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The costs of buying a house: How much is it really?

The costs of buying a house: How much is it really?

Buying a house is usually the most money you’ll spend on a single thing in your lifetime.

But many buyers underestimate exactly how much they need to spend to move, focusing on the major costs like their mortgage and neglecting to include the smaller amounts that all add up.

Your budget is one of the most important things to keep on top of when moving, so we’ve outlined all the costs of buying a house right here…

 

What is the average cost of moving house?

Taking your mortgage out of the equation, the average cost of moving house in the UK in 2020 is around £9,000, according to comparemymove.com.

That cost includes all the up-front costs and fees, but with stamp duty rates now having come down until March 2021, it should be possible for many buyers to bring their move in well under that figure.

 

The up-front costs of buying a house

As well as the purchase price of the property you’re purchasing, you’ll also have to factor in a number of other up-front costs when buying a house.

 

Stamp duty

Stamp duty is often one of the biggest costs you have to face when buying a home.

Essentially, stamp duty is the tax you pay when you buy a property and the amount is staggered as the purchase price rises.

However, after the Chancellor announced a stamp duty ‘holiday’ for England and Northern Ireland until March 2021, many buyers will now pay no stamp duty at all.

Until March 2021, buyers will pay no stamp duty on the first £500,000 of their property’s purchase price – meaning a stamp duty bill of zero on properties costing £500,000 or less.

 

What are the new stamp duty rates?

The stamp duty rates are now as follows:  

 

Purchase price

Stamp duty rate

£500,001 - £925,000:

5%

£925,001 - £1.5m:

10%

Over £1.5m:12%

  

That means a property costing £550,000, for example, will now command £2,500 in stamp duty until March 31, 2021.

Before the stamp duty ‘holiday’ was announced, and when it ends on April 1, 2021, £17,500 in stamp duty would be due on the same property, unless you’re a first-time buyer.

Under the old rules and if, or when, those rules return in April 2021, first-time buyers are exempt from stamp duty on the first £300,000 of their property’s purchase price.

 

Deposit

Your deposit is the amount of money you put towards the purchase price of your property and is likely to be one of the larger amounts of money in your budget to buy a home.

Put simply, the more you can save as a deposit, the better your mortgage rate will be, the cheaper your monthly payments and the larger your ‘stake’ in your home.

 

How much deposit do you need to buy a house?

Generally, you’ll need at least 5% of your property’s purchase price to lay down as a deposit.

So, if you’re buying a house for £250,000, you’ll need £12,500 as a deposit.

However, mortgages where only a 5% deposit is required are rare and, post coronavirus, even 10% deposit mortgages are not as common as they once were.

The closer you can get to a 20% deposit (£50,000 on that £250,000 property mentioned above), the better your mortgage rate will be as you’ll have access to far more mortgages than someone with only a 5 or 10% deposit.

 

Valuation fee

Your mortgage lender will carry out a valuation on the property you’re buying once you’ve had your offer accepted by the seller.

This is to ensure the property is worth at least the amount of money you’re borrowing as a mortgage to pay for it.

Some mortgages come with a free valuation, but most lenders charge a fee for this process which can be anywhere between £200 and £1,500 depending on the value of the property you’re buying.

 

Mortgage costs

As well as that potential valuation fee, your mortgage lender will usually charge you an arrangement fee for your mortgage, too.

Again, this fee can vary but the average is usually around £1,000.

This fee can be added to your mortgage in most cases, but remember you’ll pay interest on it if you choose to do this.

 

Survey fee

When you’re buying a home, you’ll want to be certain there are no major problems.

So, having the property checked by a surveyor before you buy it is a great way to provide peace of mind, or flag up any potential issues before you commit.

Fees for surveys depend on the type of survey you have. A basic home report survey costs around £250, while a full structural survey can cost upwards of £600.

 

Legal fees

When you buy a home, you’ll need a solicitor or conveyancer to do the legal work for you.

Legal fees can cost anywhere between £600 and £2,000 depending on the firm you use and the complexity of your purchase.

As well as the cost of your solicitor or conveyancer, there will sometimes be additional fees to pay for searches undertaken by your local authority. You should budget around £200 for these if they’re not included in your legal firm’s costs.

 

‘Hidden’ costs of buying a house

So, you’re now aware of the most common major costs associated with buying a home.

But depending on your circumstances, there could be other costs you need to budget for, including:

 

Mail re-direction

While not an essential cost, re-directing your mail from your old property to your new one can help ensure you don’t miss any vital post after you’ve moved.

While you might think you’ve told everyone you need to about your new address, it’s very easy to forget one or two and mail re-direction can help.

You can re-direct your mail to another UK address for three months for £33.99.

Re-direction for six months, nine months, or a year is also available for an increased cost, while there are extra fees to re-direct the mail of more than one person in your household.

 

Storage costs

If you would rather move out of your current property before moving into your new home, you may need to store your belongings at a secure storage facility.

Many people choose to do this rather than leave their current home and move into a new one on the same day, which can be very stressful.

Storage costs depend on the number of things you wish to store and the time you wish to store them for, so make sure you shop around for a good deal.

 

Child or pet care costs

Moving can be stressful, so doing it with children or animals in tow is rarely a good idea.

Many buyers choose to budget a small amount of money for childcare or kennels, meaning they can move and then collect pets or children once the heavy lifting is all complete.

 

House removal costs

Unless you’re planning to do the aforementioned heavy lifting yourself, you’ll need to hire a removals company.

Again, the cost of removals can vary depending on how much you have to move and the distance between your current house and your new home.

Make sure you speak to removals companies well in advance of your completion date as they do become very busy and ensure you shop around, too, as there are often deals to be found.

 

Further reading…

If you’re thinking of buying your first home, you’ll need to start saving.

Take a look at our guide to saving a deposit while living at home.