How much does it cost to buy your first home?

publication date: Aug 28, 2014
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
Join for FREE

How much for your first home?

The main cost is the deposit 
The deposit is the amount of money you put into the property. Under the Help to Buy Scheme you can buy a new build or an existing home with a 5% deposit and a 95% mortgage So if you are buying a property for £100,000, your deposit will need to be a minimum of £5,000.

You don’t have to buy a property with Help to Buy to get a 95% mortgage and it might give you more flexibility in the future as under Help to Buy you can’t rent out your property. Lenders such as Yorkshire Building Society offer 95% mortgages without tying you into the H2B scheme.

Many people tell me the ‘interest rates on 95% mortgages are crazy’ – they aren’t, 5% mortgage rate is very normal prior to the credit crunch and is likely to come back.

The ‘average’ first time buyer puts down 20% mortgage – but you don’t have to!

Read our checklist of the week from Anthony Pepe - First time buyer's quick guide

Next you have your legal fees
Most people shop around to get the cheapest legals. This is the worst possible thing to do. Without a good legal company you could lose your property.

Cheap legal companies will often:-

  1. Not give you all the fees upfront they are going to charge you – so they look cheap!
  2. Don’t chase things you need to exchange and complete, they wait for everyone else to do the work and they do the minimum
  3. Won’t have the best people looking after your legals, so when you buy, you find out things which end up costing you much more later on eg a problem with the lease which wasn’t picked up or a bedroom in a loft room not being a ‘real’ bedroom

One thing you should always ask for is a WILL to be included, especially if you are buying with someone else. Married couples tend to buy their home under joint tenancy. This means if one of you dies, then the other half of the property passes to you.

If you are buying with a friend though, you might want your half of the property to go elsewhere so you buy a property under tenants in common; leaving the property to the person you want to via a will. 

Most legals are charged based on the value of the property you are buying and whether you are buying a flat, shared ownership or a house.

Legals cost from £400+ VAT and you normally give the legal company £150-£250 to ‘get started’ on the legal process as they have to buy things like searches on your behalf.

For a comprehensive list of legals, read our article on Legal Costs.

Costs to secure a mortgage 
There are very varied costs to gain a mortgage. They can be 1-2% of the value of the property, so up to around £2,000 to £3,000 at worst or a few hundred pounds for booking and admin fees. This very much depends on the lender and type of mortgage you are taking.

Sometimes it can be worth paying a high fee if it gives you access to a cheaper rate on-going.

Personally I tend to use a broker to help with mortgages. They don’t cost anything initially, only if they find  you a mortgage that you consider good value.

Sometimes you can add the cost of the mortgage fees to the mortgage, but please be aware this can mean you pay two to three times as much over time.

Always ask for a full list of fees and be wary of taking out the legal service offered by lenders as well as upgrading surveys. Mortgage lenders tend to profit a lot from these referrals and, in my view, you don’t get the best value for money or necessarily the best service.

Read our Help to Buy checklist

Money it costs for a survey 
The survey is one of the things many first time buyers think it’s OK to ‘skip’. The belief is the ‘mortgage valuation’ which you pay hundreds of pounds for is the same as a survey and if there was something wrong, the lender wouldn’t lend or would know.

You couldn’t be more wrong! Any problems with the property the lender doesn’t care about in the main as it will be  your responsibility to fix. So a Home Condition Report; Homebuyer Survey or a Building Survey are an essential spend when buying.

The service costs from £250 to over £1,000 but it’s always money well spent. It helps you know if you are paying a fair price. The surveyor will let you know what you will have to spend money on over the coming years, such as a flat roof, new boiler etc.

For more about surveys and survey fees, read our ‘how much a survey costs’ article.

Don’t forget the insurance 
Every little bit of money you have to spend can be a shock to the system. By the time you exchange, if it’s a house you will have to have your buildings insurance in place, this might cost you from a £100 or more and it’s often more cost effective to organise your buildings and contents insurance at the same time.

If you don’t have the insurance in place, you can’t exchange, so make sure you take care to get this done.

Read our Home Contents Insurance Checklist.

And put some money aside for the removal company 
I know that you will think it’s OK to move everything yourself, but make sure you have everything ready for the day. It’s hard enough working keeping track of the paperwork and what everyone is doing on moving day, so if you have lots of stuff like a bed, several wardrobes, any plants or heavy things, it is better to get some help in.

Moving your belongings can cost a few hundred pounds to £400 or more if use a removal company. However it’s better to be safe than sorry. Moving heavy items can cause damage to you which can last a lifetime or things can be dropped or go missing, so trying to do everything yourself can be a false economy!

Normally on moving in day, the property is yours from 1pm.

Reading our Hiring a Van checklist.

Check if you owe any stamp duty
If you are buying a property that costs more than £125,001 you will owe the tax man 1% x the value of the property. If it’s over £250,001 it will cost you 3%.

This money is normally handed over to the legal company to pay on your behalf, so they will need a cheque from you to have been cashed for you to be able to complete and move into your home.

For easy to use calculations and a calculator which shows how you can save for a deposit,

Visit - ‘Kate’s calculation page’

For FREE, independent and up-to-date advice on buying, selling and renting a home, sign up for FREE at Property Checklists. Join now to access our FREE checklists, including:-

All our information is brought to you by Kate Faulkner, author of Which? Property books and one of the UK's top property experts.
This website is Copyright © Designs on Property Ltd and protected under UK and international law.