If you're thinking about buying a new home, you'll need to budget for more than just the deposit. It's a stressful time, saving! You work hard to put away savings each month and feel like celebrating when you have saved enough for that all important deposit. But don't get carried away too early, as there are other costs that you need to take into account!
When you're working out your 'buying a house' budget, you also need to take account of the cost of buying, your mortgage fees and moving costs - on top of your deposit. It all adds up and can easily plunge you into debt if an unexpected bill hasn't been taken into account.
Here's what you need to know about and budget for:
- Mortgage fees. On top of your deposit you need to take account of the charges that your mortgage provider will require as part of the application process. These can vary from a few hundred pounds to several thousand pounds. Shop around to get the best possible deal. Also bear in mind that an electronic transfer fee is often applicable when the mortgage is paid out. This is often in the region of £50.
- Surveyors fees. You may view this as a necessary evil in order to comply with your mortgage, but having a professional survey could save you thousands in the longer run. A basic survey could be as little as £250 to £300, but really amounts to little more than a valuation. Paying extra for a homebuyers report, or even a full structural survey, could identify issues that enables you to renegotiate the price or save you money and headaches in the longer term.
- Legal fees. You will need a solicitor to carry out the legal searches on your property; to identify if a new motorway is likely to be built alongside your new property, for example. Fees for these are typically less than £250. Whilst the paperwork for the purchase of your property could cost £1000 to £1500.
- Stamp duty. Depending upon the purchase price of your property you will need to pay stamp duty to the Government. If you are a first time buyer you won't pay stamp duty on the first £300,000. Whilst you are only exempt from paying stamp duty on the first £125,000 if you are not a first time buyer.
Up to £125,000
First-time buyers: first £300,000 for property up to £500,000
Over £125,000 to £250,000
Over £250,000 to £925,000
Over £925,000 to £1,500,000
- Estate Agent fees. You only pay estate agent fees of you are selling a property. So if you are a first time buyer, you shouldn't need to budget for Estate Agent fees. If you are selling, the fees are typically one to three per cent of the final sales price. With VAT usually chargeable on top of that.
- Moving costs. Unless you are prepared to rent a van and move yourself, you will need to budget for a professional removal company to move your possessions. Fees are typically £400 to £600.
- Decorations and refurbishment costs. It's worth being clear exactly what is included within the sale. If you need to buy carpets, curtains, curtain rails and more, these can quickly eat into your budget. Even a fresh lick of paint can add up. And that's before any more extensive refurbishments that may be required. Where possible get quotes up front, so you know what costs will be applicable after you've purchased the property.
- Rates. And finally, make sure you know what rates are payable (to your Local Authority) for the property that you are purchasing. As this can often be another overlooked cost.