Calculating the costs of buying your first home

If the thought of saving for a deposit on a property isn’t scary enough, you then when buying a home you will have to factor in legals, fees and other costs. These can add thousands of pounds to your initial outlay.

So you know what to pay and when, here is a run-down of the fees you are likely to have to pay:

Legal fees
Payable: Searches up to £300 on instruction; rest of the legal fees on completion

This is carried out by a solicitor or conveyancer, who will find out if thereare any issues such as ownership of the property, access or local development.

The cost of legals ranges from around £300 + VAT to over £1,000 + VAT.

These costs are the LEGAL FEES only though and don’t include many other costs you pay the legal company such as searches. These can cost up to £300 and will need to be paid if you are buying as soon as you have instructed the property. Some can take up to six weeks to be sent to the legal company, so it’s worth making sure you pay this money sooner rather than later.

All the costs you incur will depend on:

The value of the property you are purchasing

The complexity of the purchase, for example if you are buying a leasehold property, or through shared ownership; these usually cost an extra £100 + VAT over and above buying a freehold property.

The age of the property, a Listed property may cost more than one which is just considered to be a period property.

One thing NOT to do in my experience is to buy based on cost.

Choosing the cheapest legal company means you are likely to buy your legal services from a company that cuts corners and could slow down your purchase as they react to what’s happening as opposed to be proactive.

So what you save in money, you’ll end up spending in frustration chasing phone calls.

Check out our legal costs page for a full breakdown of costs so you can compare companies based on ALL of the costs as opposed the ones they want to give you.

Read - First Time Buyer Legals Checklist

Payable pre survey if upgrading a mortgage valuation with the lender

Payable post the survey being received if instructing privately

A survey will identify problems such as dry or wet rot, poor maintenance and dangerous structures. There are three main types of house survey and which one you choose depends largely on the type of property you are buying. You don’t need a survey if you are buying a new build property – you can carry out your own ‘snagging’ survey by following our snagging checklist.

Condition Report: This is the most basic survey and, therefore, the cheapest, at around £250 + VAT. It will highlight major issues and give ‘traffic light’ ratings for the condition of various aspects of the property. It’s suitable for standard properties which are relatively modern property (ie, built since the 1930s when building regs began).

HomeBuyer Report: This costs anything from £350 to around £1,000, depending on the property’s value and size. It’s suitable for most properties and goes into more detail, highlighting problems such as damp and offering advice on repairs as well as a valuation of the property to reassure you are paying the right price.

You may wish to use the findings to revise your offer on a property, to take into account the cost of fixing any problems it highlights.

Building Survey: This survey costs from around £500 to £1,500, depending on the property’s value/size This is the most detailed survey and is ideal for older homes, one that obviously needs a lot of work, or anything out of the ordinary such as a timber or concrete home. It will list any problems and offer advice on repairs, and may even give expected timings and costs, so you have a full picture of what to expect if you go ahead with the purchase.

Read - Choosing a Surveyor and Type of Survey Checklist

Anything from 5% of the property’s value, payable to your legal company BEFORE you exchange
This is likely to be your biggest cost. If you can get a 95% mortgage, you deposit will be 5% of the property price. If you can pay more, it can bring down your monthly mortgage payments as it can help to secure a lower mortgage rate.

To exchange, the money will need to be in the legal company’s bank account beforehand. So if you have the money in a 30 day account, you need to ask for it early in the transaction.

If you’re paying by cheque, you’ll need to give it time to clear, so you should play safe and get your deposit to your legal company five working days before the exchange date.

This can be a time for fraudulent activity, so make sure you are paying it into the right bank account and reference it correctly.

Read - First Time Buyer Quick Guide

Stamp duty
This is based on the price of your property and is payable on completion via your legal company.
If this is your only home (ie, not a second home such as a buy-to-let or holiday home) as of November 2017, if you are a first time buyer, for properties costing up to £500,000, there is no Stamp Duty on the first £300,000 and 5% on the portion from £300,001 to £500,000. If you are buying a second home over £40,000 you’ll pay 3% stamp duty in addition to the amount a homeowner would pay.

If you have bought a home before, ie you're trading up/down, there is nothing to pay for properties up to £125,000, the portion from £125,001 to £250,000 is 2%, from £250,001 to £925,000 is 5%, £925,001 to £1.5 million is 10%, and above £1.5 million is 12%. 

If it’s a second home, you’ll usually have to pay 3% on top of the normal SDLT rates if buying a new residential property means you’ll own more than one.

Yes, it’s complicated and these figures are correct as of November 2017, so make sure you check if there have been any changes since this time, although we’ll do our best to keep this up to date!

To find out how much Stamp Duty you'll need to pay, use the Government’s Stamp Duty calculator.

Mortgage/broker fee

Payable upfront to a lender, on completion typically for broker charges, from £299 to 1-3% of the mortgage value borrowed.

This is paid to the lender or broker and it’s best to budget to make sure you can pay it upfront if you can, even though in some cases, charges are due on completion day, so do check BEFORE you agree to apply for the mortgage.

The cost can be a flat rate and for lenders they will publish their fees upfront for the type of mortgage you are applying to. Brokers typically charge based on a percentage of the amount you borrow. This is typically between 1% and 3%.

BUT it is free to get a mortgage quote; you only pay this when you go ahead with the mortgage, so you can approach a mortgage broker and/or lender to begin with and then decide who is giving you the right mortgage and pay the appropriate fees when due.

Buildings insurance
Payable BEFORE exchange, £200+ per annum.

You need to pay this in advance so that it’s in place by the time you exchange contracts. You will normally purchase this with contents insurance and, dependent on location and property value, it will typically be a few hundred pounds.

Like car insurance, it can be reduced if you agree to pay an excess if you make a claim, alternatively you can pay monthly although this is likely to cost more and 10% of the fee will be a VAT charge.

Read - Buildings Insurance Checklist

Payable before move day, either as a deposit or in full, from £150 to over £1,500.

If it’s your first home and you don’t have much stuff, you may manage with hiring a van, but one of the benefits of hiring a removals firm is that your belongings – plus both the properties you are vacating and moving into – should be insured. Do check with your removals firm before booking.

The packing service they offer is usually cost-effective, too, as professional packers know what they’re doing and, if you use their services, you are covered for any breakages, too. Expect to pay anything from £100 for a van/man with a van or £300 +VAT for a small removal company, up to a couple of thousand for a big, long-distance, one. You’ll typically pay a deposit to secure the booking, then the balance on moving day.

Read - How to Organise and Choose your Removals Checklist


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