What costs are there to consider when buying a property?

When it comes to buying a property this can be an incredibly exciting time. Whether you’re a first time buyer or you’re moving up to somewhere bigger and better, the process of purchasing is filled with positive change. Ensuring that you’re prepared for the financial side of buying a property is essential – these are the key costs that you’ll need to plan and prepare for.

The mortgage

Obtaining a mortgage isn’t just about covering the repayments when they start. Mortgage lenders also charge a number of fees that you’ll need to put aside the cash to cover in advance if you can. Arrangement fees, for example, are often around 1% of the value of the mortgage and are charged by virtually every lender. You may have the option of adding this to the repayment amount for the mortgage, rather than paying it up front. Indemnity fees are another potential charge to look out for – this is the cost of insurance if your mortgage has an especially high loan to value amount. Many lenders don’t charge this so it’s worth enquiring when you’re making a choice between banks.

Stamp Duty

Currently, first time buyers are experiencing a Stamp Duty holiday. So, if you’re buying your first property then it is tax free up to £300,000 and you’ll pay 5% between £300,000 and £500,000. For those who aren’t first time buyers – or who are purchasing properties worth more – rates could be up to 12% of the property value.

The legal process

Buying a home legally requires a conveyancer or solicitor to get involved with the paperwork and some negotiation. The fees involved vary widely depending on factors such as where you are in the country and what kind of property you’re purchasing. They could be as low as £800 or run into the thousands. It’s often cheaper to work with a conveyancer, as opposed to a solicitor, and that may be the cheapest option if the buying process is going to be fairly straightforward.

Surveys, searches and valuations

Investigating the property and making sure that you’re not paying more than you should be is also part of the buying process – and each stage costs money. Surveys, in particular, can be very expensive and, depending on the type of survey you opt for, could run into several thousand pounds. There are always options when it comes to these costs in terms of how much you want to spend – the deeper you delve into the searches, the more expensive it will be. But even if you don’t opt for the most extensive searches, surveys and valuations some money needs to be set aside to cover these costs.

Moving costs

There are a number of moving costs to factor in to a budget when you’re buying a property. Removals, for example, could be a substantial expense, as well as any labour you’re going to need to help with packing or cleaning. Storage may also be required for your possessions if there is a delay in completion, as well as transport for your things to and from the storage unit.

If you have questions or queries about the process of buying a property please get in touch.