Buying a house in the UK is hands down one of the most expensive things you will do. There are a host off fees involved and you should take all of them into account when budgeting to avoid getting surprised on closing day or at the real estate manager's office.
The upfront costs💲💲
Your Mortgage deposit✔
Your mortgage deposit is the main cost you will need to cough up when buying a UK home. Mortgage lenders will usually require you put down 5-20% of your own money before they lend you the remaining bit.Typically they will want to see at least 15% but there are some lenders who will allow you to only put down as little as 5% for your mortgage deposit. You can apply for a home buyer government scheme if you are eligible and this should reduce the amount of initial deposit you are required to put down or increase your mortgage deposit savings.
A bigger mortgage deposit will mean mortgage lenders are more willing to offer you a cheaper mortgage rate as your mortgage loan to value has fallen.
Your mortgage deposit will also be dependant on the type of mortgage you take out.
Mortgage booking fee✔
A mortgage booking fee is essentially a mortgage application fee. This fee is paid to process your mortgage. It can range between £50 to £250 depending on the lender. You might be thinking “It is important to inquire about these costs in advance” as they may sway your decision on which mortgage lender to consider. Luckily you can easily compare the total cost for getting a mortgage through the APR as it will include all extra costs.It is better to pay this fee upfront as if you add them to your mortgage you will be paying interest on them over the life term of your mortgage except you overpay your mortgage in the first month by the exact amount.
Mortgage broker fee✔
Mortgage brokers usually charge a fee for sourcing a mortgage and assisting you in getting approved for a mortgage. This can range from £250 to up to £1000 depending on the size of the mortgage. Things have changed over the past 24 months and most mortgage brokers are no longer charging a fee but rather processing the mortgage for free.
Mortgage arrangement fee✔
The mortgage arrangement fee is very similar to the mortgage booking fee. It is a fee you pay to the mortgage lender to set up the mortgage.This fee can go from £100 all the way to £2500 depending on the size of your mortgage. It is better to pay this fee upfront as if you add them to your mortgage you will be paying interest on them over the life term of your mortgage except you overpay your mortgage in the first month by the exact amount.
Stamp duty has changed over the past few months first time buyers now pay a discounted stamp duty in comparison to the rest of the market](/how-to-get-a-mortgage/#stampdutycostwheretheabovedoesnotapply). Stamp duty is a government tax paid on homes over a certain price threshold. In Wales it is referred to as the land transaction tax and in Scotland the land and buildings transaction tax.
Conveyancer or solicitor fees✔
A conveyancer or solicitor will help you carry out any legal paperwork involved between yourself the mortgage lender and the property owner. They will also carry out searches on the property, its title and any legal structure they feel will be relevant to the sale. Conveyancers or solicitor fees can range from £1000 to £2500 depending on the complexity of the case.
Home valuation Fee✔
Mortgage lenders will carry out a valuation on the house you want to buy to determine what its value is and how this affects the mortgage you are taking out and your mortgage deposit. This helps them work out your Mortgage LTV to determine what APR to charge you. This fee can be between £50 to £250 dependant on mortgage lender.
Some mortgage lenders do not charge a fee for this. You should not rely on this survey as it will not be a thorough inspection which will reveal any defects.
A property survey is a good idea. Infact, its a great idea as it lets you know if there are any structural defects on the property you want to buy or a more annoying issue such as japanese knotweed. Property surveys may cost up to £800 but any more than this might not represent good value for money. You should always compare costs from different providers.
Estate agents fees✔
Estate agent fees are the fees the seller pays when they sell their home through an estate agent. This could range from 3-6% of the eventual sale price. Of recent more online property sales platforms such as purplebricks and emoov have come into the market with fixed fees for property sales. You can even find some firms offering this for as low as £99 . Ensure you do your homework before you chose an estate agent.
Electronic transfer fee✔
The electronic transfer fee ranges between £25 and £50. It is the cost for the mortgage lender to transfer the mortgage funds to the solicitor.
Removal costs can start from £100 up to £600. You can save this money by doing it yourself or with the help of some excited friends and family.
Your ongoing costs
Home insurance isn't a legal requirement but if anything happens to your house such as theft, structural damage or loss of property then you will be out of pocket. Most mortgage lenders will require you have buildings insurance to protect your home from fire, floods and structural damage as a condition of the mortgage they give you. You might also want to get contents insurance which will insure the property in your home but some high value items over a certain price(replacement value ) will require you to get separate insurance for them.
You may also want to get life insurance which covers the full cost of your mortgage in case you die before you finish paying off your mortgage. This will allow your family not to bear the burden of paying off the mortgage.
Council tax is a tax you pay on property you own in the UK. The tax you pay will be based on where your property is located and which tax band your property falls into. This is the same for much of the UK aside from Northern Ireland where things are a little bit more different.
Gas and electric costs✔
Gas and electric costs as well as other utility costs such as broadband are costs you might not be able to avoid. The costs will vary from provider to provider and this is exactly why you should sign up to an auto switching service to ensure you are always on the best deal.
Maintenance costs might sound a bit vague but after 1 year the average new home owner is spending upwards of £4000 on maintenance. This could be broken door knobs to light switches or boiler repairs. Ensure you have some savings and emergency fund put away. It's just good financial wellbeing!
Leasehold is when you own the home for a limited period of time. This is usually more than 99 years. Leaseholders have to pay a variety of fees including most notably ground rent. This should cost between £100 to £500.
Home mover costs
House removal insurance✔
When moving homes it is essential your items are insured so you don't lose them in transit through damage or theft. You should first check if the home removing agent is insured and how this insurance covers your property. If the insurance isn't sufficient then you should check if your home insurance caters for this. If your home insurance doesn't cater for this then you should start shopping for home movers insurance.
When looking for removal companies be sure to compare quotes and search with the british association of removers for insured removers.
When leaving your old home you will want to ensure it is clean and tidy enough so prospective buyers will be more interested in it. You can employ a cleaning agency or do the cleaning yourself. The quotes for this will range based on the size of your house and the complexity of the work.
When moving to your new home there may be some items you have fallen out of love with and want to sell. You will have to put this in a storage unit if your new home is too far or doesn't have space.You can check with the different providers for their pricing and compare accordingly.
Redirecting your mail✔
You can also set up a mail redirection service through royal mail for your old post to get delivered to your new house. Updated prices can be seen on the royal mail website.