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Buying a new home is exciting, it is a new chapter in your life which will bring new adventures and memories. Before that can happen, though, there is the mundane practicality of affordability to consider. Buying a new home is not cheap and there are lots of hidden costs that need to be considered. In this guide we will take a look at the things that will need to be paid for when purchasing a property.
The Deposit
At its absolute minimum this will be 5% of the purchase price but, depending on the mortgage product can be higher. It is not unusual to see 10%, 15%, 20% or even 25% deposits needed.
Stamp Duty Land Tax (SDLT)
Often shortened to stamp duty, this is a tax paid to the government when buying a property. This is done on a graded scale depending on the price of the property. The Government Website gives details of the SDLT rates. These rates changed on the 23rd of September 2022 after the Government’s recent mini-budget. SDLT can run into the thousands of pounds though so be sure to understand exactly how much will need to be paid.
Conveyancing
This is the legal work needed to purchase the house. There will be the basic fees that your conveyancer will charge you for their time and then also what are called disbursements, which are fees that your conveyancer will need to pay to 3rd parties for things like searches, land registration fees and money transfer fees. The disbursements need to be paid upfront to your conveyancer and their fees are paid at the end of the process when the sale completes. Disbursements can cost around £500 on top of your conveyancer’s fees.
Property Survey
As this is the biggest investment you are ever likely to buy, it makes sense to have a property survey carried out to check for any defects in the property. Depending on the level of the survey and the size of the property this can, on average be anything from £320 to £800.
Mortgage fees
As part of the mortgage application process the mortgage company will require a mortgage valuation survey which you will have to pay for upfront. The amount that this will cost depends on the mortgage lender but can run from around £100 to over £1,000 for the most expensive properties. Added to this cost is also the mortgage product fee. Some mortgages offer lower interest rates, which reduces the monthly payments, but have an arrangement fee associated with the mortgage. Typically, this is around £999.the good thing is that this can be added to the mortgage itself. Overall, you will pay more than the £999 over the life of the mortgage, but you won’t have to pay it upfront.
Insurance
Before you move in you will need buildings insurance and you might also want to consider life insurance/critical illness insurance too. Insurances cover you in the event that you or anyone you are buying the property with dies or becomes seriously ill so that they can’t work.
Moving fees
Even if you move yourself, there is the van hire to think of. If you are getting a removal firm in, you will need to factor in those costs too. These costs can run from around £500 to several £1000’s depending on how much needs to be moved and how far the move is. Don’t forget all the packaging, bubble wrap and tape.
Ancillaries
You will want to set up a mail re-direct to ensure that any mail that is still sent to your old property gets to you. This can cost from £34 to nearly £70 depending on the length of the re-direct. There is a big unknown that you’ll need to try and consider and that is what extra items you will need for your new home. Do you need new lights? Curtains or blinds? Extra furniture? It is very unlikely that you will move into the perfect home with everything that you need, make sure you keep some money aside, to be able to purchase these items.
Buying a new home is a really exciting time, but there are many costs that a lot of people do not consider. We hope that our guide has given you some indication of the sort of things that you will need to pay for. Having all your finances in place will make your move a lot less stressful and allow you to enjoy your new home much sooner.
