The hidden costs of buying a home

When you decide to buy a home you often look at the sale price - but this is not your final number. Prepare to spend a lot more. The total cost of buying a house includes some major upfront costs and several smaller ones. A mortgage will not help you cover these fees. 

Here’s the math:

Start with the deposit 

The minimum deposit for a mortgage is 5% of the home cost. But in reality, few if any mortgage providers will cover 95% of the home price. So prepare to put a deposit down of around 15%. Saving for deposit totals, on average, £33,000 outside London and £115,000 in London. This will be your biggest upfront cost of buying a home.


+ Stamp duty

If your home is valued at or above £125,001 you will have to pay a government tax called stamp duty. First time buyers have different limits and exceptions: no stamp duty on the first £300,000 for properties valued at or below £500,000.

The total stamp duty tax varies depending on the cost of the property, and the rate goes higher along with the home price. You can use a stamp duty calculator to determine what you can expect. Mortgages do not cover this tax or any other additional home purchase costs. 


+ Valuation fees

Before the mortgage lender gives you a loan, they will do an evaluation of the property. Some do not charge for this, while others will charge you between £150-£1,500. That price often depends on the value of the property in question.


+ Legal fees

Although there are some digital services that let you handle the legal side of a home purchase by yourself, it really is a good idea to go through a licensed conveyor or solicitor. They will handle a shocking amount of legal paperwork when buying and selling. 

Solicitor fees for buying a house are often laid out upfront. They may be a fixed fee of around £850-£1,500, or a percentage of the home sale. 


+ Electronic transfer fees

Sending money isn’t free. Especially when it’s a lot. Expect to pay around £50 in these fees. 


+ Estate agent fees (for sellers)

If you are selling property, expect to pay the estate agent a percentage of the sale price, or a pre-agreed fixed fee. This house selling cost means you will have less than your sale-price in hand to put down as a deposit on a new home.


+ Removal costs

The cost of moving house physically is perhaps the most obvious. And unless you have some very good, strong friends with free time and a van, you can expect to pay several hundred pounds to a removals company. 


+ Mortgage fees

There are many kinds of mortgages, and some of them have various fees associated with their arrangement. These can total between £100 and £2,000.


Saving up for your home

Now that you know a bit about the hidden costs of buying a house, be sure to change your “saving for a home” goal to reflect it. You can use Money Dashboard to set up and adjust your budget and track your savings towards your home-ownership goals.

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All content is for informational purposes only and is the opinion of the author. Nothing on this website should be interpreted as "advice". Money Dashboard Ltd make no representations as to the accuracy, completeness, suitability or validity of any information on this site and will not be liable for any errors or omissions or any damages arising from its display or use.

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