How Much Does it Cost to Buy a House?

With the UK cost of living crisis and soaring energy bills, you may be asking yourself, is now a good time to buy a house? To help you make a better-informed decision, we explore the costs associated with buying a new home and, just as important, the hidden costs you need to watch out for.

Let’s take a look at the basics. The costs of buying a house typically include the following but will not be relevant for everyone.

  • A deposit
  • Mortgage fees
  • Legal fees
  • Survey fees
  • Valuation fees
  • Broker fees
  • Stamp Duty
  • Insurances
  • Removal costs

How much deposit do I need to buy a house?

If you are a first-time buyer, you will typically need a deposit between 5% and 25% of the total value of the property. According to MoneySuperMarket, 18% is the average deposit required for home buyers. The higher the deposit, the lower the interest rate on your monthly mortgage payments. According to Halifax, the average house price in the UK as of 2021 is around £276k; a 10% deposit would mean an upfront cost of £27,000. Remember, the more deposit you have, the better the access to cheaper and more varied mortgage deals.

If you have owned a home before, the amount of deposit you will need to have will be similar to that of a first-time buyer. Aim for a 10% minimum, and the more, the better!

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Mortgage fees when buying a house

If you need to secure a mortgage to purchase a home, don’t forget to factor in the mortgage fees. Lenders will apply charges for arranging the mortgage, booking the mortgage and other hidden costs for setting up your loan. Fees can range from £100 to £1500 so keep this in mind. Also, be cautious of lenders who offer a ‘no mortgage fee’ option; their interest rates tend to be higher.

Legal fees for buying a house

If you’re worried about spiralling legal fees, you may be asking yourself, ‘do I need a solicitor to buy a house?’ - we’re afraid the answer is a firm ‘Yes’. To handle the legal part of buying your property, you must instruct a property solicitor or conveyancer. To find a licenced conveyancer, use recommendations from friends and family or try the website. Legal fees can cost between £500 and £1500. Remember, this doesn't include your stamp duty fees and other disbursements, so don't be shocked when you see a quote much higher than this for your legal team.

Standard legal fees often include charges for verifying your ID, money laundering checks, transferring money electronically, land registry processing and searches. 20% VAT will also be added to your bill, so be prepared for that extra charge when it’s time to pay. The amount of legal fees you will pay depends on the property type and location and the complexities of your purchase.

Do I have to pay for a survey when buying a house?

Although not a legal requirement, arranging a house survey is wise when purchasing a house. A house survey could save you thousands by exposing any potentially unexpected work and will better inform you of the condition of the home you wish to purchase. It may even offer some bargaining power if you can negotiate a reduced price based on any significant findings.

The level of survey you need will depend on the type and age of the property you are buying. You may need a basic survey or a complete structural survey. Surveys can range from £300 to £1500+. The HomeOwners Alliance have great advice on choosing the right house survey.

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Valuation fee

You have found the property you want; now, it is up to the lenders to tell you if the home you wish to purchase is worth what you are buying it for. The valuation fee is to protect the lender themselves; should the house fall into repossession status, they want to make sure they can sell it for an amount reflective of the market. The average price of a valuation fee is £300, but it can be more.

Mortgage broker costs

Mortgage brokers act as the middle man in the house buying game; they can help you find the best mortgage deal, particularly if you have specific or complex circumstances such as adverse credit. You don't have to use a mortgage broker to find a mortgage; this is your choice.

How much do mortgage brokers charge? Some mortgage brokers charge no fee to the buyer and make their money by charging a commission to the lender. Some will charge an hourly fee; these costs can increase unexpectedly, so beware of this option. Mortgage brokers may charge you a fixed fee ranging from £300 to £600; a more open and honest approach than an hourly rate; just be sure there are no additional charges before signing on the dotted line.

We recommend avoiding a mortgage broker who will charge you a percentage fee of the mortgage you take out; this will result in you paying a more considerable amount than a set fee or none at all! When using a mortgage broker, ensure you find one approved and regulated by the Financial Conduct Authority.

Stamp Duty rates

You will see your Stamp Duty cost included within your conveyancing agreement as a legal team will handle this on your behalf. So how much is Stamp Duty in the UK? Your Stamp Duty costs depend on a few things, mainly when you buy the property and how much you pay.

Below is a breakdown of the current rates for Stamp Duty in the UK.

Property or lease premium or transfer value Stamp Duty Rate
Up to £125,000 0%
£125,001 to £250,000 2%
£250,000 to £925,000 5%
£925,001 to £1.5 million 10%
Above £1.5 million 12%

The .gov website is full of helpful information including a Stamp Duty Calculator so you can work out your exact costs. There are some exemptions to paying Stamp Duty; for example, first-time buyers for properties under £300,000 do not need to pay Stamp Duty, and other exceptions could apply.

Note: the Stamp Duty rate information above is correct at 5th May 2022.

Home Buyers Protection Insurance

Should, the purchase of your property, fall through, Homebuyers Protection Insurance can help cover your costs. The housing market can be unpredictable; if the seller pulls out, a chain collapses, or your mortgage valuation is too low, this could cost you thousands lost on surveys, conveyancing costs, and mortgage arrangement fees.

Home Buyers Insurance is not compulsory, but it is favourable to prevent any significant losses.

How much is home buyers' insurance? Costs range from £60 to £150 depending on the level and duration of cover you want. The HomeOwners Alliance website is packed with information on ensuring your home buying costs are protected.

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Removal costs

It is essential when buying a house that you factor in the cost of your removals. It may seem like the last piece of the puzzle, but it's critical to consider these costs from the outset to have a precise spending plan. People often tend to avoid the cost of removals and do it themselves; big mistake! Without careful packing and transportation of their goods, it can cost homebuyers a lot of money due to damages, not to mention the stress of the process.

Check out our guide on how to choose a removal company and get in touch for further advice or a removal quote for your move.

Buying a house is an expensive business and it’s worth taking into account all the extra costs to prevent overstretching yourself. You may well find that you need to save that little bit extra as it is estimated that costs can amount to up to 10% of your total purchase price.

Check out our moving home checklist for even more information on the big move.

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