The true cost of buying a home: A complete guide to all the fees
Buying a new home is one of life's most exciting milestones. But the figure on the property listing is just the starting point.
From legal legwork and mortgage fees to stamp duty and removals, a range of additional costs can quickly add up. Understanding these expenses from the outset is crucial for a smooth and stress-free purchase.
It's a sensible rule of thumb to set aside around 15% of your property's value to cover these additional buying costs. To help you budget effectively, we've broken down all the extra expenses involved in moving.
Key Takeaways
Stamp Duty: This is often the biggest extra expense. However, depending on the property's price and if you're a first-time buyer, you may pay a reduced rate or be exempt entirely.
Professional Fees: Your solicitor's fees, property survey, and mortgage arrangement fees are likely to be the next most significant outlays.
Moving & Mishaps: Finally, there's the cost of removals. It's always wise to have a contingency fund for any unexpected last-minute extras.
Here's a snapshot of the typical costs you'll incur when buying a home.
1. Solicitor’s Fees
Allow: up to £2,000
Legal fees are one of the largest costs when buying a home, but they are absolutely essential. Most people hire a solicitor or a licensed conveyancer to handle the legal aspects of the purchase. While average fees vary, you should budget up to £2,000. Always get a clear quote upfront before any work begins.
Solicitors may charge a fixed fee, an hourly rate, or a percentage of the property's value. Here’s what their fee typically covers:
Conveyancing This is the core legal work and usually includes:
Drawing up and reviewing contracts between you and the seller.
Organising your Stamp Duty payment to HMRC.
Managing the final transfer of funds for your new property.
Searches (Allow: £200 - £300) Your conveyancer will commission local authority searches to check for important information about the property and the surrounding area. This includes risks like flooding, proximity to contaminated land, or any planned new road developments. These costs are often included in the main conveyancing fee but can sometimes be itemised separately.
Land Registry Documents As part of the process, your solicitor will verify the previous owner's details, confirm the legal property boundaries, and check for any public rights of way. They will also handle the transfer of the property deeds and register them in your name with the Land Registry.
2. Mortgage Fees
Mortgage Booking Fees (Allow: £100 - £200) Some lenders charge a "booking" or "application" fee as soon as you agree to take out a mortgage. This effectively reserves your mortgage deal while the purchase proceeds. This fee is typically non-refundable, even if the sale falls through.
Mortgage Arrangement Fee (Allow: £1,000 - £2,000) This is a fee charged by the lender for setting up your mortgage. The cost can vary significantly based on the mortgage type, its value, and the interest rate. You could be charged up to £2,000, though the average is around £1,000.
If you're short on cash, this fee can often be added to your total mortgage loan, but remember you'll pay interest on it over the term of the mortgage. Often, the mortgage deals with the lowest interest rates have the highest fees, so it's important to calculate the true cost over the initial deal period.
Valuation Fees (Allow: £150 - £800) Your mortgage lender will need to value the property to ensure it's worth the price you're paying. Some lenders include this valuation as part of their mortgage deal. If not, the cost will depend on the property's value. For a £300,000 home, a typical fee is around £200. For certain schemes like Help to Buy, a valuation from a RICS surveyor may be required, costing between £150 and £800.
Note: In Scotland, a Home Report, which includes a valuation, is provided upfront by the seller.
3. Survey Costs
Allow: £400 - £1,500
A property survey is one of the most important investments you can make. It provides a professional assessment of the building's condition and could save you thousands in the long run by uncovering hidden problems, or even prevent you from making a costly mistake.
There are three main levels of survey to choose from:
Level 1 Survey: A Condition Report (Cost: £400 - £950) This is a basic survey giving a top-level overview of the property’s condition. It highlights major issues but does not go into detail.
Level 2 Survey: A HomeBuyer Report (Cost: £400 - £1,000) This is the most popular choice, suitable for conventional, modern properties (less than 50 years old) in a reasonable condition. It provides more detail on defects and includes advice on repairs.
Level 3 Survey: A Building Survey (Cost: £600 - £1,500) This is the most comprehensive survey available. It provides a highly detailed inspection and is particularly recommended for older properties, buildings of non-standard construction, or any property you plan to renovate extensively.
4. Stamp Duty Costs
Allow: 0% - 12% of the property price
Stamp Duty Land Tax (SDLT) is a tax you must pay to HMRC when buying property or land in England and Northern Ireland. The amount is calculated as a percentage of the property price, with the percentage increasing in bands as the price goes up. First-time buyers benefit from relief, paying no Stamp Duty on properties up to £300,000.
5. Removal Costs
Allow: £150 - £2,000+
While a DIY move can seem cheaper, hiring a professional removal company can significantly reduce stress. You can hire a van from around £10 an hour, but for a whole house, this can mean multiple trips.
For a professional service where you pack your own boxes, the average cost for a three-bedroom house is around £1,200. For a premium service where the company packs and unpacks for you, expect to pay several thousand pounds. A good tip is to declutter your home before getting a quote, as the cost is often based on the volume of items being moved.
6. The Deposit
Allow: 5% - 10% of the property purchase price
While not an extra fee, your deposit is the largest single sum you'll need. The minimum deposit required is typically 5% of the home's value. For a £250,000 flat, that’s £12,500. However, putting down a larger deposit of 10% or more can unlock a wider range of mortgage products with more competitive interest rates. Government schemes like Shared Ownership can also help buyers with smaller deposits.
7. Insuring Your New Home
Once contracts are exchanged, your new home is legally yours, and you are responsible for it. You will need to have buildings insurance in place from this date. Buildings insurance protects the structure of your home, while contents insurance protects your belongings inside. While not a legal requirement, most mortgage lenders will insist on buildings insurance as a condition of the loan. If you are buying a leasehold flat, the freeholder is often responsible for the buildings insurance, but it is vital to check this.
8. Council Tax and Bills
Finally, as a homeowner, you will be responsible for regular household bills. Your largest monthly outgoing after your mortgage will likely be council tax, followed by utilities such as energy and water, as well as home insurance and broadband.
Feeling overwhelmed? Taking it one step at a time is key. Ensuring the property you're buying is structurally sound is the most critical part of the process.
Contact Carpenter Surveyors today for expert advice on which survey is right for you and for a no-obligation quote.
A thorough survey is the best investment you can make in your new home.