The cost of buying a new home


If you’re planning to buy a new home, your deposit is not the only thing you need to save for. With many different costs involved, the total bill often takes first-time buyers by surprise. Even existing homeowners can miscalculate.

To make sure you don’t get caught out, here’s a quick guide to the various costs and fees you need to include in your overall budget.

Your deposit

There is no set amount of savings you need as a deposit for a mortgage, but lenders generally look for at least 5% of the value of the property you want to buy.

Keep in mind that the bigger the deposit you have, the cheaper the mortgage deals you will be able to get. You usually have to pay a portion of your deposit when you exchange contracts and the remainder when you complete the sale.

Mortgage costs

Mortgage costs vary from lender to lender, but these are the three main ones to consider:

  • Arrangement fee: If an arrangement fee applies, it is usually the largest mortgage fee you’ll have to pay. You can sometimes add this fee to the mortgage loan but this can be expensive as you’ll end up paying interest on it for the full term.
  • Application fee: To secure a fixed-rate, tracker or discount deal, some lenders will charge you an application fee (also known as a booking fee or a reservation fee).
  • Property valuation fee: To make sure the lender agrees that the property is worth what you’re paying for it, they will charge you for conducting a property valuation survey.
  • Broker fee: If you take advice from a mortgage broker, they will search the market to help you find the best deal for your circumstance. Brokers make their money by taking commission from the lender for recommending their loans, while some charge you another additional fee on top for this service.


To find out how mortgages work, read our beginner’s guide to mortgages. To learn how to get the right deal for you, read how to find the best mortgage rates.

Reservation fee

If you’re buying a new-build home, most developers will ask you to pay a pre-contract reservation fee to secure your plot while your sale progresses.

If the sale goes through, this amount will be deducted from your purchase cost. If for some reason you have to pull out, you may not get the full fee back as some of it may be used to cover the developer’s administration costs.

Conveyancing costs

You need a solicitor or conveyancer to carry out all the legal work involved with buying a new home. As well as paying legal fees to them for dealing with the transfer of ownership and checking the paperwork is in order, you will also pay them the following:

  • 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.
  • Money transfer fee: This covers the cost of transferring money from your mortgage provider to your seller/developer via your solicitor.

Find out more about conveyancing costs.

Survey costs

The mortgage lender’s valuation survey only looks at how much a property is worth. To protect yourself from buying a home with issues or structural defects, it’s a good idea to get your own survey done too.

The different types of house survey include a full structural survey for older and non-standard* properties, or a HomeBuyers Report for more conventional homes. While these are not relevant for new-build homes, which are covered by the NHBC Warranty and builder’s guarantee, some buyers choose to instruct a snagging survey.

*A non-standard property is a property designed from materials that don’t conform to the standard definition outlined by the insurance industry. For instance, a property not build with brick walls, tiled or slate roof will be considered to be non-standard.

Stamp duty costs

Stamp duty is the name of the tax you pay to the Government when you buy a property worth more than £125,000.

  • You pay 2% on properties worth between £125,001 and £250,000,
  • you pay 5% on the value of any property above £250,000,
  • you pay 10% on the value of any property above £925,000.

Since April 2016, anyone buying a property in addition to their main home must pay an extra 3% on their purchase.

 The full tariff bands are outlined below:

Purchase Price Stamp Duty rates*
£0-£125,000 Zero
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5 million 10%
Over £1.5 million 12%

To work out how much you’ll owe, use the Government’s stamp duty calculator.

*paid on the part of the property price within each tax band.

The full tariff bands are outlined below for 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%

When you buy a property in Scotland there Is no stamp duty. Instead, if you buy a property worth more than £145,000 you must pay Land and Buildings Transaction Tax (LBTT).

Home and contents insurance

Your mortgage lender will ask you to have buildings’ insurance in place from the date you exchange contracts for protecting your new home against structural damage – unless you’re buying a leasehold property, in which case your lease holder usually covers this.

It’s a good idea to take out contents insurance once you move in, so all your possessions will be insured.

Removal, furnishing and decorating costs

Moving costs depend on how much stuff you’re moving, and how far you’re moving it. If you can move on a weekday, it tends to cost less – and if you can hire a van and do it yourself, it’s even cheaper.

Remember to factor in any furniture or white goods that you’ll need for your new home. And unless you’re moving into a new-build, you’ll probably need to allow for some redecorating costs.

Ongoing costs of owning a property

It’s not just the upfront costs you need to budget for. When doing your sums, make sure you’re accounting for these regular ongoing costs:

  • Mortgage repayments
  • Council tax, water, gas and electricity bills
  • TV, cable, broadband and phone bills
  • If you’re buying a flat: ground rent, service charges and residents’ parking
  • If you’re buying an older property: maintenance, repairs and building work

Buying a home is a huge commitment and budgeting is essential. Find out more in our costs of buying a home guide, from saving for a deposit right through to ongoing costs once you’ve moved in.