You’ve saved hard to pull together your deposit. You have a mortgage in principle. And you’ve budgeted for any furniture and renovations you need for your new home.
But are there any costs you’ve forgotten to factor in? Here’s a transparent rundown of the other costs involved in buying a house.
Stamp duty land tax
Remember back in 2020 – 2021 when the Government introduced the Stamp Duty holiday? This was a very effective way of boosting the property industry because buyers didn’t have to pay stamp duty on properties of £500,000 or less. That saved buyers thousands (or did it?), and lots of people rushed to buy to take advantage of the savings.
Now that the rates have returned to normal, a buyer (depending on their circumstances) will pay £12,500 in Stamp Duty Land Tax for a property worth £500,000.
Here are the current rates of Stamp Duty Land Tax for a single residential property, which you can find on the Government’s website https://www.gov.uk/stamp-duty-land-tax/residential-property-rates:
| Property value | SDLT rate |
| Up to £250,000 | Zero |
|
The next £675,000 (the portion from £250,001 to £925,000) |
5% |
|
The next £575,000 (the portion from £925,001 to £1.5 million) |
10% |
|
The remaining amount (the portion above £1.5 million) |
12% |
Stamp Duty Land Tax is a sizeable outgoing on top of the purchase price of your property. So don’t forget to put some savings aside for it.
Lender valuation
When you apply for your mortgage, your lender will send out a surveyor to double check that the property is worth what you’re paying for it. This cost is often wrapped up in your mortgage package, but as a standalone cost you’re looking at £150 to £1,500.
Surveys
Later down the line, you’ll commission your own survey to check for any problems in the property that might make you think twice about buying it (dry rot or mould for example). Depending on which ‘level’ of survey you go for, it’ll cost between £250 and £900.
Searches
As part of the property transaction, we carry out searches on the property. That’s things like checking the title (or ownership), checking the flood risk, finding out about any planning decisions that affect your property. The total cost of these searches is usually around £350 to £500.
Solicitor fees
Solicitor fees are another cost to factor in. A typical cost for a property transaction (which is purchase only) is usually around £900 to £2,000 (and if the lawyer quotes you less than this – question (1) the service you will be getting for the fee (2) what referral fees they are paying the agents and (3) what ‘add on’ fees are payable to enhance the fee (so you don’t get any nasty surprises at the end of the transaction!)).
We give you a fixed fee at the outset so you know what to budget for and we have consistent 5* reviews, we are always at the end of the phone (during usual working hours) and respond to emails promptly and professionally. Furthermore, not only are you getting access to a qualified lawyer, but also one with considerable experience – Sarah having 28 years conveyancing experience!
Don’t cut corners on legal fees or just focus on the cheapest price (cheap does not mean good or fast!) as getting poor or the wrong advice, could cost you dearly in the future.
Buildings and contents insurance
Mortgage lenders often make it a requirement of your mortgage that you at least have buildings insurance in place. Of course, insurance costs will vary depending on the size of your house and the value of the contents you’d like to insure. As a rough guide, you could be spending £200 to £800 a year on buildings and contents insurance.
Those are the costs that are usually mandatory in every house purchase. You may decide to opt for one of the optional services below, which can make life a bit easier and give you extra peace of mind during the process.
Mortgage broker (optional)
You don’t need to use a mortgage broker, but it certainly takes some of the stress away from finding the best mortgage for you. A good mortgage broker will have access to many more lenders than you will by yourself, and they can advise you on rates, product fees, and options for self-employed people among other things.
Removals (optional)
Whether you need to hire a van for moving day, or you get a whole team of packers and movers, you will probably need to set aside some budget for removals. Again, it can be a helpful way to take some of the stress out of moving and make the day a little less tiring and overwhelming.
Critical illness cover, life insurance, and income protection (optional)
You don’t need these insurance covers, but when you buy a house, it’s a good opportunity to think about these things. These types of insurance will make sure that you can continue with mortgage payments if you become unwell, or even if you die. It’s a way of making sure you (or your children) don’t lose the home if your health declines and you can no longer work.
Will (optional)
Again, not mandatory, but it might be a good time to think about drafting a Will. We wrote another blog on this for more information: Should you get a Will when you buy a house? (https://sumhowe.co.uk/should-you-get-a-will-when-you-buy-a-house/)
We are transparent about the costs from the outset. If you’d like any help with buying or selling your home, and you want peace of mind about the costs, please get in touch.