When purchasing your first property there are a number of additional fees and home buying costs on top of your deposit that you need to consider. Here we’ve detailed what these are to help you get a clearer idea of your total expenses.
The deposit you put forward when buying your first home is likely to be the biggest cost you incur, but there are a number of other fees, charges and even taxes you’ll have to pay before and after you move in.
We’ve listed these out below to help with your budgeting, when you’re getting your foot on the property ladder.
*At the moment if you’re buying a property that costs £500,000 or less you won’t have to pay any Stamp Duty. This rule is set to change again on the 31st of March 2021. In the meantime we’ve addressed some of the key questions about Stamp Duty and we will update this as and when the UK Government releases the new guidance.
You can use our Mortgage Calculator to work out how much you can afford and to see how much the monthly payments would be for your dream home.
What is Stamp Duty?
UK Stamp Duty – or Stamp Duty Land Tax (SDLT) – is a tax you have to pay if you buy a house or a piece of land over a certain value in England.
How much is Stamp Duty?
There are different rates for Stamp Duty and as mentioned above, this doesn’t apply until March 31st 2021 if you’re buying a property up to the value of £500,000.
The current rates according to Gov.uk are:
- Up to £500,000 – zero
- The next £425,000 (the portion from £500,001 to £925,000) – 5%
- The next £575,000 (the portion from £925,001 to £1.5 million) – 10%
- The remaining amount (the portion above £1.5 million) – 12%
You can of course calculate your Stamp Duty using one of the many online tools available, such as this from the Money Advice Service.
When do you pay Stamp Duty?
You must pay your Stamp Duty within 14 days of completion. Typically though you’ll sort this beforehand with a solicitor and they may add this payment onto their fees.
When sourcing a mortgage from a lender, you may have to pay additional fees. These can include:
- Arrangement fees – which are lender’s costs for setting up the mortgage and can range from being free up to several thousands of pounds.
- Booking fees – some lenders will charge a fee to meet with them and apply for a mortgage. These are typically around £100.
- Administration costs – some lenders will also charge you extra for the time it takes them to put everything in place for your mortgage once it’s been approved.
When buying a property you may wish to get a surveyor to look at it to uncover any problems you may want or need to get resolved before the sale goes through. The cost of these can vary depending on the level of detail you want in the report, but typically can cost between £250 and £1,000.
You will most likely appoint a solicitor during the buying process to cover all of the legal work and do things like carry out searches. These costs again can range depending on who you appoint, but these are often between £500 to £1,500, while searches can be upwards of a few hundreds of pounds.
Money Transfer Fees
When transferring large amounts of money from different accounts you may also incur money transfer fees from the banks or lenders involved.
Your mortgage provider will likely require you to take out buildings insurance which will cover your property against damage from things like subsidence, structural issues, fire and flooding.
Other examples of insurance you can get are contents insurance and life insurance. The former will cover all your possessions, while the latter is often in place to cover your mortgage if you were to become unwell before completing repayments.
Like with any insurance the cost of these is subject to a range of criteria including your personal health and circumstances and the area in which your property is situated.
If you plan on furnishing your new home with any of your existing furniture and white goods, then you’ll need to think about paying for removals to help you. The cost of this is dependent on the amount you have and the distance it needs to be transported.
Alongside Stamp Duty, another tax to factor in is your Council Tax. You should be able to find out what Band the property sits in and how much the on-going payments will be by checking with your local council.
Other on-going living costs
A couple of other on-going expenses to also think about are your living costs. As well as your utility bills and your expenses on things like food and leisure, there’s also the upkeep and maintenance all homes need.
If you can, try and have a few hundred pounds aside a month for this, or at least include it when totalling up your potential home buying costs.
Find out more
All of these expenses might be a bit much to take in, especially if you’ve not done this before. So it’s important you do your research and get financial advice if you need it before you start looking for your new home.
However, if you’re buying new from one of our quality new build developments, you can get added peace of mind as our knowledgeable sales teams will be available to talk you through these costs, so there are no unexpected surprises.
Equally, if you have any questions in the meantime you can get in touch with us and we’ll be happy to assist you with your queries.
Take a look at the previous guide in our series asking the question, am I ready to buy my first home?