The process of buying your own home can be challenging at the best of times. With packing, logistics, and having to notify people of your change of address, it’s easy to overlook how much things are going to cost you.
Luckily, in this article, you’ll find a breakdown of the types of costs you can expect to incur. We’ll look at each cost in detail and give you an estimated idea of the overall budget you should aim for.
The Deposit
The deposit for your new home is likely to be the first cost you incur, making up a percentage of your overall property purchase price. Typically, a deposit ranges from 5% to 20% of the purchase price, but a larger deposit increases your chances of receiving a mortgage and a lower interest rate.
Stamp Duty
Stamp Duty Land Tax applies to properties that cost over £125,000. This tax applies to both freehold and leasehold properties, whether you’re buying outright or with a mortgage.
Valuation Fee
Not all mortgage lenders charge you a fee to value a property. The mortgage lender and type you choose determine it.
It’s worth bearing in mind that your lender’s valuation shouldn’t be considered an extensive survey. The valuation is solely to determine the property’s overall value for the purpose of your mortgage and may not take into account repairs and structural damage.
Surveyor’s Fee
This brings us to the next step: paying for a thorough survey of the property. Having a surveyor do this is crucial to gain a good understanding of any issues the property may have before you purchase.
A basic home condition survey will cost around £250. To get the very best survey, including any structural damage to the building, the price can be closer to the £600 mark and over. It’s important to get a survey done, as it will save you money on repairs in the future.
Legal Fees
It’s difficult to get away with buying a home without employing a solicitor or licensed conveyancer to carry out all the legal paperwork. They will also do local searches to see whether there are any local plans or issues that might affect your property, which will cost you £250–£300. On top of this, the legal fees are typically £500–£1,500, including VAT at 20%.
Electronic Transfer Fee
While this is a relatively small fee in comparison to some of the others, you’ll need to budget in at least £40 to £50 in electronic transfer fees. This will cover your lender transferring mortgage funds to your solicitor.
Removal Costs
Finally, you’ll need to consider the cost of moving your furniture and possessions to your new home. Hiring a professional removal company can be a great route to go down in order to lessen the burden and stress placed on you as you move.
A typical home removal service will cost around £300 to £600, although it’s worth bearing in mind that they tend to charge more over weekends, and towards the latter end of the month.
Summary
Putting the higher end of each estimate together, based on a property worth £175,000, the maximum estimated budget you’ll need to save in order to move without a hitch would be in the range of £45,000.
This is a significant cost, so you should look to save in areas that aren’t crucial, such as removal costs and transaction fees. In certain circumstances, there are also agencies available that can help with these costs, so it’s worth exploring every possible option.
Ultimately, knowing your budget will give you a goal to save towards, saving you time, money, and a lot of stress further down the line.
If you’re thinking of buying your own home or would like more information on the buying process, contact your local Martin & Co branch today.
