There are a number of
upfront costs associated with buying a property. These all need to be factored in when you're calculating how much money you are likely to need for the property. If you're buying your first property, there are 2 great schemes to support you (see the
Saving and Buying Support Section).
The upfront costs. Here are the details of what the costs are:
- The deposit. This will be your most expensive upfront cost - a percentage of the value of the property that you pay, that isn't covered by the mortgage. The higher the deposit you have, the better a deal you will get on interest rates.
- Stamp Duty Land Tax (SDLT) or Land and Buildings Transaction Task (LBTT) (value dependant). In England and Northern Ireland SDLT is paid on properties above £250,000 (£425,000 for first-time buyers). In Wales SDLT is paid on properties above £180,000 and in Scotland LBTT is paid on properties above £145,000 (£175,000 for first time buyers). There is a stamp duty calculator linked below to calculate how much you have to pay.
- Conveyancing fees. Conveyancing is the legal process used in buying a house. The costs cover the legal fees for the solicitor or conveyancer doing the work and disbursements (local search and change of ownership with the Land Registry). Fees depend on the value of the property and average from £500 to £1150. There is a comparison tool linked below to find a conveyancer / solicitor.
- Survey costs (optional). A survey assess the condition of the property before you buy it. Costs can range from £300 to over £1000, depending on the type of survey you choose. You do not have to do this, but it does provide piece of mind on the condition of the house. In Scotland, the seller must have a Home Report carried out on the property which with provide details of any problems with the property, but you could still choose to get your own report / survey done.
- Mortgage fees. There are potentially 3 types of fees associated with the mortgage:
- Mortgage valuation fees. Your mortgage provider will conduct a mortgage valuation survey to make sure the property is worth at least what they are basing the lending on. Some lenders don't charge a fee for this, but if they do, charges tend to be from £200 to £300.
- Mortgage arrangement fees. Arrangement fees on the mortgage vary based on the deal. A lower arrangement fee tends to have a higher interest rate. Some providers will allow you to add this to the mortgage (so you'll pay interest on it) or some will want you to pay upfront. This will be covered further in the Mortgage Application Section.
- Mortgage broker fees (optional). Some mortgage brokers charge you a fee. There are plenty of fee-free brokers, and you can get fee-free advice from Forces Mutual. This cost is an easy one to avoid.
- Life insurance (optional). You may wish to set-up a life insurance policy (if you don't already have one) to ensure your mortgage is covered in the event of your passing.
- Removal costs. If you're moving from the block or mess, this should be relatively cheap, but if you're moving from a quarter to your own property, it will be more costly. The distance you move, the amount of things you're moving and wether you choose to hire a company or self-drive will influence the costs.
- Furniture and white goods. White goods (fridge, freezer, washing machine) can often be included in a sale - it'll be made clear by the seller. It's worth doing calculations based on what you'll need to buy to furnish the house to better understand your savings target.
- Redecorating (optional). Not always necessary, but something to consider in the costs.
