The process of buying your own home can be challenging at the best of times. With packing, logistics and having to notify people of your change of address, it’s easy to overlook how much things are going to cost you.
Luckily in this article you’ll find a breakdown of the type of costs you can expect to incur. We’ll look at each cost in detail and finally, give you an estimated idea of the overall budget you should aim for.
The deposit for your new home is likely to be the first cost you incur and makes up a percentage of your overall property purchase price. An average deposit is usually between 5% and 20% of the purchase price, however if you put down a larger deposit, you’re much more likely to be given a mortgage, as well as a lower interest rate.
Stamp Duty Land Tax applies to properties that cost over £125,000. This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.
There are a variety of rates depending on the price of your property, beginning at 2% for properties in the £125,001 and £250,000 price bracket. Therefore a property at £175,000 will cost £1000 in stamp duty.
Not all mortgage lenders charge a fee for valuing a property for you. In most cases however, the charge can be anything from £150 to £1,500. This all depends on whom you choose your mortgage with and what type of mortgage you opt for.
It’s worth bearing in mind that your lender’s valuation shouldn’t be considered as an extensive survey. The valuation is purely to determine the overall value of the property for the purpose of your mortgage and may not take into account repairs and structural damage.
This leads us on to paying for a detailed survey to be carried out on the property. Having a surveyor do this is crucial to gain a good understanding on any issues the property may have, before you purchase.
A basic home condition survey will cost around £250. To get the very best survey, including any structural damage to the building, the price can be closer to the £600 mark and over. It’s important to get a survey carried out, as it will save you money on repairs further on into the future.
It’s difficult to get away with buying a home, without employing a solicitor or licensed conveyancer to carry out all the legal paperwork. They will also do local searches to see whether there are any local plans or issues that might affect your property, which will cost you £250-£300. On top of this the legal fees are typically £500-£1,500 including VAT at 20%.
Electronic Transfer Fee
While this is a relatively small fee in comparison to some of the others, you’ll need to budget in at least £40 to £50 in electronic transfer fees. This will cover the cost of your lender transferring the money for your mortgage over to your solicitor.
Estate Agency Fee
How much you’ll have to pay your Estate Agent can be difficult to pin. Prices vary widely across the many different agencies on the market, however if you’re only buying a home and not selling one in order to move, you shouldn’t have to pay them anything.
If on the other hand if you’re selling in order to buy, your Estate Agent will normally charge anywhere from 1 to 3% of the overall sale price, plus 20% VAT. In situations like this, it’s best to get all of the facts you possibly can together, before approaching an agent. This will help you should you try to haggle the price down.
Finally you’ll need to consider the cost of moving your furniture and possessions to your new home. Hiring a professional removal company can be a great route to go down, in order to lessen the burden and stress placed on you as you move. Many will pack your contents and unpack them upon arrival.
A typical home removal service will cost around £300 to £600, although it’s worth bearing in mind that they tend to charge more over weekends, and towards the latter end of the month.
Putting the higher end of each estimate together, based on a property of £175,000, the maximum estimated budget you’ll need to save in order move without a hitch would be in the range of £45,000.
This is a significant cost; therefore look to save in areas that aren’t crucial - areas such as removal costs and transactions fees. There are also many agencies available that can help with these costs in certain circumstances, so it’s worth exploring every possible option.
Ultimately knowing your budget will give you a goal to save towards, saving you time, money and a lot of stress further down the line.
If you are thinking of buying your own home, or would like more information on the buying process involved, contact your local Martin & Co office.