In This Guide
Apply for a mortgage
Buying at auction
Buying in Scotland
Conveyancing
Find and view
Negotiate
Plan your purchase
1. Buying overview
2. Purchase costs
3. Mortgage costs
4. Move Costs
5. Total cost planner
Success and failure
Surveys and valuations
To buy or not to buy
Plan your purchase
Purchase costs
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If you're thinking of buying for the first time, you may find this section a little alarming. Fact: buying a house is not cheap. You can never start with too much cash, and it's better to overestimate your expenditure than to get caught short. We believe that we have covered everything that you will have to spend, but if you think otherwise, let us know and we will add anything that we have overlooked.
If you feel like fainting, don't. Not every cost will be applicable to every purchase. The examples are for a two bedroom flat in London costing £166,000. If you are buying somewhere less expensive, then many of your costs may be significantly lower. On the other hand, if your budget is higher, your costs will be higher too.
Lots of the fees and charges that are associated with buying a house are stepped in relation to the value of the property you are buying. Rarely does the service you receive differ a huge amount for the extra money that you pay. It's just a fact of life that the more money you have, the more money people will try to extract from you in a variety of different ways.
Anyway, here is a brief rundown on the purchase costs:
You don't necessarily have to put a deposit down on a property.
There are many lenders who will be willing to advance you 100%
of the value of the home. But if you do this, you must be prepared
to pay a slightly higher rate than you would otherwise, as well
as a mortgage indemnity premium. If you do put down a deposit,
then 10% of the property value should mean that your don't incur
a MIG
fee.
There are potentially three or four costs associated with arranging
a mortgage:
- Application fee
- Arrangement fee
- Administration fee
- Mortgage indemnity premium
For more information on these charges, please read the page dedicated to mortgage costs.
Your solicitor will usually charge you a basic fee to cover taking
your instructions, advising you throughout the course of the sale,
acting and investigating on your behalf, explaining the contract
for purchase and completing the matter on your behalf. Though
this is rarely charged as a percentage of the property value,
it can be stepped, so that buyers of more expensive properties
pay higher fee. If you hunt around, you should be able to find
a solicitor with a basic charge of as little as £300+ VAT, but
remember that cheap is not always best.
On top of the basic fee, the solicitor will charge you for disbursements.
These are any activities that the solicitor undertakes which incur
a cost. This will normally include local authority searches, land
registry fees and various other fees and searches. Further details
of the individual activities are available in the solicitors and
conveyancing section. Expect to pay around £400 including VAT.
Stamp duty is where you pay the government a tax for the privilege
of buying a house. What do you mean that's a bit unreasonable?
It's only fair, they after all have a huge amount of work to do
in connection with the sale, like…err…Anyway, stamp duty charges
vary depending on the price of the property you are buying:
| Up to £60,000 | Nil |
| £60,001 - £250,000 | 1% |
| £250,001 - £500,000 | 3% |
| £500,001 + | 4% |
So if you are buying a property for £499,999, you will pay stamp duty of £14, 999.97p. If you are buying a house for two pounds more - £500,001, you will pay stamp duty of £20,000.04p - a full £5,000.07p more. The logic behind this seems somewhat flawed to us, but there you go, that's the way it is.
Given the relatively good chances of a mortgage lender refunding
the costs of a basic mortgage valuation, estimating the costs
of a survey is not all that straightforward. It is made all the
more complicated by the fact that there are a variety of different
types of survey available, the cost of which is not standardised.
Roughly speaking, you could pay nothing for your valuation (i.e.
have it refunded by your lender on completion of the mortgage),
or anything up to a thousand pounds. To get a better idea, it
is worth reading through the pages on surveys
and finding out more.
Moving your stuff out of your old place and into your new can
be quite costly. A lot depends on whether you are going to undertake
the removal operation yourself, or hire a company to do it for
you. For a detailed explanation of the costs (which can run into
the thousands), please read move costs.
You shouldn't discount the costs that you may have to incur once
you have moved in. Apart from potential rises in your monthly
outgoings, you may have to pay for such things as:
- Connection and disconnection
- Repairs Redecoration
- Other incidentals - installation of new equipment, carpet cleaning, mail forwarding
- Finally, don't forget to account for the selling costs if you are not buying for the first time - including solicitors fees, estate agents and so on.
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