The cost of buying a home

There are many costs to owning and buying a property. As well as the obvious costs involved in buying a property, such as the mortgage, there will be other fees that are important to consider in the house buying process such as stamp duty, solicitors, valuation fees, and removal services.

Upfront costs

Deposit

A deposit is the amount of money you will pay upfront for your home. Whilst there are mortgages available with as little as 5% deposit, typically these range from 10-25% of the overall price of the property. While it feels like saving can take an eternity, and rising house prices may make it seem as though your dream home keeps edging away from you, stick at it, as it could be the deciding factor in a securing mortgage.

Solicitor fees

Solicitors or a licenced conveyancer will handle the legal side of the house moving process. This will include all the housing contracts and the exchange and completion dates. They will charge a fee for their services, and you will also have to cover the cost of Land Registry charges and local search fees.

Land Registry fees are charged by the government for changing the records about who owns your property. The fee is charged to update you as the legal owner and to show your mortgage. This can vary depending on the cost of your home.

A local authority search is undertaken as part of the conveyancing process. If you are taking out a mortgage then it will often be a condition that you obtain a local search. It refers to specific information about the surrounding area and the particular property.

Estate Agent Fees

The estate agent fee is only required to be paid by the seller, not the buyer. If you are a first time buyer, you typically won’t be selling so this is not a cost you will need to worry about. However, if you are buying your 2nd, 5th or 50th home, estate agent fees are definitely something you need to consider. This will usually be around 1-3% of the house price and is typically negotiated at the beginning, when you first instruct the agent.

Stamp Duty

This is a tax paid by you when you buy a property worth £125,001 or more. The amount you pay will depend on the value of the property you’re buying. Stamp duty has had many renovations over the years, the most recent of which was announced in the 2017 autumn budget. First-time home buyers will now be able to claim a discount (relief) so you don’t pay any tax up to £300,000 and 5% on the portion from £300,001 to £500,000

As of April 2016, stamp duty for those looking to purchase second homes in addition to their first home increased significantly. Those buying a second property will have to pay an additional 3% stamp duty. This doesn’t mean for those buying their second home and selling their first, but rather those looking for holiday homes, buy-to-let investments etc. To find out more click here.

Valuation and survey fees

When you have found a home you like, it is a condition of many mortgages that a mortgage valuation is carried out before you can buy it. This will assess the value of the property, in order to establish how much they are willing to lend you. This is completed for the lender and may not necessarily be shared with you, the buyer.

There are other surveys available to you as a buyer, which are able to tell you about the condition of the property before purchasing it and identify any problems that the property may have. The cost of a survey is, again, very subjective to each individual property. They will typically range from around £250 -£1000, but some properties may require a building survey, specific defect reports etc. To find out more about property surveys and how we can help, click here

Adviser Fees

Some advisers may charge for mortgage advice and this is a necessary cost to consider. Andrews do not charge for our advice, we simply charge a fee for processing your mortgage application, should you choose to proceed. Our typical fee is £450, however the actual fee will depend on your circumstances.

House moving costs

It’s important to consider the cost of using a moving company or hiring a van to help get all your belongings into your new home. If there is going to be a period of time between you buying and moving in, then the cost of storing your belongings might be another cost to consider.

Ongoing costs

Council Tax

Council tax is an annual fee charged by the local council for the services it provides. This includes rubbish and recycling collection, libraries, park and road maintenance etc.

There is no set cost for council tax as it is worked out on an individual basis. The amount you pay will be dependent on the valuation of your home and where it is located. To find out more click here.

Insurance

Your mortgage lender will require you to take out buildings insurance to safeguard your new home. Buildings insurance covers things like fire, flooding and moving ground (subsidence). This will need to be in place from the day you exchange contracts.

While the lender will not require it, contents insurance is always a smart idea, as is life insurance and income protection. Contents insurance will protect your possessions from such risks as flooding, fire, theft. Life insurance is slightly more morbid, but with it comes the security that if you were to die before the mortgage is fully paid off, the mortgage will be repaid. There are also policies that can protect your income should you fall ill and be unable to work. If you are unsure about what is covered by insurance, arrange to talk to one of our advisors, who will be happy to talk you through it.

Maintenance and bills

According to a recent study carried about by More Than, a home insurance company, nearly half of all household income is spent maintaining the home. The average annual cost of bills and mortgages equates to around £20,000 a year for a home with 3 bedrooms.

Bills generally will include home necessities such as electricity, gas and water. It’s also important to consider the cost of food, a TV licence, and phone and internet bills.

So what about maintaining a property? According to the 1% rule, the money that generally should be set aside for maintenance is 1% of the cost of your home. Say your home costs £300,000, your yearly maintenance will be around £3,000. This is an average and does not mean that you will spend £3,0o0 every year, as some years will be more costly than others.

If you are a first time buyer then you’ll potentially have a few more things to buy that seasoned home owners may not. This could include a vacuum, a lawn mower, a washing machine etc.

Wondering if you can afford to buy? Arrange a call back with our award winning mortgage service who will be able to talk you through your options. Or pop in to your local Andrews branch to talk to our experienced team to discuss where your property journey may take you.

Striving to create perfection in an ever growing collection of beautiful properties.

sign David Westgate, Group Chief Executive
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