various administrative costs.

There are also charges for being late with repayments and potential fees for paying your mortgage off early and for completing your repayments. 

Legal fees

Unfortunately, there is a lot of legal work when buying a house and you will need to hire a solicitor or licensed conveyancer to deal with this side of the deal.

A local search, which covers plans or potential issues in the area you are buying, costs around £250 to £300. However, you will also need to cover legal fees, which range from £500 to £1,500.

Electronic transfer fee

Essentially, this is an unavoidable admin fee. Normally costing between £40 and £50, it covers the lender's costs of transferring the mortgage money to the solicitor.

Stamp duty

If you live in England, Wales or Northern Ireland and you’re buying a home worth more than £125,000, you will have to pay stamp duty. In Scotland you pay the Land and Buildings Transaction Tax (LBTT) on properties over £145,000.

Both stamp duty and LBTT are charged on a sliding scale, so the more your home is worth the more you pay.

In both cases, this must be paid within 30 days of completing the deal.

Why was stamp duty introduced in the UK?

First introduced in 1694, stamp duty was used to pay for wars against France


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Surveyor fee

What’s the worst thing that could happen when you’ve just spent a lot of money buying a house? You suddenly discover there is a serious problem, which needs to get fixed. To avoid this unpleasant situation you should get a survey done to identify any problems and structural issues.

The cost of a survey varies depending on the kind of survey being carried out, the location, size of property and other factors. The most basic survey just covers the condition of the property and will cost around £250, while a full structural survey can cost more than £600.

Removal costs

Assuming you want furniture in your new home, you will need to pay to transport your stuff from A to B.

If you don’t have much you need to move, then you could hire a self-drive van for less than £40 a day, although it will be more if you want someone to drive it for you.

A proper removals company is more expensive, normally between £300 and £600. 

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