Finances.
The costs associated with buying a property and moving are inevitable. However being prepared can make all the difference.
Stamp Duty
Stamp Duty Land Tax (SDLT) is a tax applied when you purchase property or land in England and Northern Ireland. Use our Stamp Duty calculator to work out how much you’ll pay when buying your property. Currently, first time buyers will not have to pay Stamp Duty on properties costing up to £300,000. As a first time buyer, you can also apply for stamp duty relief, which means you will only pay 5% of the difference between £300,000 - £500,000. It is worth noting however, that if your purchase is above £500,000, you will not be eligible for the first time buyer relief. If you’re not a first time buyer, you will need to pay stamp duty on the value of the property above £125,000. How much you pay varies depending on the price of the property and your circumstances, for instance; if you’re a first time buyer, you already own a property and are buying an additional property or you’re not a UK resident. You have to pay stamp duty within 14 days from the completion of your purchase.
Stamp Duty Thresholds
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(1) Rate applies to that portion of the purchase price. (2) Additional properties bought for less than £40,000 will be charged the main residence stamp duty. (3) The 300,000 first-time buyer stamp duty threshold does not apply if the property you are buying costs more than £500,000 - if it does, you’ll pay the normal rate of stamp duty.
Legal Fees
You’ll need a solicitor or licensed conveyor to carry out all the legal work when buying and selling your home.
Estate Agent Fees
This is only paid by the seller, not the buyer, for the estate agent’s services. So if you are looking to sell and buy, you will need consider this within your costs. Fees can vary and this is negotiated when they put the property on the market. It is usually 1% to 3% of the sale price plus 20% VAT.
Valuation Fee
The mortgage lender will assess the value of the property to establish how much they are prepared to lend you.
The cost can be £150-£1,500 based on the property’s value.
Some lenders might not charge you for this, depending on the type of mortgage product you select. The lender’s valuation is not like a full structural survey, so it might not identify all the repairs or maintenance that might be needed.
Mortgage Fees
Use a Mortgage Affordability calculator to see how much you can afford to borrow to buy a home.
Generally, the bigger the deposit you can pay, the more likely you are to be given a mortgage (subject to a mortgage affordability assessment), and the lower your interest rate is likely to be.
This is the amount you put towards the cost of the property when you buy your home.
On average, you need at least 5% to 20% of the purchase price (for example: £10,000 to £ 40,000 when buying a £200,000 home).
Your mortgage broker may charge you for other costs.
These might include:
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A booking fee of £99-£250
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An arrangement fee of up to £2,000, and
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A mortgage valuation fee (£150 or more).
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It’s best to pay these upfront rather than adding them to your mortgage, otherwise you’ll be paying interest on them for the life of the mortgage.
Also bear in mind the types of mortgage available. There are hundreds of types of mortgage products and several types of mortgage for different circumstances. Look beyond the interest rate. Make sure you also take the fees and charges into account when choosing a mortgage.
Survey
Before you buy a property, get it checked by a surveyor. This is vital so you understand if there are any problems before you buy.
Surveys range from a basic home condition survey costing from £400 to a full structural survey from £600 or more. Costs can depend on the depth of service, type and size of property, location and quality of report.
Paying for a good survey could save you money on repairs in the long run.
Removal Costs
These usually range from £300-£600, although you could rent a van do it yourself. Remember to shop around for quotes (and references) to find a reliable firm.
Check the removal firm you hire is insured.
Ongoing Costs
Remember once you buy your own home you’re responsible for looking after it. The average repair bill for new homeowners is £5,750. Your survey should have highlighted any problems that need fixing straight away.
Utilities
Ask the sellers how much they spend on utilities. With the cost of living increasing, it is more apparent than ever to have this information upfront so you can estimate your living cost once moved in. These can include;
Gas
Electricity
Council tax
Water rates
Insurance
Council Tax
The amount you pay is based on where the property is and its valuation band the property is in (apart from in Northern Ireland where rates are set individually). You can find out which council tax band you are in on the following link https://www.gov.uk/council-tax-bands
Each district/borough will have different values for each banding.
Ongoing Costs
There are different ways you can own property: freehold, leasehold or through a share of the freehold. If you buy a leasehold property, you’ll have to pay ground rent (around £50-£100 a year) and service charges to the person who owns the freehold. Service charges and admin fees differ between properties. This is an important cost of running a property, so it’s vital you know more about these charges. The service charge will cover costs such as building insurance, building maintenance, communal cleaning, facilities such as concierge, communal utilities and building management fees.
Once you know the cost of your new mortgage payments, new insurance policies, solicitor and estate agent fees, make time to find out about moving-day costs.
Whether you’re a first-time buyer or a seasoned home mover, it’s important to know and prepare for these costs, which can be surprisingly high.
As you settle in your new home, make time to work out how much you’ve got coming in and going out each month.