If you’re considering the extra fees for buying a house, Finance Rate can take you through each likely cost, to help you prepare your mind and your wallet. Let’s start at the beginning of the process.
Extra fees for buying a house – the upfront costs
Before you purchase a property with a mortgage, you’ll need to put down a deposit. This is the cash amount you must pay upfront when buying a house using a mortgage.
First time buyers are able to purchase a home with only a 5% deposit through the 95% mortgage scheme introduced by the government in 2021.
Using a personal loan for a house deposit is a potential option, but certain lenders may not approve. As a broad guideline, having the necessary savings readily available for your deposit is typically required to secure a mortgage.
You will pay Stamp Duty on properties costing more than £250,000 for residential properties, unless you’re a first-time buyer. As of 2023, the purchase prices are as follows:
|Purchase Price of Property||Stamp Duty % paid on Purchase Price|
|Below £250,000 (£425,000 for 1st-time buyers)|
£250,001 – £925,000
£925,001 – £1,500,000
First time buyers who meet the criteria will be exempt from paying stamp duty on properties priced up to £425,000.
For those purchasing a second home, an additional 3% Stamp Duty will be levied on properties exceeding £40,000, based on the prevailing rate.
This tax is applicable to both freehold and leasehold properties, regardless of whether the purchase is outright or financed through a mortgage.
This fee covers the mortgage lender’s evaluation of the property you’re interested in, helping them determine the amount they’re willing to lend you.
A valuation typically costs in the region of £250 but this can increase into the +£1000 range depending on the size of the property so be sure to set aside more than you’ll think you’ll need so you’re prepared.
Prior to purchasing a property, it’s advisable to have it inspected by a surveyor.
This can reveal any potential issues ahead of time before committing to the purchase.
Survey options vary, ranging from a basic home condition survey with a price of approximately £250, to a comprehensive structural survey starting at £600 or higher. Investing in a thorough survey has the potential to save you money on future repair costs.
Conveyancing fees: Costs to consider during the purchase
At the next part of the home buying process, you’ll encounter additional costs. These will include extra fees for third parties to keep the administration of the sale moving forwards. This administrative process is known as conveyancing – the legal process of buying a property. This task is generally carried out by a solicitor or licensed conveyancer.
To carry out all the legal work when buying and selling your home, you’ll typically need a solicitor or licensed conveyance. Expect legal fees to be in the region of £850-£1,500 as a general guide.
They may also do local searches to check whether there are any local plans or problems which could affect the property. This can cost you a further £250-£300.
These costs can differ based on factors such as the property’s type, value, location, and the specific firm you use.
Electronic transfer fee
This covers the lender’s cost of transferring the mortgage money from the lender to the solicitor and usually costs around £40-£50.
Mortgages are about more than your monthly repayments and you need to factor in these extra fees into your home buying calculations. These might include:
An arrangement fee or product fee is charged by lenders to arrange your mortgage deal and can exceed £1000.
Some lenders might ask for a mortgage booking fee – however, this practice is not as common as it used to be. This generally ranges from £100 to £300.
A mortgage valuation fee is for assessing the value of the property you’re purchasing, which might not match the price you’ve agreed on. This step is taken for the mortgage provider’s protection. The price of this valuation can differ – while typically around £300, it could be higher for pricier properties.
Moving fees: Costs to think about on moving day
Once you know the costs prior to getting the keys, it’s time to find out more about the costs surrounding your moving day.
House removal costs
On average, the cost of hiring a removal service falls between £300 and £600. Make sure to explore different quotes (and also ask for references) to make sure you end up enlisting someone reliable.
If you’re in a position where you need to put your possessions in storage, be sure to shop around, compare prices and get a grasp of the firm’s security. Price will depend on the company and the length of time that you’ll need storage.
Costs to consider after you’ve bought a house
These are any ongoing costs once you’ve bought your own home.
Maintenance and repairs
The cost estimate for this could vary considerably, but the survey you had done earlier should have highlighted any problems that need fixing so you can get quoted on the jobs that need to be done. Having some money set aside for this eventuality will leave you better prepared for this step.
You’ll likely need to take out buildings insurance to protect your new home against damage from fire, floods, subsidence and anything else. For further peace of mind, you can also consider contents insurance for your possessions too.
The amount charged by your local council for the services they provide. The amount you pay varies based on where the property is and the valuation band the property is in. You can check your council tax band via the government website.
Check with the house sellers how much they spend on gas, electricity and water each year. You should also consider regular monthly costs such as phone, internet, TV or other entertainment packages.
Making financial queries easier to digest
At Finance Rate, our aim is to give you the facts surrounding the daunting process of property buying, to make it feel less overwhelming.
If you’re in search of solutions to other inquiries concerning finances, we’re here to assist in that aspect as well. With a vast amount of impartial information on financial subjects that might seem intimidating if encountered without a financial background.