If you’ve decided it’s time to get onto the property ladder and have begun budgeting for a house, don’t be caught in the trap of thinking it is just the deposit you need to save for. There are a number of other costs that you need to factor into your calculations that you may not have previously considered.
When budgeting for buying a house, there are a multitude of extra costs you’ll need to consider on top of the deposit.
To help you along, we have looked at the other additional costs that you will be facing, in order to help you estimate how much you will need to put aside for elements such as legal fees, house surveys and mortgage fees.
Once you’re fully up to speed to how much these additional expenses will amount to, you can start thinking about how big of a mortgage you can afford, based on your circumstances.
Mortgage costs
Once you start looking for a mortgage, you will find that the vast majority will be paired with arrangement fees and initial set-up fees. If you really do your homework, you may be able to strike a deal where this cost is slashed, however you may end up with higher interest rates as a result. Some lenders may also give you the option to add these fees onto your mortgage loan if you don’t have the money upfront, but you should avoid this where possible, as you will end up paying a significant amount of interest on it.
Once you put an offer down on a property and it gets accepted, your lender will then want to complete a valuation, to ensure that it is worth the asking price. Although they are likely to arrange this themselves, you will be responsible for covering the cost. Depending on the size of the property, you will be looking at an additional £200-£600.
Additional to this, if your deposit is 25% or less than the overall price of the property, you may also find yourself having to pay a higher lending charge.
House survey costs
Despite getting a house valuation from your mortgage lender, it is highly recommended that you arrange for a separate survey to be carried to make sure there are no hidden problems with the condition of the property. Depending on which type of survey you go for, it will reveal any issues to do with the state of the property and take an in depth look into its structure. This survey can’t really be avoided as, you will need to understand any problems with the property before you seal the deal. Should there be any issues, the surveyor will be able to tell you how much you are likely to pay to bring it up to scratch, so you can then make an informed decision on whether or not to continue with the purchase. This could cost you anywhere in between £350 to £1,300.
If the property you are looking at is less than 40 years old, you will have the option to have a conditional report. Although this is more basic, it is adequate for newer homes that are in good condition and will only cost you £150 to £300.
Legal costs
If the initial survey comes back clear and you want to continue with the purchase, you will need to appoint a conveyancing solicitor to deal with the legal aspects of purchasing the property. Depending on the firm you choose to go with, you may be looking at paying either a flat fee or a percentage of the price of the property. This will be in the region of £400 to £850, depending on how complex to process is.
Unfortunately, you will also be required to pay a fee of £90 to £140 to The Land Registry to transfer the property into your name.
If the property is leasehold, you will also need to pay a fee for this, which should be approximately £140, regardless of the price of the property. The may also be a yearly maintenance fee on leasehold properties, so you should be wary of this when working out your budget.
Stamp duty costs
Another cost you will have to factor in is stamp duty. This is a tax that falls on all land and property transactions, but you will only have to pay it if the property is worth more than £125,000. The amount you will be required to pay depends the value of the property you are purchasing, it will increase as the price of the property does.
About Gorvins Solicitors
Gorvins Solicitors have been operating for over 150 years and in this time they have helped thousands of clients take their first steps onto the property ladder. Now, they would like to help you do the same. Gorvins have a dedicated property and conveyancing team, who are expertly trained to help you at every stage of the process, offering you friendly and knowledgeable advice. If you would like to find out more information, then please visit the Gorvins website, where you will find a number of helpful resources, including an interactive first time buyers guide.
