You’ve decided to take the plunge and put down your roots in some good, solid, brick and mortar! Good for you! There’s a lot to be said for owning your own patch of earth and if that’s the next step you decide you want to take in life then it’s an exciting time. However, before you start the process of buying, take a look at your finances and make sure that you have enough put by to cover all the sneaky hidden ‘extras’ that come with purchasing your own home.
1. Legal fees
Conveyancing is the name, charging you loads of money is the game. Finding yourself a good conveyancer is important, as they handle all the legal aspects of your purchase. This includes the Land Registry checks (who actually owns it), the local authority searches, and anything else you can think of on the legal side. Getting a good conveyance can really make the difference.
However, they don’t come cheap. Legal fees, plus the costs of the searches, can easily cost you between £1000 - £2000 (inclusive of VAT) depending on the price of your house, how many searches need to be done, and if there are any complications etc.
2. Stamp duty
Arguably not a ‘hidden’ cost, as it is a well-established extra fee, but expensive none the less. It is definitely something you should factor into your ‘house buying savings’.
Essentially, Stamp Duty Land Tax (SDLT) to give it its proper name is just another tax you need to pay when buying a house. The current threshold is £125,000 (for residential properties). This means if you buy a house under this amount then you don’t need to pay the tax. Anything over this amount, and you do. The amount you pay varies on the price of the house. The Government has a great website that clearly lays out all the pricing for you here.
It’s important you understand stamp duty thoroughly as the final amount you will need to pay runs into the thousands.
3. Survey Costs
The two most common surveys for buyers are the RICS HomeBuyer’s Report, and a Structural Survey, and they usually start from around £400 and £600 respectively.
The HomeBuyers Report is a survey usually recommended for newer properties that are in relatively good condition. They give a good solid overview of the main issues such as, structural issues or damp etc., but do not do an ‘in-depth’ survey of the property.
The structural survey is a more comprehensive overview of everything in the house that may need work or repairs, and it also provides detailed advice on how to go about these repairs. Hence, why it is more expensive.
No matter what survey you opt for when buying your home, it is imperative that you get one. Not getting a survey can lead to some nasty surprises later on that could end up costing you a fortune! So make sure you have money in the budget for it.
4. Moving costs
You may think you’ve got this covered, but it’s the little things that end up adding up. The yards of bubble wrap, the meters of masking tape, the endless boxes, and the stacks of brown paper all cost money. Not only that, but the amount of time it takes you to box up all your belongings costs you hundreds of pounds in personal man-hours!
You can hire your own moving van and do all the work yourself, which would only cost you between £100 and £200. This is feasible if you live in a one bed apartment, but isn't recommended for a four bed house. Many people choose to get a professional service to it, as moving items such as bedframes or wardrobes can be difficult if you don’t know what you’re doing.
If you decide to go with a moving company, make sure to get quotes from a number of different companies to ensure you get the best deal. However, don’t be surprised if the price of just moving your things about comes to well over the £1000 mark.
5. Mortgage Application Fees
I know, I know. You are paying people for the joy of setting you up with a crippling amount of debt. But it’s a real thing; trust me!
Depending on what mortgage lender you use this can range from anywhere to being free (not often), right up to £2000. You can sometimes choose to add this onto the cost of your mortgage and spread it over the duration of your loan, but bear in mind that this means adding to your monthly repayments.
There is also the valuation fee, where you will be charged again, for the mortgage company to value the price of your home. This can range from £150 to £1500 depending on the size of the mortgage.
So, you need to make sure you are aware that applying for a mortgage costs more than just the amount you need to buy the house. These extra costs, when added together, can run into the thousands, so you need to make sure you’ve accounted for them in your budget.
Ultimately though, buying your first home is an exciting and life changing adventure, so make sure you have a handle on the hidden financial pitfalls so that you can stay in control and enjoy the experience from start to finish.