Costs Associated With Buying A Property
Anyone whose read my blog in the last few months will probably know my pending plans for me and Luke to buy a house. I plan on putting my current flat up for sale around March 2019 so we can get that sold next year then we might move back in with my parents for around 6 month’s to save a little more for some of the additional costs associated with buying a property, with the hope we’ll be in during 2020 which is really exciting.
Finances are of course the biggest part of buying a house and something I know is a big thing so I thought I’d do a post talking over all the costs associated with buying a property. Of course this list isn’t limited and there will probably be other things, if you can think of any let me know so I can add them to my ever growing list of what we need to save.
Deposit
Of course the deposit is the most important of the costs associated with buying a property and without it you won’t be able to proceed. This is the amount you put towards buying it and you’ll need at least 5% but generally nearer 10% off the property price. The bigger the deposit you put in the more likely you will be to get a mortgage and get a good rate so this is very important. I’m planning on using a good bulk of what I make from my flat to cover our deposit.
Stamp Duty
This is the other biggie which can get very pricey. This is a government tax which is paid on all houses costing £125,001 or more, although if you’re a first-time buyer you pay nothing on the first £300,000. I’ll have bought and sold a house and Luke will have never bought before so we’re not quite sure what we will be classed as so this is a question on my list to ask a mortgage adviser when we make an appointment.. You can use the Stamp Duty calculator to get an idea of how much you’ll be likely to pay.
Valuation fee
Some mortgage lenders may charge a valuation fee where they assess the value of the property to establish how much they are prepared to lend you which can range from £150- £1,500 depending on the value of the property.
Surveyor’s fee
Something you need to do before buying a property is to get it checked by a surveyor to see if there’s any problems before you buy it. This is so important as it could save you money on repairs in the long run and establish any issues which might help you push to offer less than asking. Costs associated with buying a property usually just feel like you’re throwing money away but this one can actually save you. A basic home condition survey can cost around £250 but a full structural survey is nearer £600, perhaps even more.
Legal fees
When you buy or sell a house you’ll normally need a solicitor to carry out the legal work and these fees can cost around £1000-£1500. There’s also an option to do a local search for around £250-£300 which checks whether there are local plans or problems.
Electronic transfer fee
This is the cost which covers transferring the mortgage money from the lender to the solicitor and is generally around £45. I don’t quite understand this fee when you’re paying so much but it’s something little to consider as all the costs associated with buying a property add up.
Mortgage fees
There are normally some fees associated with setting up a mortgage which can include:
- A booking fee £100-250
- An arrangement fee of up to £2,000
- Mortgage valuation fee £150+
You can add these costs to your mortgage but it’s best to pay them upfront if you can otherwise you’ll be paying interest on them.
Other costs associated with buying a property to think about:
- Insurance- Lenders will require you to take out buildings insurance and it’s a good idea to have contents cover for your possessions as well
- Life insurance – You never want to think about death but this would cover to pay off your mortgage if you pass away
- House removal costs – You can hire a van and do it yourself but either way there’s a cost involved
- Storage costs – If you need to store some of your items you might have costs involved with this. If we move back in with my parents it’s something we’ll 100% need as we have a lot of furniture and stuff we’ll be taking.
Another thing to think about in the future is equity release which could provide you with extra funds should you need it in the future. It is the difference between the market value of your property and any outstanding mortgage or other debt secured on it which can be released. Sunlife have a great article on ways that 5 people have spent their equity release.
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18 responses to “Costs Associated With Buying A Property”
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Rhian Westbury
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I’m in the middle of this. I would add
1) Things you want to fix or change when you move in. I’m installing a new heating system.
2) Things that you’ll need to replace because they don’t fit or aren’t right for the new place
3) fees for turning on utilities
Extra money for the things you didn’t notice
We have not bought our own home…yet! However it is something I hope we will be able to do in the next few years, so this comes in really handy – thank you!
As an aspiring homeowner I felt as though this was really helpful information! Great read.
Yes, thank you for this helpful guide! I am not a homeowner but my parents have a lot of properties so I know it’s crazy how much money goes into buying a home in addition to just the real estate cost!
soooo many costs involved with buying a property – was a huge learning curve for me (luckily my partner was familiar with it already!). when getting a valuation be sure to get them done free by a few estate agents, then make them aware that whoever you choose to go with for the sale will be the most competitive fees charge – we managed to get ours into a bit of a bidding war for us and got a set charge that was better than the 1% initially offered as the “lowest they could possibly go” 🙂
It’s surprising how many hidden costs are involved in forming out for your new home!
This is a really useful post. I remember when first plannnig to buy and being so shocked by all the extra coss so I’m sure this will be useful to lots of people.
This is such a helpful post for anyone who is going through the throes of buying a house. I think sometimes we dont realise how much it costs and all the things involved!
This is an excellent post and so very useful. My daughter is just going through this process of buying her first property so I can fully understand how hard it is .Goodluck with the sale of your flat.
We may think that these other costs are a pain in the behind, but honestly, I would bear with paying these costs, than to keep paying rent for a property I won’t own.
I must have been living under a rock as I had no idea about half of these costs! Thanks so much for putting this together!
This is good information to have for prospective home owners. We did not know half of these costs when we purchased our home. Nevertheless, all of that is in the past and it was a learning experience we are always willing to share with others too.
Buying a house is just so expensive!! I always remember being so shocked at how much removal companies cost!!
This is so helpful for people planning to buy property. Some of the rules may be different in our country, but these tips can work as a guideline tips
For those thinking about buying a property this is information is so essential. You think about buying a property is just about the property but there really are so many fees going on you need to know about.
We are planning to buy a property soon as an investment and I find your post helpful. Thank you!
This is a good resource. My husband and I are mulling the idea of buying our own property. Will show this to him 😀
Such a fab post, really wish I had this post a few years back when I was buying a house!