A complete guide to the costs of buying a property

Purchasing a new property can quickly become more expensive than originally expected. There are some costs which can be overlooked, which can add to the total costs and skew your budget.

Former renters are often surprised at how much more it costs to buy a property and without the correct preparation, you might find it a difficult process. But that’s where Haybrook can help. This guide will take you through all the costs that come with buying property and help you to get your budget in perfect order.

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Deposit

This is the first thing you will save up for. It’s the amount of money that you will put towards the cost of the property and it averages from 5% to 20% of its price. For example, you might pay as little as £10k or as much as £40k on a £200k property. Getting this money together is you first step to being ready to find and purchase your home.

Mortgage broker fees

A mortgage broker is a financial adviser that specialises in mortgages. They will show you the best products (mortgages) available to you and they work for you, not the lender. This makes them a knowledgeable and trustworthy source of information. Some mortgage brokers don’t charge a fee, while others charge between a few hundred pounds or up to 1% of your mortgage.

Looking for expert mortgage advice, speak to one of our Just Mortgages advisers to see what mortgage deals you could be eligible for.

Conveyancing

This is the name given to the legal procedure of buying a property. Conveyancing fees include search fees and joining the Land Registry. The Land Registry is a government department that keeps records of all registered properties in England and Wales.

You can either hire a property solicitor or licensed conveyancer. The cost will depend on the value of the property you’re purchasing and what searches you’ve completed. Its costs can range from £800 - £1500 and are more for leasehold homes.

Valuation fees

Your mortgage lender will conduct a valuation survey. This doesn’t look at the condition of the property but is produced for the lender who wants to know the property is worth at least what they are lending you. Some lenders don’t charge a mortgage valuation fee but if they do, they are usually around £200.

Surveys/valuations

These can add up quickly, ranging from a couple hundred pounds to over £1,000, depending on the value of the property.

Stamp duty

This is the tax that is levied on legal documents and can add as much as 7% extra to the total cost of buying a property. First time buyers do not have to pay Stamp Duty on properties that are valued under £425,000 in England and Northern Ireland. This is slightly different in Scotland and Wales.

For a full breakdown of Stamp Duty, visit gov.uk

Buildings Insurance

This is an insurance policy that pays the cost of repair or rebuild in the event of your property being destroyed or damaged from things such as:

subsidence
falling trees
fire, smoke, explosions
car and lorry collisions
water damage from leaking pipes

This needs to be purchased before completion of your new property. The average cost of a policy (as of 2018) is £111 a year.

Mortgage fees

On top of your standard mortgage, there are other up-front mortgage fees that need to be considered:

Arrangement fees: these are often charged by mortgage companies and range from just a few hundred pounds to 1% of the mortgage value. Some lenders prefer it being paid up front, others may add it to the mortgage. Be sure to check

Indemnity fees: usually if you had a high loan-to-value ratio, the lender might charge a fee that covers the insurance they take out in case you can’t pay back your loan. Fortunately, many lenders won’t charge these fees even for those borrowing a hefty amount of the purchase price, even up to 90%.

Transfer fees

There is a fee for transferring the mortgage deposit from your lender (mortgage provider) to your solicitor. However, it’s usually no more than £50.

Removals

If you don’t have much furniture and have some generous friends, this can be done at little cost. If you do have a lot of furniture, hiring a removals firm is your best bet. It can be costly, but with the right research you can select a company that best meets your needs and budget. Check out our blog on selecting a removals firm for more advice on this.

After the move

Once you’re moved in to your new home, there are some ongoing costs to consider too:

Insurance – to protect the contents of your home
Council tax – an ongoing monthly payment that is determined by the location of your property
Maintenance and repairs – Any work done will need to be budgeted for
Utilities – these are your bills for energy, water etc. shop around for the best deals
Leaseholder costs – if you purchase a leasehold property you may have to pay additional fees to maintain the grounds or external building.

Not sure of the difference between leasehold and freehold property? Try Haybrook's jargon buster. These are some extra fees that might creep up on you:

Mail redirection Starting at £33.99 for three months
Child or pet care on moving day Around £50
Cleaning costs for previous property. This depends on the depth of the clean and size of the property, but can range from £120 - £250

Looking for your family’s next home? Darlows invests in the people and technology to get you moved smarter and faster. Find your new home here.