How much does it really cost to buy a home?

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Whether you’re a first time buyer looking to get your feet on the property ladder or you’re buying your next home, there are a lot of costs to consider when you’re budgeting for buying a property.

For first-time buyers, the deposit will be the main outgoing and definitely the largest upfront sum of money needed. If you’re looking for ways to save your deposit, read our guide on how to fund a house deposit which advises on savings, government Help to Buy schemes and whether it’s advisable to use a loan or credit card.

Saving for a house deposit

How much you'll need to have in the bank depends on the price of the property you're buying and how much mortgage you will need.

Most mortgage lenders want a minimum of a 5% or 10% deposit, but with many first-time buyers struggling to meet these demands, some high street lenders are offering a 100% mortgage. But pay close attention to the interest rates – they’ll more than likely be a lot higher than the rates you’ll be offered with a bigger deposit.

Make sure you spend plenty of time comparing lenders and don't be afraid to shop around to find which companies are providing the best offers with low interest rates.

When you’re looking for a mortgage provider, ask them about mortgage set up fees – also called arrangement fees, product fees or a booking fee. Not all companies charge a fee but it’s worth checking as you can be charged anything from £100 to £2,500.

If you're a first time buyer, read our mortgage guide to help you decide which type is right for you

Valuation fees

Once you have chosen your mortgage lender, they will arrange for a valuation of the property; this will help them establish how much the property is worth and how much they are willing to lend you. Valuation fees range from £150 to £1,500 depending on the property’s value but some lenders do offer mortgages with free valuations.

A valuation is only carried out to satisfy the mortgage provider that the property is worth what you are paying for it; if you want to find out if there are any issues with the property you’ll need to have a survey done.

Home surveys

If you want to know if there are any issues with the property you are buying it’s advisable to get a survey carried out. Surveys are optional but they’re advisable for your own peace of mind, particularly if you are buying an old property.

There are a range of surveys available from a basic Home Buyers Report which looks for things like damp and subsidence right up to a full structural survey. The comprehensive structural survey looks at the materials used to build the property as well as the condition of the roof and the property’s foundations.

Surveys vary in price; a basic Home Buyers Report can cost around £250 whereas a full structural survey costs anything around £700. While a survey can be a big sum on an already expensive bill when buying a home, a decent report could save you money in the long run as it will identify any hidden or future problems with the property.

If you’re unsure which type of survey to go for, ask your solicitor or conveyancer for their advice. 

Solicitor or conveyancer fees

To buy a home and make sure every aspect is legal – such as transferring the legal ownership of the property, it’s advisable that both parties – buyer and seller - use a solicitor or conveyancer.

A solicitor is a qualified lawyer with a broad knowledge of many aspects of the law, while a conveyancer has less training but specialises in property.

You will need to hire a conveyancer or solicitor to carry out the legal work on the sale and how much they charge depends on a number of factors such as the location and value of the property you are buying. 

Solicitors are normally more expensive than a conveyancer, but make sure you shop around and get full written quotes so you can compare and find the right representative for you.

An estate agent will often recommend a solicitor but be cautious with this, they often recommend companies which pay commission if they get hired and it can add hundreds onto your legal bill.

You will need to instruct a legal representative once an offer has been agreed on the property.

To compare prices for conveyancers in your area visit the HomeOwners Alliance Conveyancing website. To find a solicitor, take a look at the Law Society website.

What’s included in the legal fees?

There are a number of charges included in your legal bill so always ask for an itemised breakdown of the charges when you are looking to appoint a solicitor or conveyancer. Some of the most common charges you’ll see on your bill are:

Searches – your legal representative will carry out checks with the local council to see if there are any planning issues that could affect the property’s value. They can also carry out a water and drainage search to check if the property is connected to public drains.

Land Registration Fee - after you’ve bought the property, your legal representative will complete all the necessary paperwork to register you as the owner of the property at the Land Registry.

Electronic transfer fee – normally a small charge of around £40, this covers the mortgage provider’s costs of transferring the mortgage money to the solicitor

Stamp Duty – you only pay Stamp Duty Land Tax in England, Wales and Northern Ireland if the property you are buying costs more than £125,000. You’ll pay 2% on properties valued between £125,000 and £250,000 and 5% on properties above £250,000.

In Scotland you’ll pay 2% Land and Buildings Transaction Tax on properties valued between £145,000 and £250,000 and 5% on the value of properties above £250,000.

Home insurance

The type of insurance you need depends on the property you are buying. If you are buying a leasehold property, the buildings insurance will be included in your service charge so you will only want contents insurance which will protect your belongings – things like your furniture and clothes.

You will need to calculate how much your contents are worth before buying the right cover for you, we have a handy contents calculator to help you estimate the value.

If you’re buying a freehold property, you may have already been informed by your mortgage lender that buildings insurance is a condition of the loan. Buildings insurance covers the structure of your home and most things that are fixed down within such as the fitted kitchen units and carpets etc. You’ll also be covered for fire, water and malicious damage.

If you want both aspects covered, a combined home insurance policy would be a good option for you; it includes cover for both buildings and contents.

Ongoing costs

First up, you’ll more than likely need to factor in removal costs when you’re moving house. If you’ve amassed a lot of furniture that needs to be taken to your new property, it might be quicker and less stress for you if you hire a professional removal company to do the heavy lifting.

Depending on your budget you can either do the packing yourself and just get the company to move your belongings from one property to the next, or, if you have a little more to spend, you can get the company to do the packing for you as well as the removal.

Make sure you find a good quality removal company who you know will look after your prized possessions; look for companies that are members of the British Association of Removers. And keep in mind a lot of companies charge more at weekends and at the end of the month.

Monthly outgoings

As a homeowner you’ll have a number of monthly costs to factor into your budget. The big one, your monthly mortgage repayments, but on top of that you’ll have:

Utilities bills – gas and or electric and water can add up to hundreds of pounds each month. You should also think about things like a TV licence – a standard colour TV licence costs £145.50, internet – we have a handy guide on finding the best broadband deals - and any extras you want such as Netflix or Sky

Council Tax - the amount you pay is based on where you live and which valuation band your property sits in. If you live in England or Wales you can find out the Council Tax band for your home online, for Scottish homeowners, check the Scottish Assessors website.

Service charge and ground rent - For leasehold properties, more often than not an apartment, you will be subject to a service charge and ground rent. The service charge is your share of running costs such as property maintenance, cleaning and paying the management company – it’s the money used to keep your estate looking good and in working order.

Your buildings insurance will also be included in this cost and water rates are often included – check this with the previous owner. Service charge fees vary depending on location and how many services are included in the price.

You pay ground rent to the person or company that owns the freehold of the building. It can be a fixed or variable sum and can be anything between £100 and £300 a year.

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