It’s now more important than ever to adequately plan and prepare your finances before moving.
But where do you start?
In our latest guide, we run through all the potential costs you’ll need to factor in and offer some great tips on budgeting and planning ahead of your move.
Costs you can expect when moving home
The average UK move now costs just under £10,000, according to research.
Many of the costs in that figure are payable up front, too, so preparing a budget is a really important step before buying your next home:
Upfront costs when moving
1. Stamp duty
If you’re buying a home for more than £250,000 and have owned a property before, you’ll need to factor in stamp duty when budgeting.
For first-time buyers, meanwhile, stamp duty kicks in at £425,000.
While stamp duty is only due once your property purchase is completed, you should always factor it into your up-front costs so you have it ready to pay when required.
2. Deposit
Your deposit will probably be among the largest up-front costs you face when moving.
The larger your deposit, the more attractive your mortgage rate is likely to be, and, in most cases, you’ll need to provide at least 5% of your property’s purchase price as a deposit.
Your deposit is the amount of your property you’re buying outright, but it will also be used as security at the point you exchange contracts with your seller.
If you’re selling a property, your buyer’s deposit can often be used as security, meaning you don’t have to save a separate deposit when yours is coming from the sale proceeds of your existing home.
If you’re a first-time buyer, your saved deposit will initially be used as security, before passing to your seller once your purchase is complete.
3. Valuation fee
So they can be sure your property is worth the mortgage your borrowing, your lender will carry out their own valuation.
You may need to pay a fee for this, and it will need to be settled up front.
Lender valuation fees are often between £150 and £1,500, although some lenders offer them for free.
4. Other mortgage fees
Arrangement fees are another common mortgage fee that can be paid up front.
These fees vary, often depending on the mortgage deal being offered, and can be anything up to £2,000 in most cases.
Although you can pay arrangement fees up front, you may also be able to add the fee to your mortgage loan.
However, by doing this, you’ll pay interest on the amount.
Some mortgage products are fee-free, but these are often higher interest rate products, so always seek advice from an independent broker.
5. Survey fees
A property survey can either give you great peace of mind that what you’re buying is in good condition or reveal potential issues before you commit.
Either way, a survey is a good idea, but you’ll need to pay a fee if you decide to have one.
This figure can vary depending on the survey you choose and the size of your property, but you should expect to pay between £200 and £700 up front.
6. Solicitor or conveyancing fees
You’ll need to hire a solicitor or conveyancer to complete the legal work on your purchase and this may mean a partial fee up front for their services.
This fee is often used to cover searches and other checks, known as disbursements.
The main fee for your solicitor’s services will normally be paid once your purchase has completed.
7. Buildings insurance
Because your lender may stipulate that you have a buildings insurance policy in place when you exchange contracts, you should budget for this up front.
The type, condition, and location of the home you’re buying will affect the premium you pay, but always make sure you have enough coverage when searching for good deals.
8. Removals costs
Depending on which company you choose for removals, you may have to pay up front for the service.
Removal costs vary hugely, depending on the distance you need to travel, the size of the vehicle required, and any access issues at either property.
Costs payable after you’ve moved
1. Estate agent fees
Your estate agent’s fee or commission will be due once your sale and move are completed, and your solicitor or conveyancer will normally pay this on your behalf when settling your financial commitments.
2. Ongoing running costs
Once you’ve settled into your new home, you’ll need to start paying to run it.
This means factoring in utility bills such as:
- Gas and electricity
- Sewerage
- Water
- Broadband, TV package and phone
If you need to pay council tax, meanwhile, the amount will depend on how your property is banded with the local authority.
3. Leasehold costs
If you’re buying a leasehold home like a flat or apartment, you’ll need to consider some additional costs.
A ground rent charge may be payable to the freeholder, while service or maintenance charges are also commonplace, with funds raised used to maintain common areas, including outdoor spaces.
4. Mail redirection
Mail redirection can be a great way to ensure all your important post arrives at your new property instead of your previous home.
Redirection costs between £34 and £69, and you can arrange it for up to 12 months while you inform everyone you need of your new home address.
How to budget your move effectively
1. Secure the right mortgage
The rising cost of living and increasing interest rates have been well publicised and this means being on the right mortgage has never been more important.
By speaking to an independent mortgage broker, you may be able to access more of the mortgage market and find the right deal for you in the current climate.
Brokers can also take a look at your finances before you apply for a mortgage and help you to ensure everything is in good shape – saving you time and potential problems further along the process.
2. Avoid big changes to your income and limit credit applications
Consistent income and a good credit report are key to mortgage lenders when assessing applications.
So, try to ensure there are no major changes to your income or credit file in the six months leading up to your application.
If you do have to apply for credit or change jobs, it may be worth waiting before you apply for a mortgage
Remember to check your credit score and file before making your application and make any changes to anything that’s incorrect.
Also close down any unused store or credit cards to help keep your credit file looking healthy.
3. Save enough to cover all up-front costs
When buying, make sure you factor in all the up-front costs you need to, so you can avoid any unwanted bills further along the process.
Your deposit and any stamp duty owed will almost certainly be your biggest costs, but it’s important to also factor in and budget for all the smaller costs you’ll need to settle before you get the keys to your new home.
Set yourself a maximum purchase price and decide on your deposit contribution, then work out what you need to save in order to settle everything else.
Having a small contingency fund can also help, just in case there are any unexpected costs along the way.
4. Factor in insurance
Having the right insurance in place is not only vital to protect your investment, but it may also be a stipulation of your mortgage agreement.
Your buildings insurance policy may need to be in place when you exchange contracts, so make sure you have the money to pay for it within your up-front budget.
Shopping around for a good deal is crucial, but make sure it’s one that gives you enough cover should the worst happen.
5. Understand your new property’s energy efficiency
The rising cost of energy bills has been the major force at play during the cost-of-living crisis.
Therefore, being fully aware of a property’s energy efficiency has never been more important.
When looking at potential properties to buy, study their Energy Performance Certificate (EPC), which must be provided for buyers to view as soon as a listing goes live.
The EPC will tell you:
- How energy efficient the property is
- What the projected annual running costs for the property will be
- Some of the work you could do to make the property cheaper to run.
By fully understanding how efficient a property is, or how much it would cost to bring it up to standard, you’ll be able to make an informed decision on whether it’s the right home for you.
6. Be prepared to switch suppliers
When you move into your new home, you’ll be placed on a ‘deemed contract’ by your seller’s energy supplier – and this could mean you end up paying more.
As soon as you move in and provide your first meter reading, contact the supplier and ask them what deals they can offer you.
You can then compare tariffs with other suppliers and decide if switching is the right step to take.
7. Cut back on spending while you settle in to your new budget
It can take time to get used to your new property and how much it costs to run month-by-month.
So, while you adjust, consider cutting back on other, more general spending until you’ve adapted to your new household budget.
8. Sell the things you no longer need
Once you’ve found your new property and your purchase is progressing, turn your attention to the things you have but no longer need.
By selling items online or at events like car boot sales, you may be able to add some cash to your moving budget, as well as enjoying a good declutter before you move to your new home.
For help with planning your next move, contact your local branch.
