Costs to Factor in When Buying a House
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Securing a mortgage and saving for a deposit are monumental achievements on your journey to homeownership. With the biggest financial hurdles seemingly cleared, you might feel ready to start browsing for furniture. However, the final sale price is often just the starting point.
A range of other essential, and sometimes surprising, costs emerge before you can finally get the keys. Understanding these additional expenses from the outset protects your budget and ensures the final stages of buying your home are as smooth and stress-free as possible.
Stamp Duty and Property Taxes
When you buy a property in England or Northern Ireland over a certain price, you must pay Stamp Duty Land Tax (SDLT). The government organises this tax in bands, meaning you pay different rates on different portions of the property price. The amount you owe can change depending on whether you’re a first-time buyer or buying an additional property.
To find out exactly what you’ll owe, use the official calculator on the government’s website. You also need to budget for the ongoing Council Tax, which you’ll start paying to your local authority as soon as you own the home.
Legal, Conveyancing and Search Fees
You need a solicitor or licensed conveyancer to handle the legal aspects of transferring ownership of the property to you.
Their fee covers their expertise and the time they spend on your case. It also includes payments to third parties for ‘property searches’. These checks with the local authority and other bodies reveal crucial information about planning permissions, flood risks or potential developments nearby.
Obtain a few different quotes before you instruct a solicitor, as their charges can vary quite a lot.
Mortgage-Related Costs and Valuation Fees
Most mortgage products come with their own set of fees.
You will likely pay an arrangement fee to the lender for setting up the loan, which can sometimes be added to your mortgage amount. Some lenders also charge a smaller, non-refundable booking fee just to secure the mortgage offer.
Your lender will also insist on a mortgage valuation. This is a basic inspection to confirm the property is worth the amount you want to borrow against it, which protects the lender’s investment.
Survey and Insurance
A mortgage valuation is not a proper survey for your benefit. A separate, more detailed survey, such as a RICS HomeBuyer Report, will give you a clearer picture of the property’s condition and flag any potential problems that could be expensive to fix.
Your lender will also require you to have a home insurance policy in place from the date of exchanging contracts, not your move-in day. Make sure you arrange this cover in advance to avoid any delays with the purchase.
Moving In and Ongoing Costs
Finally, you need to account for the practicalities of the move itself.
The cost of hiring a professional removal company can run into many hundreds of pounds, depending on how much you have to move and how far you’re going.
Once you’re in, you’ll have immediate expenses for setting up utilities like broadband and may need to budget for any urgent redecoration or repairs.
Remember to factor in ongoing maintenance costs, and if you’re buying a leasehold property, you’ll likely have annual ground rent and service charges to pay as well.
This article is for information only. Please consult legal, financial and other professionals when you are considering buying a property for the latest requirements and expert advice.
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