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What’s the real cost of buying a home?

24.08.2021

By Beehive Money

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Don't forget about these areas you’ll have to pay for when it comes to buying a house. Lots of these things can sometimes be labelled hidden costs of buying a house but we’re here to forewarn you of what to expect when you buy a home so that you’re ready and all saved up.

Fees and charges you pay when buying a house 

When thinking about the costs related to buying your first house, the deposit you put down on your mortgage is just one part of the overall cost. There are other things along the process that you’ll need to factor in like mortgage fees, legal costs and removal/moving charges. Let’s dive in to having a look at them, shall we? Once you know about the extra costs you can start planning for them.   

Arrangement fees 

Most mortgage lenders will charge an arrangement fee for setting up the loan or arranging the mortgage for you. These costs go straight to the lender, they’re not charged by the mortgage adviser themselves.  
 
You can get deals without fees, but they’re likely to increase the interest rate you pay and your monthly repayments could be higher because of this.  
 
Fees will vary between lenders, and some lenders will allow you to add the fees onto your mortgage, rather than pay them upfront but this will mean that your monthly payments could be higher.  

Solicitor fees and conveyancer fees  

You’ll need a solicitor (also called a conveyancer so these are the same set of fees and the terms are often used interchangably) to sort out the legal parts of buying and moving home, such as transferring the legal title of a property from the seller to you, the new owner. These conveyancing fees vary across solicitors and are dependent on your location. You will need to ask for a quote, but it could be from around £1,000 up to over £2,000 depending on where you live and how much legal work is needed for your house purchase.   

Searches  

A ‘search’ is when your conveyancer requests information from the local authorities to confirm details about any planned developments, disputes or roadworks that may affect a property. The searches are usually payable to your conveyancer and most of the time aren't refundable. 

Land registry fees and Stamp Duty Land Tax  

You won’t have to pay Stamp Duty rates if you’re a first-time buyer up to a certain amount, however everyone else will – and the amount is based on the value of the property you’re buying. Visit the GOV.uk website for the current taxes and head to our handy Stamp Duty calculator to work out how much you could pay on your purchase. The land registry fee you pay will vary depending on the value of the property.  If you do need to pay Stamp Duty this'll be paid to your solicitor. 
  

Valuation costs  

Your lender has to make sure that the property is worth the value you’ve agreed to pay for it. This is done through a valuation. Costs vary depending on who carries out the valuation. Some lenders also offer free valuations. While the internet is a great source for research, it’s well worth taking mortgage advice before you embark on buying a property. You might also consider having a Homebuyer Report (which includes a valuation report).  This supplies a more detailed review of the property but tends to be pricier than a standard valuation.  

Mortgage adviser fees 

When you buy a home and you take out a mortgage there are sometimes arrangement fees for your mortgage product and, if you’re working with someone to help you choose your mortgage, there’ll be mortgage adviser fees to pay. Sometimes these are included within your final mortgage figure and sometimes you’ll have to pay them upfront. Speak to the experts at Mortgage Advice Bureau about your circumstances and they’ll be able to let you know what deals you have access to and what fees you might incur.  
 
We also have a useful mortgage calculator that can help you work out what your monthly repayments could be on your mortgage – you might find this handy to have a look at when choosing a mortgage. 

Higher lending charges  

A small number of lenders apply these charges if your loan-to-value ratio (LTV) is high. For example, if you’re a first-time buyer wanting to borrow 95% of the property value, they may charge extra as you seem like a higher risk. The charge covers their insurance fees in case you default on your repayment. So having a larger deposit might mean you'll be able to access more deals with lower lending charges. If you need more tips on how to save for your deposit, Beehive is here to help.    

Removal/moving fees  

How much stuff you have will obviously determine whether you need a big lorry and a removals company or whether you could easily hire a van and do it yourself. If you can do it yourself it will almost certainly be cheaper, but removals companies are experienced in fitting everything into the back of a van like a magic game of Tetris, so it depends how confident you are in your own packing skills. The cost will depend on how much you have to move and how far, but removals companies usually work on half a day or a full day basis when it comes to billing. 

    

Insurances

You’ll no doubt want to protect this new (and very expensive) thing that you’re buying so insurance is key.  
 

Indemnity insurance

House purchase indemnity insurance is something that you can get before you officially complete on the purchase of the house. This will protect you against anything in the property that was either hidden from you, unexpected or you weren’t made aware of in the sale process. Of course, there’s a limit to what’s covered as with any insurance for house purchases. Your solicitor will discuss this with you and it'll usually be added to your final bill.

Home insurance  

You’ll legally have to take out buildings insurance just before you complete on the purchase of your new home, as a requirement from your mortgage lender.  

Contents insurance 

You can take out home contents insurance at the same time to cover your belongings too so that you’re ready for when you move in. These are available as joint policies or separately if you’d prefer.  
 

Fees once you’ve moved  

Of course, it doesn’t stop there once you’ve moved in, there’s always something to pay for when it comes to being a homeowner.  

Maintenance costs 

General maintenance costs of owning a house are a given. For example, things like gutter clearing, window cleaning and any gardening or landscaping works you aren’t able to tackle yourself. There’s also replacements and repairs over the years to think about such as windows, roof tiles, boilers and even things like kitchens and bathrooms. The maintenance costs don’t end but the positive is you could be adding value if you repair or replace something in your home.    

Common necessary repairs 

Sometimes there can be small hidden costs of buying a new-build home with what’s called ‘snagging’. These are little jobs around your house that the builders may have finished but they might not be exactly how you wanted them to be depending on what you’ve paid for in your build. Keep this in mind as your build finishes up and either ask for them to be completed if possible or make sure you save a little extra money. 

Similarly, if you’re buying an older home, you might already be aware that there are some repairs to make as soon as you move in, but these are things that you would have hopefully been aware of before the purchase. It’s always a good idea to have a savings pot aside for repairs such as leaky taps or squeaky garden gates.
   

Home improvements 

Unless you’ve had a new-build home built from the ground up and chosen every wall colour, fixture and fitting in it you might have some home improvements in mind to make the house feel fresh and ‘yours’ if someone’s lived there before you. 

There we have some hopefully no longer hidden costs of buying a home for you to think about and make sure you’re ready to tackle. Good luck with your house purchase, and remember, you can always come back to the Beehive Money guides anytime to read up on the mortgage application process or for any information on understanding mortgage interest rates and more!


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