Buying a new home is an expensive business and the costs are not just restricted to the price of the property you want to buy. Knowing what costs are involved is important, therefore, allowing you to budget properly and to avoid any nasty surprise. So, what upfront costs are you likely to face?
Deposit
You will generally need between five per cent and 20 per cent of the total cost of the property you want to buy to act as a deposit. Ten per cent is the average amount paid but the more you can pay, the better interest rates and terms you are likely to be offered. Paying a larger deposit will also reduce how much you have to pay back each month.
Stamp duty
Stamp duty is generally one of the biggest additional costs you will face when purchasing property. There is currently a stamp duty holiday in place until the end of June 2021, but charges are expected to return after this date. Some properties will be exempt, however. In England and Northern Ireland, this will be properties worth less than £500,000. In Scotland, properties worth up to a quarter of a million pounds will be exempt, and in Wales it will be properties valued at up to £180,000. Stamp duty calculators are available online to work out how much you are likely to have to pay. Take a look at https://www.gov.uk/stamp-duty-land-tax.
Conveyancing costs
The conveyancing costs are the legal fees and related charges you will have to pay when buying a property. You will have to pay your conveyancer and for disbursements. The latter are the costs of the searches that are necessary to make sure that there are not any legal problems with your property and registering it in your name.
The amount you pay in conveyancing costs will depend on the price of the property, how many searches it needs, and whether it is a freehold or leasehold property. Typical prices range from around £850 to £1,500 to pay for the conveyancing, plus another £250 to £450 to cover the disbursements.
Survey costs
You will not have to pay for surveys but they can offer reassurance about the quality of the property you are buying and help to prevent nasty shocks in the future. It also allows you to negotiate on the price of the property if issues are found.
Mortgage fees
You may have to pay for a mortgage valuation, although some lenders do not charge for this. Others may simply add it to your mortgage. You may also have to pay mortgage arrangement fees. These could cost anything from around £300 to as much as one per cent of your mortgage.
