Perhaps you’re a first-time buyer or maybe you haven’t moved house in a while, don’t get caught out by not knowing nor budgeting for all the costs associated with moving! You don’t need to be put off, just go into the process with your eyes wide open.
There are a number of fees to consider when buying a new house and we have laid these out together into one place to give you a better idea of where the money will go!
Always use a reputable Stamp Duty calculator online to work out how much you’ll pay when buying your property in England or Northern Ireland. Until 30th June 2021, you will not have to pay Stamp Duty on properties costing up to £500,000. This will apply whether you’re a first-time buyer or have previously owned a property.
Properties costing more than £500,000 will pay the Stamp Duty rate based on the value of the property over £500,000. If you’re buying a second home, you’ll still pay Stamp Duty on a property costing more than £40,000 at the revised rates – paying an extra 3%.
If you buy a house for £575,000, the Stamp Duty Land Tax you owe is calculated as follows:
0% on the first £500,000 = £0
5% on the final £75,000 = £3,750
Total SDLT = £3,750
This is a saving of £15,000 based on the Stamp Duty rates that were in place before 8 July 2020.
Stamp Duty on second homes
If you’re buying an additional property, such as a second home or certain buy-to-let properties, you’ll still have to pay an extra 3% in Stamp Duty on top of the revised rates for each band up until 30th June 2021. This increased rate applies to properties bought for £40,000 or more.
Remember that it doesn’t apply to caravans, mobile homes or houseboats.
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).
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.
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.
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 mortgage valuation (which you can often negotiate for free) or a home buyers survey costing around £500-600 to a full structural survey from £1000 or more. Paying for a good survey could save you money on repairs in the long run.
You’ll normally need a solicitor or licensed conveyor to carry out all the legal work when buying and selling your home. Legal fees are typically £850 – £1,500 including VAT at 20%. They will also do local searches, which will cost you £250 – £300, to check whether there are any local plans or problems.
Electronic transfer fee
Typically this costs £40 – £50. It covers the lenders cost of transferring the mortgage money from the lender to the solicitor.
Estate agent’s fee
This is only paid by the seller, not the buyer, for the estate agent’s services. It is negotiated when they put the property on the market, usually 1% to 3% of the sale price plus 20% VAT.
These usually range from £300 – £600, although you could rent a van and do it yourself.
These might include:
- A commitment fee of c. £100 – £250
- An arrangement fee of up to £2,000 depending on the amount
- A mortgage valuation fee (£150 or more).
- You have an option to either pay these fees upfront or by adding them to your mortgage
- Mortgage Broker fee – typically between £300 and £500
There are hundreds of types of mortgage products and several types of mortgage for different circumstances. It’s always a good idea to look beyond the interest rate. Make sure you also take the fees and charges into account when choosing a mortgage.
Consider using a trusted mortgage advisor who will work with you to understand your personal circumstances and your financial goals and objectives before making a recommendation. Remember, most good brokers will also charge a fee to get you the deal that is right for you.
Remember, once you buy your own home you’re responsible for looking after it.
Maintenance and repairs
The average repair bill for new homeowners is £5,750. Your survey should have highlighted any problems that need fixing straight away.
The lender will require you to take out buildings insurance to protect your new home against damage from fire, floods, subsidence and anything else. It’s also a good idea to have contents insurance for all your possessions, and life insurance to pay off your mortgage, should you die before you’ve repaid the entire amount.
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).
Ask the sellers how much they spend on utilities – gas, electricity and water – every year. Don’t forget to think about charges for your phone, TV packages and broadband.
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.
Call Citygate Mortgages anytime and we can help you get your head around the costs of moving house
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