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The cost of buying a house

Aug 16, 2021
Buying a House
When looking to buy a new home, most people know about saving for a deposit – but there are lots of other outgoings you need to think about too. These range from the solicitor’s fees for buying a house to the cost of a securing a mortgage, and can take first-time buyers (and even existing homeowners) by surprise.

To make sure you don’t get caught out, we’ve pulled together a quick guide to all the usual fees when buying a house in the UK.

How much do I need for a deposit?

One of the biggest costs of buying a house is your deposit. Of course, the amount you need will depend on the home you’re buying, but lenders generally look for at least 5% of the value of the property. However, the bigger your deposit, the better mortgage deals you’ll be able to access. You’ll pay a portion of it when you exchange contracts and then the remainder when you complete the sale.

How much will getting a mortgage cost?

As well as the legal costs of buying a house, there are fees involved in securing a mortgage. Below are the main ones:

  • Arrangement fee: Some lenders charge you to set up your mortgage and it’s usually their largest fee, with costs varying between £1,000 and £2,000. Some lenders let you add this to your mortgage loan but this might mean you end up paying more in the long run as you’ll be charged interest on it.
  • Application fee: This is sometimes known as a booking fee and is the charge you’ll pay to secure your mortgage. It’s best to budget between £100 and £200 for this.
  • Property valuation fee:Your lender will want to make sure the property is worth what you’re paying and what they’re lending for it, so they’ll charge you to conduct a basic valuation survey which can cost around £300 – though some lenders now do this for free.
  • Broker fee:Lots of people use a mortgage broker to help them find the best deal. Brokers usually make their money by taking commission from the lenders but others may charge you a fee (up to around £500) for using their service – it’s always worth checking before you start talking to them.

For more help, check out our 10 tips to help you get mortgage-ready.

What is a 'reservation fee'?

If you’re buying a new-build home, most developers will ask you to pay a reservation fee of around £500-£2,000 to take that property or plot off the market. 

When the sale goes through, this money will then be deducted from your purchase price. If for some reason you have to pull out, you may not get the full fee back as the developer may use it to cover their administration costs.

 

How much are solicitor’s fees for buying a house?

You’ll need a solicitor or conveyancer to carry out all the legal work that’s involved with your purchase. The legal fees for buying a house can differ between solicitors so it’s worth getting a few quotes. They’ll deal with the process of transferring ownership, checking all the paperwork is in order and ensuring all the contracts are correct – but there will be other conveyancing costs for you to pay on top of this, including:

  • Searches fee: This is a cost for submitting searches to the local council to check if there are any planning or environmental issues that might affect the property’s value.
  • Land Registry fee: This is the fee for registering the property in your name with the relevant Government department. The cost depends on the value of the property, but for a home worth £275,000 budget about £300 for this. 
  • Money transfer fee:This covers the cost of transferring money from your mortgage provider to your seller/developer via your solicitor.

 

 

How much does a conveyancing survey cost?

To protect yourself from buying a property with any issues or structural defects, it’s a good idea to have a conveyancing survey done. This is far more in-depth than the one your mortgage lender gets and can save you money in the long run.

 

There are different types of survey to choose from, including a full structural survey for older homes and non-standard properties (such as those not built with brick walls or having tiled or slate roofs), or a HomeBuyer report for more conventional properties. It’s best to budget around £500-£750 for your survey, but they can be more depending on how thorough you want your surveyor to be.  

If you’re buying a new property, you generally don’t need a survey as your house should be covered by a warranty. With one of our homes, you’ll be covered by an NHBC Buildmark Warranty which gives you a 10 year structural warranty and two years on fixtures and fittings, so you can move with peace of mind.

How much will Stamp Duty cost?

One of the hidden costs of buying a house is the Stamp Duty you’ll need to pay on it. This is a tax to the Government and the amount depends on the cost of your home. You’ll send the money to your solicitor who’ll then pass it on to HM Revenue & Customs within 30 days of your completion date.

In Scotland, you’ll pay a similar tax called the Land and Buildings Transaction Tax, and in Wales it’ll be the Land Transaction Tax.

 

 

Stamp Duty in England:

Purchase Price Stamp Duty rates*
£0-£250,000 0%
£250,001 – £925,000 5%
£925,001 – £1.5 million 10%
Over £1.5 million 12%

The percentage shown is paid on the part of the property price within each price band, so if your house is worth £450,000, you’ll pay 0% on the first £250,000 and then 5% on the other £200,000. If you’re unsure, you can use the Government’s Stamp Duty calculator.

Land and Buildings Transaction Tax in Scotland

Purchase Price LBTT rate
£0-£145,000 0%
£145,001 – £250,000 2%
£250,001 – £325,000 5%
£325,001 – £750,000 10%
Over £750,000 12%

Land Transaction Tax in Wales

Purchase Price LTTrate
£0-£180,000 0%
£180,001 – £250,000 3.5%
£250,001 – £400,000 5%
£400,001 – £750,000 7.5%
£750,001 – £1,500,000 10%
Over £1,500,000 12%

What insurance do I need when moving house?

Your mortgage lender will ask you to have buildings insurance in place from the exchange date so you’re protected against any structural damage that may occur after then. If you’re buying a leasehold property, your leaseholder usually covers this but it’s always best to double check.

It’s also a good idea to take out contents insurance once you move in, so all your possessions are insured from day one.

 

How much will I need for removal, furnishing and decorating costs?

  • Removal costs
    The cost for your move depends on the amount of furniture and belongings you have and how far you are moving. If you’re hiring professionals, moving on a weekday can be cheaper. And, if you can hire a van and do it yourself, it’ll be even less. 
  • Furniture and white goods
    When buying a house, you’ll be told what white goods and furniture are included, if any. New builds often come with some fixtures and fittings included, which will be brand new so you won’t need to replace any of them. 

For more information about the costs of moving home read our guide.


What are the ongoing costs of owning a property?

Buying a home is a huge commitment and, after you’ve paid all the costs of buying and selling a house, there are lots of regular outgoing costs you’ll need to budget for including:

  • Mortgage repayments
  • Council tax, water, gas and electricity bills
  • TV, cable, broadband and phone bills
  • Maintenance costs
  • Ground rent and service charges (if you’re in a flat)

You can find out more about these in more detail in our costs of buying a home guide. And don’t forget that, whether you’re a first-time or existing buyer, we have a wide range of offers to help you make your next move.

See Our Low Deposit Schemes >

See Our Help to Sell Schemes >

 

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