Buying a house for the first time or even moving to a different home is an extremely exciting process.
Getting your foot on the property ladder or progressing up is a significant life event and one that many look forward to. However, it comes at a cost and quite a substantial one at that. Years or even decades of saving are often needed to gather enough to put down a deposit and be accepted for a mortgage, but that’s not the last of the expenses. There are a number of associated costs that must be factored in when buying a new home from a developer or an existing home off the market. Let’s walk through these for your benefit.
The biggest upfront cost for any property purchase, unless you’re paying cash in full, is the deposit. This is the amount of money you initially put towards buying your new home, with the rest of the property’s value hopefully being lent through a mortgage. Several help-to-buy schemes allow first-time buyers to put down a smaller deposit – making getting on the property ladder more affordable. If you’re already a homeowner, you may be able to transfer your existing mortgage to a new property or you’ll have to start a new arrangement.
If you’re a first-time buyer, luckily, you don’t have to worry about stamp duty. This is a property tax that is paid by the buyer whenever they purchase a property over a certain value. This fee can’t be loaned by your mortgage provider, so you’ll have to fund this another way. You pay a higher percentage of your new home’s value depending on the price you are buying it for.
The valuation fee is another cost associated with the mortgage process. This is charged by mortgage lenders when they are valuing the property you are looking to buy, giving them an indication of how much they can feasibly lend you.
It is common to hire a surveyor when you are buying a property to ensure that the house is in good condition and to highlight any problems before you complete the purchase. This can be a relatively small cost compared to your deposit or stamp duty, but it’s certainly worth it for peace of mind.
Solicitor and Legal Fees
Solicitors are an essential part of the house buying process and you wouldn’t be able to finalise a purchase without one in most cases. These professionals oversee and complete the majority of the legal paperwork and processes that are needed to transfer house ownership and mortgage arrangements. You may have to cover other legal and transaction fees that are needed to accommodate your mortgage transfer.
Last but not least, many people forget to account for the cost of moving home once the purchase goes through. If you’re moving to a family home, this could be a significant cost. House movers can charge anywhere from a few hundred pounds to thousands depending on the specifics. You may choose to do it all yourself, but this is a lot of hard work for potentially only minor savings.