Cost of buying a house for first time buyers
There are lots of costs to think about when you’re buying your first house.
How much does it cost to buy a house?
From Stamp Duty to solicitors’ fees, it’s useful to know what extra costs you’ll have to pay so you can plan your budget when you’re thinking of buying a home.
Here are some of the common costs to consider when house hunting.
Common mortgage costs
Product fees
The product fee covers the cost of setting up your new mortgage deal with a lender.
The price is usually around £1,000. You might be able to include it as part of the money you borrow from your bank or Building Society.
Valuation fees
Your lender will value the property you’re buying to ensure it’s worth the asking price. Your lender will arrange a valuation which you’ll pay for. This is to make sure that the house is worth what you’re paying for it.
Survey costs
You may want to arrange a property survey to find any issues with your new home before you buy it.
A property surveyor will carry this out. The survey will look for any repairs that needs to be done and any safety issues.
A survey might find issues like missing roof tiles or faulty electrics. Surveys are optional, but it’s a good idea to have one, so you know the condition of the property you are buying. Fees for a survey depend on how detailed they are and the size of the property. Prices range from £500 - £1500.
Broker fees
Broker fees only apply if you are using a mortgage broker to find a suitable deal. The costs of using brokerage companies differ.
Some will charge a percentage of the property price or will ask for a flat fee. Others are free to use and are paid for through a commission by the lender.
Conveyancing
You’ll need to hire a conveyancer to handle the legal bits. They will sort out the contracts, manage your deposit and carry out the sale the property.
Conveyancing fees usually include the transfer of deeds and all legal paperwork. This can cost around £1,000.
Stamp Duty costs
Stamp Duty is paid to the government as a form of property tax. You pay Stamp Duty to HM Revenue and Customs via your solicitor. How much you pay depends on the value of your home.
First time buyers will not pay any Stamp Duty on the first £300,000 of a property’s purchase price and then 5% for any amount above £300,000 up to £500,000. If the purchase price is over £500,000 you will pay Stamp Duty at the home mover rate.
Different rates of tax apply if you're buying a house in Wales or Scotland.
Land Registry Fee
The Land Registry Fee is a charge to have the legal ownership of the house changed to your name on the Land Registry record. This usually costs around £150.
Removal costs
You’ll need to hire a removal van if you have large items of furniture to move. How much you pay will depend on how many items you’re moving and how far you’re travelling.
It might be a good time to have a clear of those old books and clothes you no longer want before the big move.
Or ask family and friends to help – buying pizza for everyone at the end of the day is a lot cheaper than a removal company.
Costs after you’ve moved in
After you’ve moved in, there are a few more things you may need to budget for:
You’ll need Home Insurance to protect you from the cost of damage to your new home from insured events like storms, fires or floods.
Your mortgage provider will require you to have Buildings Insurance that covers the cost of completely rebuilding your home from the ground up.
Mortgage Protection Insurance
If you were to lose your job, or not be able to work due to sickness or injury, Mortgage Protection Insurance covers the cost of your mortgage repayments.
This is optional, but may offer peace of mind that you’ll be able to keep repaying your mortgage, should the worst happen.
Furniture
You might want a new couch to go with your new home, or maybe you need a new fridge. Make a list of the items you’ll need and put them in priority order – a new washing machine is probably more important than a new lamp.
Renovations
You might want to start renovating and decorating your new home in your own style.
This could involve small jobs like painting rooms in a new colour scheme or bigger ones, like fitting a new kitchen.
If you want to make big changes, like building an extension, you may need planning permission from your local council. Make sure you check before starting any work.
Mortgage repayments
Once you’ve bought your property and moved in, you’ll need to start meeting your mortgage payments. The cost of mortgage repayments varies depending on how much you borrowed and your interest rate.
