What are the Additional Costs of Buying a Home That I Should Be Aware Of?
For first-time buyers in the UK, understanding the full financial scope of buying a home is crucial. While securing a mortgage is a significant part of the home-buying process, there are several other costs that can add up. Being aware of these additional expenses is key to planning your budget effectively and avoiding surprises down the line.
When purchasing a property, you will need to hire a solicitor or a licensed conveyancer to handle the legal aspects. These fees can vary widely depending on the complexity of the transaction and the property’s value. On average, legal fees can range from £850 to £1,500, but it’s wise to get a few quotes to find the best deal.
Before finalising your purchase, getting a survey of the property is advisable to check for any structural problems. There are different types of surveys available:
- Home Condition Survey: The most basic and affordable option, suitable for new-builds and conventional homes.
- HomeBuyer Report: More detailed, covering all visible and accessible parts of the building.
- Building or Structural Survey: The most comprehensive, especially recommended for older or non-standard properties.
Costs for surveys range from £250 for a basic survey to over £600 for a full structural survey.
Stamp Duty Land Tax (SDLT) is a tax paid on properties costing more than a certain threshold. First-time buyers currently benefit from a relief that means you don’t have to pay any Stamp Duty on properties up to £300,000 and a discounted rate up to £500,000. It’s important to check the latest thresholds and rates as these can change.
Mortgage Arrangement and Valuation Fees
Lenders may charge a mortgage arrangement fee, which can be up to £2,000, though it varies significantly between lenders and mortgage products. Additionally, there’s often a valuation fee, as your lender will need to value the property to ensure it’s worth the money they’re lending you. This can cost anywhere from £150 to £1,500.
Don’t forget the cost of actually moving your belongings to your new home. Hiring a moving company can range from £300 to £600 for a local move and more for longer distances.
Furnishing and Renovations
Depending on the state of the property you are buying, you may need to set aside money for furnishing or renovations. Even if the property is in good condition, you might want to personalise it, and these costs can quickly add up.
Building insurance is usually a mortgage requirement, and you might also consider contents insurance to protect your belongings. The cost depends on the property type, location, and the amount of cover you need.
Utility Connections and Council Tax
Setting up your utility connections (if not already present) and paying council tax are additional costs. Council tax varies depending on your local authority and the property band.
Buying your first home in the UK involves several costs beyond the mortgage. Being aware of these – legal fees, surveys, Stamp Duty, mortgage-related fees, moving costs, furnishing, insurance, and ongoing taxes – is crucial for effective financial planning. Always budget for these additional costs to ensure a smooth and stress-free home-buying experience.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Houz Mortgages does not charge a fee for mortgage advice.