The costs of buying a house

When you’re looking to buy a home, your main financial focus will likely be the asking price of properties that take your fancy. With the average UK property priced at £226,906(as of April 2018), finding your dream home within budget can be a challenge.

But the true cost of buying a house also includes a number of other fees that can be easily overlooked. They include conveyancing fees, the cost of surveys, stamp duty and the deposit. Each of these costs will need to be included in your calculations to make sure you don’t come up short when the time comes to pay.

How much will you need for a deposit?

For a first-time buyer, the deposit is the single biggest upfront cost of buying a home and can fall anywhere between 5-25% of the purchase price. The average deposit is usually about 20%, which for the average UK property price mentioned above, works out at over £45,000.

It’s worth paying as much as you can afford, as the higher your deposit, the better the mortgage deal you’re likely to be offered and the lower your monthly repayments may be.

What are the solicitor’s fees for buying a house?

You’ll need either a qualified property solicitor or a licensed conveyancer to take care of the legal side of a property purchase and to handle the transfer of ownership from its previous owner to you. The cost can vary widely, with some solicitors working for a flat fee and others charging a percentage of the value of your property.

Solicitor fees could also include the mortgage account fee (the mortgage lender’s admin costs), the search fee (identifying potential problems such as local flood risks) and the Land Registry fee (registering you as the new property owner with the government department that keeps records of properties in England and Wales).

What fees will your mortgage lender charge?

There are a number of fees your mortgage lender may charge when you take out a mortgage with them. Below are those you’re most likely to come across, though some mortgage lenders may waive them and others may call them by a different name. Any fees you’re being charged for your mortgage product should be detailed in a mortgage illustration document supplied by your lender.

Arrangement fee – a charge for the mortgage product itself, which you can add to your mortgage. These are sometimes calculated as a percentage of your mortgage value, or come as a fixed cash amount.

Booking fee – a fee sometimes charged when you apply for your mortgage, which isn’t usually refundable.

Valuation fee – a charge for the mortgage lender’s assessment of the property to make sure it’s worth what they’re lending you. May be waived by some lenders.

CHAPS (Clearing House Automated Payment System) – this covers the cost of your mortgage lender transferring funds to your solicitor.

Other charges you may come across once you’ve got your mortgage in place include missed payments fees, early repayment charge and an exit fee.

Will you have to pay stamp duty?

Stamp duty is a tax paid on transactions involving property and land. There are a number of factors that play a part in determining whether you pay it and how much you pay.

If you’re a first-time buyer, there’s no stamp duty to be paid on property up to a value of £300,000. For properties priced between £300,000 and £500,000, there’s nothing to pay on the first £300,000 and 5% payable on the amount over £300,000. For properties over £500,000, stamp duty is paid at the standard rate for non-first-time buyers as follows:

  • Property priced at £0-£125,000 – 0%
  • Property priced at £125,001-£250,000 – 2%
  • Property priced at £250,001-£925,000 – 5%
  • Property priced at £925,001-£1,500,000 – 10%
  • Property priced at £1,500,001+ – 12%

If you’re buying a second home or a buy-to-let property, you’ll have to pay an extra 3% stamp duty on top of each of the rates above and will be charged for any property costing over £40,000.

Figures from March 2019

There are different systems in place for home-buyers in Scotland and Wales.

In Scotland, you pay Land and Buildings Transaction Tax, which has a similar tiered structure to stamp duty. First-time buyers don’t pay LBTT on the first £175,000 of their property price, while non-first-timers pay 2% on homes worth £145,001 and above.

In Wales, you pay Land Transaction Tax on property that costs over £180,000 and there’s no exemption for first-time buyers. 

Do you need to pay for surveys?

Yes. A property survey, though optional, will let you make sure that your property has been correctly valued and that there are no structural or planning problems on the horizon. How much you pay depends on the kind of survey you opt for and the kind of property you’re buying .

At the cheaper end is a RICS Home Condition Report, which is only really suitable for modern homes in a good condition.

The most commonly used survey is a RICS HomeBuyer Report, which looks a little further into the general condition of a property.

Then at the more expensive end there’s a building survey, also known as a structural survey, which takes a more in-depth look at the condition of the property.
 
If you’re moving into a new-build property, you should also commission a snagging survey. This looks for problems big and small, from doors that don’t close properly to larger scale structural issues. The developer should then fix any problems highlighted, preferably before you move in. 

What other costs should you expect?

Moving
You can move yourself with just a car or a hired van to keep your budget down. If you hire a professional removals company, the price will depend on how much stuff you have to move, how far you’re moving and whether you opt for additional services like professional packing.

Redirecting your post
As of January 2019, getting Royal Mail to redirect your post from your previous UK address costs £33.99 per surname for three months and £66.99 for a year.

Do you need insurance?
It’s recommended that you take out life insurance when you get a mortgage, so that your family won’t struggle with repayments if you pass away. Find out more about our Life Insurance.

Usually, mortgage lenders will require you to have Buildings Insurance as part of your mortgage agreement. You can also choose to add Contents Insurance to give yourself further protection.

If you take out Home Insurance with us we’ll fix the price for two years, so if you don’t make a claim, your premium won’t increase at first renewal. Terms and conditions apply.

Find out more about our Home Insurance


*Fix your Home Insurance price for 2 years T&Cs

If you make a claim before your next renewal, the premium may be adjusted at renewal and the fixed price will end. If you make a change to your policy, e.g. if you move house, add or remove cover, the price may be adjusted to reflect this. The new premium will then be valid for the remainder of the original fixed price period. If there’s a change to Insurance Premium Tax, this will be applied to any premiums you have to pay in line with HMRC requirements.

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