Costs of buying a house for the first time

Buying a house for the first time? Before you start your search, make sure you can actually afford to move. To help plan your budget, here is a list of the costs of buying a house for the first time. Once you have considered these costs you will be able to focus your search on properties that are within your price range.

Costs of buying a house for the first time

• Deposit
• Stamp Duty (where applicable)
• Solicitor fees
• Surveys
• Mortgage valuation
• Mortgage arrangement fees
• Broker fees

Deposits

When taking out a mortgage the minimum deposit required is usually between 5-10% of the total cost of the property. For example, a house at £200,000 with a 5% deposit will require £10,000 in cash. It is important to remember the more deposit you have, the less interest you will pay on the mortgage repayments. Usually the interest on repayments for 5% deposits is much higher in comparison to 10% deposits.

Stamp Duty Land Tax

Currently first time buyers are exempt from paying Stamp Duty Land Tax (SDLT) as long as the purchase price of the property you are buying is below £300,000. However, if the property costs between £300,000 and £500,000 you will need to pay SDLT at 5% on the amount of the purchase price in excess of £300,000.  First time buyers purchasing property for more than £500,000 will not be entitled to any relief and will pay SDLT at the normal rates. Visit Gov.uk for for further information on Stamp Duty.

Solicitor fees

When purchasing a property you will need to budget for a solicitor or conveyancer to carry out all the legal work. They conduct a number of searches before your purchase goes through. Solicitor fees can vary, but on average expect to pay between £850 to £1500. Your solicitor will usually request an upfront payment for local searches before acting on your behalf, these usually cost between £250 to £300.

Surveys

Carrying out a survey on a property you want to buy isn’t compulsory but is recommended. The survey will highlight issues/defects that the property has. Some defects could potentially be expensive to rectify, therefore knowing about them before buying a house is a good idea and will help you decide whether to go ahead with the sale, renegotiate the price or pull out altogether. The cost of a survey can vary, depending on the size of the property and the type of survey you would like.  More information…

Mortgage valuation

A mortgage lender will want to carry out a basic survey on the property to establish its current value and condition. Many lenders will do this for free, however some will charge you a fee (on average £200 to £300), therefore this is another cost to consider.

Mortgage arrangement fees

Arrangement fees vary between lenders. In some cases there will be no arrangement fee, it is entirely dependent on the terms of the loan.

Broker fees

Using an independent mortgage advisor/broker can be useful when it comes to finding a mortgage. They help to find a deal to suit your needs and will provide guidance during the application process. Some mortgage advisors charge a broker fee starting from around £500.

To start the ball rolling we can put you in touch with independent mortgage advisors, Apr Money Limited. Apr will search the market to find you the most suitable mortgage, plus they won’t charge you a broker fee. Keeping at least one cost down! See more…