How Much It Really Costs To Buy A Property

Buying a property is a huge step for anyone. Be that buying into shared ownership like I did which was great to get on the ladder. Or buying your first house with a partner or friend. But the costs to buy a property can be what put people off. It isn’t the cheapest of processes, but when you’re investing into a property it’s to be expected.

I had a little bit of an idea what to expect from having done shared ownership before (although these costs were much lower- and I was a first-time buyer then!) But I did plenty of research so that nothing shocked me when thinking about the additional money we’d need on top of a deposit.

If you’re thinking about how much it costs to buy a property, here are some of the main expenses:

Costs when buying a property: Stamp duty

Stamp Duty Land Tax (SDLT) can be the biggest cost when buying a property if you’re not a first-time buyer. If you’re a first-time buyer and the cost of the house is under £300,000 then you’ll be fine. This has been the case since about November 2017 and can make a huge difference in helping people get onto the property ladder.

As I am not a first-time buyer we don’t get any tax relief when it comes to buying a house. Even though Luke is a first-time buyer! If you’re buying a property over £125,000 (or over £40,000 if it’s an additional property) then you’ll pay a percentage of the whole price as Stamp Duty. The percentage you pay depends on the value of the property. For example, if it’s between £125,001 and £250,00 it’s a 2% Stamp Duty, but if it’s above £250,001 (up until £925,000) then the fee jumps to 5%

To work out how much Stamp Duty you may have to pay then use this stamp duty calculator.

Mortgage fee’s when buying a property

You can choose to look around for your own mortgage, but this isn’t always the best way. Not only is it super time consuming, but you may not get the best deals. Some deals are only available to brokers or mortgage advisors. So it can save you money, in the long run, to pay for someone else to find you the best deal. Plus they know everything to look out for such as additional fees.

We paid the Connells (the estate agent we’re buying through) a one-off fee of £599 + VAT for a lifetime membership. This means every time our mortgage renews they’ll do the leg work in advance finding the best deals. This means we don’t have to worry every 2/3/5 years and spend time looking around. It covers us for life regardless of what property we’re in and whether it’s bought through them or not. Some mortgage brokers/ advisors may charge a one-off fee, but it’s worth looking into.

For us, it was well worth it as he had some super valuable advice which helped us save a lot of extra money on our mortgage and get a better rate. And it was something we’d have never thought about doing ourselves.

You may need to pay mortgage finder fees

It generally costs to get a mortgage and this can be anything up to £2,000. But don’t get scared by this figure, it can work out cheaper to get one with a mortgage finder fee as the interest rate or deal you’re getting saves you more. We’ve chosen a mortgage with TSB and the finders fee was £1,495 which we bundled into the cost of our mortgage so we didn’t have to pay it upfront. Despite the additional money it still worked out the best deal around.

Costs when buying a property that you need to have: Buildings insurance

A mortgage provider will only provide you with a mortgage if you have buildings insurance. If they’re investing in your property they want to have peace of mind that it’s safe. While this isn’t big money it’s another of the costs to buy a property that you’ll want to remember. Connells helped us find a good deal for us, and we did also get contents insurance with it. The combined cost for this was just £36 a month which we were more than happy to pay.

We don’t pay this cost until completion when we get the keys to the property. This means its set up and will start at a later date. It’s just one less thing to think about.

A worthwhile expense when buying is a survey

Sometimes you’ll get a free basic survey or a valuation fee when you choose your mortgage provider. But it’s worth upgrading to a mid or full survey. This will help give you a proper report on the condition of the house you’re buying. From the mortgage lenders point of view, they want to ensure it’s worth the money you’re paying for it as they’re also investing.

And from your perspective, it will help establish if the house is going to need any major works to it. This may help you push the price you’re paying for the house down. Or at least you’ll know the things you’ll need to spend out on when you move. We paid an extra £480 to get a full survey for our property.

The final costs to buy a property: Solicitor fees

You’ll need to have a solicitor when you’re buying a property (or selling) as they handle all of the legal documents. The fee varies from solicitor to solicitor but should be around £1,000-£2,000. This covers the general legal work and dealing with the property purchase and paperwork. It also includes local searches to check if there are any plans or problems in the local area where you are buying.

This can also include the land registry. The Land Registry’s job is to register properties under the owner’s name so if you’re buying it from someone they charge to transfer their entry into your name. You’re likely to need to pay your solicitor a few smaller amounts during the process as they pay for things like the searches etc.

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