Costs of buying your first home

Costs of buying your first home


Buying your first home is an exciting step. But whether you are looking for a city-centre flat or a chocolate box cottage in a village, you will need to factor in the cost of the actual buying process when doing your sums.

On top of finding the cash to cover the sale price of the property – usually by saving up for a deposit and borrowing the rest from a mortgage lender – you will need to pay a solicitor or conveyancer, as well as cover moving costs and essentials such as home insurance.

If you are buying a house or flat worth more than £125,000, you will also have to fork out for stamp duty – a tax which can slap on thousands of pounds extra to the overall cost of your purchase. To avoid any nasty surprises, do your homework first.


The high cost of housing in the UK and the fact that most mortgage lenders require you to put down at least 10% of a property’s value, making raising a deposit the biggest hurdle to homeownership. With the cost of the average UK home now at around £170,000 (according to Halifax figures for August 2013), that’s means saving a total of £17,000.

On top of the interest you are charged on your mortgage, most lenders impose a range of fees when taking a mortgage.

To start accessing the better interest rates however, you’ll need at least 25% to put down which – on the same cost of the average home – means saving a whopping £42,500. 

Budget for: Between £17,000 and £42,500 


Lender’s valuation

Once you have found a property you like and had an offer accepted, your mortgage lender will want to carry out a valuation to ensure that the house or flat is worth at least the amount it plans to lend you. And, unless otherwise stated in your mortgage offer, this cost will fall at your door. The cost of a lender’s valuation will typically depend on the cost of the property you are buying.

Budget for: Between £200 and £500


Your own survey

A lender’s valuation however, is not a survey and won’t tell you about the condition of the home you are considering buying. To find out this, you will have too commission your own survey from an independent surveyor. You can find one at the Royal Institution of Chartered Surveyors

The cheapest and most basic survey is the home condition survey. It’s generally only recommended for new-build and convention homes and costs about £250.

For greater peace of mind, however, you can choose a homebuyer’s report, which includes a valuation (that your mortgage lender may use). Budget for about £400.

If you have concerns about the property, meanwhile or it is old, listed or an unusual structure, it may be worth shelling out for a full structural survey that typically costs anything from £600 upwards.

Budget for: Between £250 and £1,000


Local Authority Searches

You will have to pay for searches to be done on your home to check that there are no planning issues – for example a major road, property development supermarket is going to be built nearby – which could affect your purchase. Searches will also show whether your new home is properly serviced by underground drains.

Budget for: About £300


Mortgage fees

On top of the interest you are charged on your mortgage, most lenders impose a range of fees when taking a mortgage. The main fee to look out for is the arrangement fee, which have been creeping up in price (often to negate mortgage rates which lenders have been reducing to remain competitive). 

Arrangement fees are now typically between £1,000 and £1,500 but, as some are charged as a percentage of the loan, they could work out even more. You will usually be given the choice of adding the arrangement fee to the loan. Although this can help alleviate upfront costs, it does mean you will be paying interest on it for the length of your deal (unless you overpay on your mortgage by that amount at a later date).

Other fees to look out for include administration fees, product fees and even exit fees to leave the mortgage. You may also have to shell out a further £50 or so to have the mortgage money transferred to the seller’s solicitor.

Budget for: Around £1,500


Solicitor’s fees

You will need to hire a solicitor or licensed conveyancer to handle the legal aspects of your purchase, such as the payment of stamp duty and transfer of the property funds to the seller’s solicitor. The cost of this will usually be between about £500 and £750. You can usually opt to fix the price upfront but, even if you do, it may be more if there are complications with the purchase.

Budget for: Between £500 and £1,500


Stamp duty

Stamp duty is the cost with the biggest sting when it comes to buying a home as the tax is charged a flat rate of the purchase price. The rate you pay is tiered. Purchases of properties worth up to £125,000 are stamp duty-free. You’ll pay 1% on properties priced at up to £250,000; 3% on those worth between £250,000 and £500,000, and 4% on homes with a price tag of between £500,000 and £1million. If the home you are buying is over £2million, you’ll have to pay 7% in stamp duty.

Buy a house or flat for £250,000 then, and you will therefore have to factor in stamp duty of £2,500. Or on a £300,000 home, you will pay £9,000.

Budget for: Between £1,250 and £9,000


Home insurance

It's important to have home insurance in place from the day you exchange contracts on your new home – just in case. While most mortgage lenders only require you to have buildings insurance that covers the structure of the property, contents cover can also prove a great investment should you be targeted by burglars, for example.

The premium you pay for cover will depend on factors such as the size of your home and its location. However, you can save hundreds of pounds a year by shopping around for the best deal on MoneySuperMarket

Budget for: Between £200 and £600 


Moving costs

Employing a removal company can help to take the stress out of moving house, but of course, this will cost you. However, even if you decide to do it all yourself, you may well need to hire a van to transport larger items such as your furniture. You should therefore budget at least a couple of hundred pounds for the move itself.

Budget for: Between £200 and £1,000

Moving house? 


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