You've saved up your deposit and you've finally found a house that you think you can afford. Before heading to the bank to see about a mortgage, it's worth bearing in mind the hidden costs that go with buying a property. You'll need to make sure you have enough money available to cover these expenses, as well as the deposit and your monthly repayments.
Admin fees
Some companies charge a mortgage arrangement fee, which can be as high as 1% of your property's value. Although most lenders have stopped, a few do still charge mortgage indemnity fees if you have a high loan-to-value ratio – for example, if you're only putting down a 10% deposit. This fee covers the cost of their insurance in case you default on the loan in the future. Some mortgage brokers also charge a fee, ranging from a few hundred pounds to 1% of the loan.
Homebuyer's survey
Getting a professional survey of the property you're buying is highly recommended before you sign on the dotted line. These range in price from £250 for a basic RICS Condition Report to well over £600 for a full structural survey.
Valuation
A valuation is similar to a survey, but a lot more basic. This is provided by your mortgage lender to ensure that the price of the property isn't grossly inflated, as it's their investment too. Some lenders will provide this for free, but sometimes there's a small fee associated with it (usually under £150).
Conveyancing
This is the legal part of a house sale, transferring the property from the previous owner to you, and should be done by a qualified solicitor. Costs do vary based on your property value, but tend to range from £800 to £1500.
Stamp Duty Land Tax (SDLT)
You'll need to pay stamp duty (tax on purchasing a property) if the house costs £500,000 or more. The rate is 5% for homes between £500,001 and £925,000. This rises to 10% for homes valued between £925,001 and £1.5 million. And finally for houses priced over £1.5 million, the stamp duty is 12%. It's calculated in a similar way to income tax, so you won't pay anything on the first £500,000 of your property but will pay 5% on the value above that. So if the house you're buying costs £650,000, you'll pay 5% tax on £150,000, which works out at £7,500.
Insurance
It's recommended that you take out a life insurance policy with your mortgage, so that your partner or family can deal with your mortgage debt should you pass away. Many mortgage lenders offer it alongside the loan, but it's better to take it out from a dedicated insurance provider. A home insurance policy is another necessity, and one you might not have thought about if you've been renting up until now.
Repairs, cleaning and decorating
Once you move in, you'll need to spend a bit of money getting the property how you want it. Changing the locks is always wise, while getting carpets and ovens professionally cleaned helps you to make a fresh start. You'll also want to budget for painting and decorating supplies to get your new home just how you like it.
Fixtures and fittings
If you've moved from a rented property or your parent's home, you probably won't have your own white goods or furniture. You can negotiate with the sellers to keep some of their items but, before doing so, look online to make sure they're not asking over the odds. Otherwise, keep some money aside to buy your own. You can sometimes find second-hand pieces on Gumtree and eBay.
The cost of moving house
If you hire a removal firm you can expect to pay roughly £50-60 per hour if you're moving locally. You could do it yourself for the cost of van hire, or do it in your car for the cost of petrol. Enrolling your friends to help you move could cost as little as a couple of pizzas.
Post redirection
Although you've probably been in touch with your bank, employer and magazine subscription companies, accidents do happen. Setting up a mail redirection service with Royal Mail starts at £33.99 for three months or £68.99 for one year.
