Extra costs to consider when buying a house 

When buying a house, whether it be your first home or you are moving house, there will be a number of fees, asides from the cost of the property that you will need to factor into your budget. Make sure that you have enough money saved to meet the following upfront payment requirements before you consider buying a house.

Deposit

A deposit is the amount you put towards the cost of the property that you are buying. Typically, you will need to put down 5% to 20% if your houses value dependent upon your lenders requirements and whether you are buying a home through a government housing scheme. Generally, the bigger the deposit you put down, the lower your monthly repayments will be.

Legal fees

When buying a property you may need to involve solicitor or conveyancer to complete all legal paperwork. Additionally, they will carry out checks on the local area to ensure that there are no issues or up and coming plans that could affect you, your family and your property. Legal fees typically range from £500-£2000.

Booking Fee/ Application Fee

This is a fee that may be applicable depending upon your lender. The booking fee/ application fee, if applicable, is paid at the very start when you take out your mortgage. The fee is usually paid upfront and is paid to ‘reserve’ your mortgage funds whilst your application goes through. You should expect to pay around £99.00 for this.

Mortgage arrangement fee

Your lender may charge you a mortgage arrangement fee. The fees vary but around £1000 is typical. In most cases this fee can be added onto your mortgage loan, you will need to clarify this with your mortgage lender.

Stamp duty

If you are intending to purchase a property that is worth more than £125,000 then you will be required to pay stamp duty land tax. Except if you live in Scotland where since 1 April 2015 Stamp Duty doesn’t apply.

In the chancellor’s autumn 2014 statement, a reform of residential stamp duty was announced. This means that rates will now only apply to the part of the property price that falls within each band.

The below table shows how much stamp duty you will be required to pay based on the price bracket of the property you are purchasing.

Min property purchase price Max property purchase price Stamp duty rate
(only applies only to that part of the property price that falls within each band)
£0 £125,000 0%
£125,001 £250,000 2%
£250,001 £925,000 5%
£925,001 £1.5 million 10%
Over £1.5 million 12%

(The Money Advice Service)

Electronic transfer fee

This fee covers the cost of transferring the money from the lender to the solicitor and is typically priced at £45-£50.

Surveyor’s fee

Before you purchase a property you may wish or be advised to get it checked out by a registered surveyor. The surveyor will make you aware of any structural issues before you buy the property. You may think that this is an unnecessary fee, but just imagine if you were to move in to your new home without the knowledge that you need a new roof.

Please be advised that this is not an inclusive list of all fees that may be applied. This article is a guide to potential fees that may occur. Fees may differ for buy to let properties.

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