A house or apartment is a pretty expensive thing, we all know that. But how much cash do you actually need to buy yourself a new home?

This blog is going to take a quick look at what is needed and how much you need to set aside for it.

Deposit

This is the main area you have complete control over, and it’ll be the biggest one, so let’s start here.

As a first-time buyer, you can get up to 95% of the purchase price as a mortgage without too much issue. You’ll pay a higher rate of interest than if you went for a lower percentage, but it’s a possibility for you.

Now there’s a whole bunch of other things that come into play here, but a general rule of thumb for first-time buyers is to expect to put down between 25% and 5% of the purchase price.buying a house is cheaper

Which can make a huge difference in the kind of property you might buy. If you have a £15,000 deposit it is the difference between a £60,000 home and a £300,000 home.

Bit of a difference.

Mortgage Advisor Fees

You don’t need to pay a mortgage advisor to get you a mortgage. This is entirely your choice. There are even mortgage advisors out there that don’t charge anything and just receive a commission from the lenders.

But, if you do want to be guided by an expert then you can expect to pay anything from £500 up to £1,000.

I personally charge £595 up front to act as your Mortgage Advisor. But this is 100% refundable if I can’t do my job.

The benefits of working with someone like me is that I can check the whole of market to find the most suitable product for your needs. I can also explain all of the options out there to you, and make sure you know exactly what you’re getting yourself into.

As discussed above, the mortgage product you end up with can be the difference between a £60k two-bed terrace and a £300k 4 bed detached.    

Mortgage Arrangement Fees

These are the fees charged by the lender for giving you the mortgage. It can vary from nothing up to 3% of the amount they lend, but often it’s a fixed fee.

Again a Mortgage Advisor will earn their fee by working out whether you’re better off paying a larger upfront arrangement fee and lower interest payments or vice versa.

Another option is to add the cost of the arrangement fee onto the loan. This does end up costing you more in the long run because you’re paying interest on the fee. However, a lot of first-time buyers go this route to minimise the amount of cash needed up front.  

But if you budgeted £1,000 that would usually be fine.

Stamp Duty Land Tax

This is the tax you pay for the privilege of buying a small part of the UK. It is a sliding scale from 0% up to 12%. Now, the good news is there is no stamp duty to pay for first-time buyers up to £300,000. And reduced rates for purchases up to £500,000. Yay for being a first-time buyer!

If you aren’t a first-time buyer, then the below rates will apply.

Stamp Duty Rates

Band Normal Rate
less than £125k 0%
£125k to £250k 2%
£250k to £925k 5%
£925k to £1.5m 10%
rest over £1.5m 12%

Survey Fees

Every purchase will require a valuation survey to be undertaken. This makes sure the lender is protected when they give you money. You’ll often still end up paying for this survey, so budget around £250 for this.

You can upgrade these surveys though. A HomeBuyers Report will give you a bit more information on the state of the property, and give you a clue as to what areas need further investigation. This will set you back around £400.

A full building survey is generally only needed for a property that is in a state of disrepair, or it’s particularly old or even listed. This is going to run you anything from £600 – £800.

Solicitors / Conveyancer Fees

When buying a property it’s important for both the lender and you to make sure the person selling it to you has the right to actually sell it. And there’s nothing too untoward going on with the legal ownership.

Solicitors or conveyancers will do all of the necessary searches to make sure it’s a sensible idea to buy the place, and there’s nothing insane written in the lease – like you have to pay for the upkeep of Westminster Abbey when you buy the place.

With some mortgages you can get this paid by the lender, so a decent mortgage advisor could pay for themselves by getting this type of deal!

Within these costs, you will have to pay for searches that are carried out, which will run to around £300 usually.

So all in, budget in the region of £800 – £1,500

Moving Fees

While this could potentially be nothing, it makes sense to budget something for the hire of vans or payment of some kind to your friends for helping move you, or if you’re so inclined – the cost of a moving company.

At the low end, you can expect to pay around £300 once all is said and done for this, up to £1,500 for a complete service removal company.

Home Insurance

At the point of exchange of contracts, you are officially responsible for the property. So it’s a sensible idea to make sure you have some kind of buildings insurance in place. If it’s a flat it’s less important as this will usually be covered by the service charge. But if not, then it’s on you!

You can expect this to be in the region of £300-£500.

Summary of Costs

Here is a table summary of the costs involved.

Item Lower End Cost Top End Cost
Deposit £X,XXX £XXX,XXX
Mortgage Broker £0 £595
Mortgage Arrangement Fees £0 £995
Stamp Duty Land Tax £0 £0
Surveys £250 £800
Conveyancing Solicitors £800 £1,500
Moving fees £300 £1,500
Home Insurance £300 £500
TOTAL COSTS £1,650 £5,890

You’ll probably end up somewhere in the middle of the two. I would (unsurprisingly really) recommend the services of a decent Mortgage Advisor. Whether it’s me or someone else, if they are any good they can save you the cost on the other fees up front, but certainly, on the lifetime of the mortgage, they arrange for you. Plus the amount of time saved searching lenders and filling out paperwork will be worth it for most people!

For a free and no obligation chat to see if I can help you with your upcoming property purchase, get in touch HERE.

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