With the increasing cost of living, it’s arguably never been more important to carefully plan your finances when moving home.
But making these important financial decisions can be challenging at the best of times and knowing where to start can feel like a daunting prospect.
In this guide, we’ll run through all the costs you’ll need to consider when moving in the current climate and offer some great tips on how to budget effectively for your move.
The costs you may have when moving home
The average cost of moving in the UK in 2023 is just under £10,000.
And with many of those costs coming up front before you even receive the keys to your new property, it’s important to budget well.
The costs you’re likely to face when moving include:
Upfront costs
1. Stamp duty
Stamp duty is payable on properties costing more than £250,000 unless you’re a first-time buyer in which case you’ll qualify for stamp duty relief on the first £425,000 of a property’s purchase price.
Although stamp duty is technically payable after you complete your purchase, because it’s one of the biggest costs you’ll face when moving, you should factor it into your up-front budget alongside your deposit.
2. Deposit
Your deposit is likely to be the biggest up-front cost you face when moving.
The deposit you pay will need to be at least 5% of your property’s purchase price – and the bigger your deposit, the more favourable your mortgage interest rate is likely to be.
Your deposit will have two functions when you purchase a new home:
- As a security deposit on the day you exchange contracts
- As your mortgage deposit, which is the portion of your home you’re buying outright
If your mortgage deposit is solely coming from the sale of your existing home, this money won’t be freed up until you complete that sale.
Because you’ll need a security deposit, usually 10% of the purchase price, on the day you exchange contracts, you’ll either need to find the cash for this or your solicitor may be able to use your buyer’s deposit paid to you as security for your purchase.
If you’re a first-time buyer, 10% or more of your deposit will be used as security at exchange of contracts with any further deposit money transferring over at the point of completion.
3. Valuation fee
When you buy a property with a mortgage, your lender will carry out their own valuation to make sure it’s worth what you’re paying for it.
Valuation fees can vary between £150 and £1,500, with some lenders offering free valuations.
However, if you do have a fee to pay, you’ll have to pay it up-front.
4. Other mortgage fees
Your lender may also charge you a booking fee and / or arrangement fee when you apply for a mortgage.
Often, arrangement fees can be added to your mortgage loan but to avoid paying interest on the amount, it’s usually best to pay this fee up front.
Arrangement fees can be anything up to £2,000, with the most expensive fees usually coming with the best mortgage rates.
5. Survey fees
While a survey isn’t a legal requirement, it can help you assess any problems with your new home before you commit to buying it.
Survey fees range from £200 to more than £700 depending on the size of the property you’re buying and the survey you choose.
6. Solicitor or conveyancing fees
When you engage a solicitor or conveyancer to do the legal work on your purchase, they’ll usually ask you for a part payment up front.
This covers what are known as disbursements – costs throughout the conveyancing process, such as searches and anti-money-laundering checks.
Your remaining legal fees, for the work your solicitor has done, will be collected by them after you’ve completed your purchase.
7. Buildings insurance
If you’re buying with a mortgage, your lender will require you to have a buildings insurance policy in place on your new home – often at the point you exchange contracts.
Your policy cost will depend on the cover you require, the type of property you’re buying and where it’s located.
8. Removals costs
Some removals companies may accept payment after you’ve moved or even on the day itself, but others may insist on payment up front.
How much you need to pay for removals will depend on the distance you’re moving, the number of belongings you have and any access difficulties at either your current home or your new one.
Costs payable after you’ve moved
1. Estate agent fees
If you’ve sold your existing property in order to move into a new home, you’ll need to pay your estate agent’s commission once your sale is complete.
Your solicitor will normally deal with this when they distribute any sale proceeds, but you can also pay these fees yourself from other sources if you wish.
2. Ongoing running costs
Once you’re settled into your new home, you’ll need to cover the costs of running it on a monthly basis.
This includes:
- Gas and / or electricity
- Water and sewerage
- Other utilities such as broadband, TV packages and phone
3. Leasehold costs
If you’ve bought a leasehold property such as a flat or apartment, you may have to pay a ground rent to the freeholder, alongside a service or maintenance charge.
Your maintenance contribution covers the freeholder’s costs for maintaining the common areas of the property, including any outdoor spaces.
4. Mail redirection
Signing up for mail redirection can help ensure all post sent to your old home reaches your new home while you inform everyone of your new address.
How to budget your move effectively
1. Secure the right mortgage
With interest rates having risen to their highest level for more than a decade at 4.5% in April of 2023, securing the right mortgage has never been more important when budgeting to move.
The best way to secure the right mortgage for your financial circumstances is to speak with an independent broker, who will be able to advise you.
Brokers generally have access to more of the market, too, meaning you may be able to secure a better deal than directly with a lender.
2. Avoid big changes to your income and credit where you can
You should avoid major changes to your income in the six-to-nine months before your mortgage application if you can.
If you do need to change jobs during this time, you may need to reassess your finances before making an application.
You should also avoid applying for too much credit during this time, too, as this could affect your credit rating when your lender assesses you.
Remember to check your credit file and make sure everything is correct and close down any store or credit cards you no longer use.
3. Make sure you’ve saved enough to cover your upfront costs
It sounds obvious, but making sure you’ve saved to cover all the major up-front costs you’ll face really is key.
Ensure you set yourself a maximum purchase price for your new home and that you have the deposit amount you wish to put forward, alongside any stamp duty you may owe.
Then factor in projected costs for things like conveyancing, removals, mortgage lender fees, and estate agent fees if you’re selling.
Finally, it can be a good idea to have a small contingency fund if possible, to protect yourself against any unforeseen costs during the buying process.
4. Factor in insurance
Buildings insurance will almost certainly be a stipulation from your lender and you may need to have it in place when you exchange contracts with your seller.
If you decide to pay your policy up front, make sure doing so won’t leave you short in other areas.
5. Understand your new property’s energy efficiency
Energy bills are now among the biggest ongoing costs you’ll face when buying a new home.
So, it’s never been more important to fully understand a property’s energy efficiency before you buy it.
Every property that goes on the market must have a valid Energy Performance Certificate (EPC) and this must be available for buyers to study as soon as a property is listed.
Spend some time looking at a property’s EPC, which will tell you:
- How energy efficient the property is
- What the projected annual running costs for the property will be
- Some of the work you could do to make the property cheaper to run
6. Be prepared to switch suppliers
As soon as you move into your new home, it’s likely the previous owner’s supplier will place you on a ‘deemed contract’, which is usually their standard energy tariff.
This could be more expensive.
So, when you submit your first meter reading, speak to the supplier, and ask them about the best deal they can give you.
This means you’ll then be able to decide whether to remain with them or switch to a new supplier – which could save you considerable money.
7. Cut back on spending while you settle in to your new budget
It’s likely your new home will either cost you more or less to run than your previous property did.
So, give yourself a few months to get used to your new ongoing household costs, such as energy bills and cut back on more general spending while you do.
This will give you time to assess how much disposable income you have in your budget once your regular monthly costs are covered.
8. Sell the things you no longer need
Moving home is always a great time to look at the things you have and declutter where you can.
And if you’re able to, selling items you no longer need can be a great way to bolster your moving budget.
Car boot sales, selling to second hand shops or listing items online can be a great way to get things sold.
And as well as the money you’ll make from sales, you may save more in removal costs, too.
