First time buyer guide


The True Costs of Buying a Home

You’ve set your heart on the perfect house and the price tag looks good? Congratulations! Buying a house is one of the biggest steps you’ll ever take, but it comes with a great number of hidden costs we want to make sure you’ll budget for.
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Let’s break them down for you so you can keep on top of them all.

Upfront Costs

  • Deposit: it’s one of the largest costs you’ll have to face, ranging from 5% (Help to Buy schemes) to 20% of the value of the property. You’ll need to carefully consider this cost since the amount you put down will determine how much you’ll end up paying for your mortgage. Read our Saving for a Deposit article for more detail.
  • Stamp Duty: it’s a land tax you pay when you buy a home. It varies depending on the value of the property and whether you’re buying for the first time or not. A first-time buyer purchasing a £500K home would pay a £10K charge. For a full breakdown of how much stamp duty you’ll need to pay, read our Stamp Duty Explained article.
  • Surveyor’s fee: while surveys can be pricey, they are well worth considering. The condition and construction state of your dream house are important for you (and your lender) before you buy, and can save you a lot of money on repairs later on. A basic Home Buyer’s Report costs between £350 and £900, and a full structural Building Survey starts at £500. Read our House Surveys article for more detail.
  • Legal fees: you’re likely to need loads of help in the buying process and a solicitor is just the person you’ll want. You’re looking at a £600 to £1,200 chunk in your budget, but this VIP will draw up contracts, deal with Land Registry, pay Stamp Duty, transfer the payment for the purchase of the property and carry out searches to check for planning or environmental issues that could affect your property. Read our Property Solicitors article for more info.
  • Valuation fee: your lender will carry out a valuation to make sure that the property they’re lending you money for is worth what you’re planning to pay for it. Usually, you’ll be expected to cover this fee. Valuations start at around £250 but can rise to £600 based on the value of the property.
  • Electronic transfer fee: your lender may charge you a fee when transferring the money for your purchase. It’s usually around £40-£50.

Mortgage Costs

They can include:

  • Booking fee: some lenders charge a fee just for applying for one of their mortgages. It can be around £100 to £250
  • Arrangement fee: your lender could charge you a fee, generally around £975, for setting up your mortgage
  • Valuation fee: could add £200-£600 to your bill  (as mentioned above)

Ongoing Costs

Once you own the home you’ll have these costs to consider:

  • Insurance costs: most lenders will require that you have buildings insurance so that you’re covered against structural damage caused to your property. Contents insurance is also worth bearing in mind as it covers your personal belongings, furniture and appliances should an incident occur. Read our Home Insurance article for more info.
  • Repairs and maintenance: new homeowners can end up spending well over £5,000 on maintenance, decorating, DIY and making improvements to their property. You can cut costs by doing things yourself, but you’re likely to need minor building works, some new furniture and appliances that could have you coughing up your cash quickly.
  • Council tax: it’s an annual fee your local council charges you for services like rubbish collection, police, libraries, etc. The amount you pay is determined by the value of your property and the area it’s in. The average council tax bill can cost you anything between £650 and £1,800.
  • Utilities and other regular costs: gas, electricity and water bills as well as telephone, tv license and internet costs can make a huge difference to your quality of life. Make sure you know what you’re up against by asking the sellers how much they’re paying a year for their utilities.

Moving Costs

The costs for moving home may include:

  • Removal expenses – moving costs will vary depending on whether you can do the move yourself or need to hire a van or removals service. Expect to pay around £200 for a van and around £500 for a removals company.
  • Cleaning – if you’re moving out from a rental house
  • Removal insurance – if you’re planning to do it yourself, in which case you should check your current home insurance to see if it will cover your move
  • Storage – if you need to store things in another location for some time
  • Mail redirection – if you’d like to continue receiving mail once you move

As you can see, the mortgage isn’t the only thing that will have you counting sheep at night. It’s important that you do lots of shopping around and ask for quotes because hidden costs could add up more than 10% to the bill you had in mind. Those extra costs that might not have occurred to you need to be under control and in your budget. Plan ahead, budget wisely and enjoy the ride!