Buying a new home can be as exhausting as it is exciting. It’s likely to be the biggest purchase you will ever make, and could also be one of the most emotional. Understanding the process, and how much it will cost you, will ultimately save you money in both the short and long term.
Arranging a mortgage
The best advice when it comes to arranging a mortgage is to be realistic, and make sure you know how much you can borrow before you set your heart on a home you can’t afford. You can arrange a mortgage in principle before starting your property search, and the more money you can put down as a deposit, the more likely you are to get the best mortgage deal, and be accepted. You should aim to save between 5% and 20% of the value of the home, while making sure you also keep enough back to pay for additional expenses (see below).
The cost of moving
Moving is expensive, so make sure you factor in all of the costs involved. These include:
- Stamp duty – this is a tax on land and property transactions in the UK. The amount you pay is based on the value of the property - https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
- Solicitor’s fee – you will pay between £500 and £1,500 for a solicitor’s conveyancing fees. Make sure you appoint a reputable firm as scrimping now could cost you dearly in the future.
- Mortgage fee – different mortgages come with different fee structures such as a booking or arrangement fee. Be prepared to pay between £1,000 and £2,500 to secure the best rate.
- Valuation fee – you will also need to pay your mortgage provider a valuation fee of around £300 to £400. This is so that they can verify the true cost of the property before lending to you.
- Survey – it’s important to carry out a full survey of a property before you buy it. You will pay between £400 and £800 for a report, but this could save you a lot of money in the long run.
- Land Registry fee – this fee will depend on how much your property is worth and is likely to be between £200 and £300. Your solicitor will deal with this.
- Removal costs – these can vary widely depending on whether you do it yourself, hire a removal company, or find a ‘man with a van’.
- Furnishing and decoration costs – always remember that you are likely to want to freshen up your new home, and you will need furniture.
Ongoing costs
Before you buy a property, you need to have a good idea of how much it will cost to run on a monthly basis. Some key costs to consider include:
- Service charges – some properties (especially flats) have a monthly service charge.
- Council tax – find out how much the property pays in council tax before you buy it.
- Insurance costs – you must ensure you have adequate buildings and contents insurance.
- Energy – moving into a new home is the ideal time to get on the most efficient energy tariff.
- TV and Broadband - there are lots of good deals out there for new customers, so make sure you shop around.
This is by no means an exhaustive list of costs associated with buying a property, but it covers the main expenses you can expect. It can be quite daunting buying a new home, but there are companies out there that can make life a little easier. At PayingTooMuch.com, we can help you source the best deal for your building and contents insurance, as well as find you the cheapest energy supplier.
