Buying a house is likely one of the biggest purchases you'll ever make. Beyond the purchase price, there are additional costs to factor into your budget. Being prepared for these expenses is key to smoothly navigating the home buying process. Here are 5 key things to budget for when buying a house in the UK.
1. Mortgage Deposit
Most lenders require a deposit of at least 5% of the property's value to secure a mortgage. The more you can put down as a deposit, the better mortgage rates you’re likely to secure. Experts recommend aiming for at least 10-20% if possible. Calculate the deposit based on the asking price, not what you hope to negotiate down to. Getting estimates from multiple mortgage lenders can give you an idea of the deposit amount needed for your situation.
2. Conveyancing Fees
You’ll need a licensed conveyancer or solicitor to handle the legal side of your purchase. Budget £850-£1,500 for conveyancer fees to cover search fees, land registration, preparing contracts/deeds and more. Rates depend on your property's value and location. Shop around for quotes as fees can vary widely between conveyancers.
Many conveyancing solicitors carry out their job completely online these days, which is convenient for clients, but read reviews and consider the merits of working with a local solicitor, who is available in person when you have questions or need to drop paperwork off.
3. Surveys
A homebuyer survey done by a surveyor RICS gives insight into a property’s condition and identifies issues that need addressing. There are different survey levels, with prices starting around £200 and going up to £1,000 or more. An RICS Level 2 survey carried out by a chartered surveying company offers good insights into the major areas, and is ideal for more modern properties. A more in-depth Level 3 building survey may be more suitable for older or listed buildings. Factor in extra costs if the survey uncovers problems needing professional inspection. Engaging a property surveyor, such as a house surveyor in Norwich, in the early stages of the transaction, can prevent unwelcome surprises down the road.
4. Stamp Duty
This tax must be paid when you buy a home over a certain price. The rate is based on the property purchase price. First-time buyers pay nothing on homes under £425,000 and reduced rates on homes up to £625,000. For other buyers, stamp duty kicks in on homes over £250,000. Account for stamp duty right away as it's required when you complete the purchase.
5. Removal Costs
Don’t underestimate the cost of moving! Hiring a removal company typically costs around £500-£800 per day. Renting a van and moving yourself is more affordable but requires serious elbow grease. If packing supplies, rental vehicles, movers to help load/unload, storage fees and more are needed, removal costs add up quickly. Get quotes and estimate high when budgeting.
Building in buffers for the many additional, often overlooked home buying costs makes for realistic budgeting. Seeking professional advice around estimates for your situation ensures your first home purchase goes smoothly. Being prepared for all the associated fees and expenses gives you financial confidence throughout the process.
