Buying a property is one of the most expensive purchases most of us will ever make. However, few people go into this process being aware of all the different costs involved, and why such services are required. Fortunately, you can read all about this topic in the post below.
Legal Conveyancing
The first cost you will need to consider when purchasing a new home are the legal fees, or as they are also known conveyancing solicitor fees. Conveyancing fees come in two main types – the legal fees and the disbursements.
The legal fees in conveyancing are what your solicitor will charge you for performing this service. They tend to cost from £400-£1500 and will be based on the value of the property you are buying. The disbursement charges cover third-party costs such as local searches and these can cost around £700 for freehold properties, and up to £1000 for leasehold properties. You must pay these legal conveyancing fees when buying a home, because they ensure that your property is bought legally, thus avoiding major legal issues further down the line.
Deposit
Another important cost to consider when purchasing a new home is the deposit. The deposit will be a percentage of the overall cost of your new home that you pay the developer to show you are serious about the purchase. The size of the deposit you put down will impact the type of mortgage you get, as well as the interest rate you can expect.
Commonly, the larger the deposit you can put down, the more favourable you can expect your mortgage to be. Typically most people put down between 15-10%, with some putting up to 25% down.
Mortgage Fees
Yes, that’s right not only will you have to pay your mortgage each month when buying a new home, but you will need to pay a fee when arranging your mortgage as well. Such fees tend to cover costs like valuing your property, and setting up your mortgage, and will differ between lenders. You may also be given the option to add your mortgage fees to your mortgage, which can make it easier and more convenient to pay off.
Stamp Duty
When it comes to the cost of buying a new home, stamp duty is one that you may also have to account for. However, it is worth noting that the minimum property value threshold for stamp duty differs across the UK, and the figures below are only for England.
Stamp duty is a type of property tax, but you only need to pay it in England if your new home costs more than £250,000. If so, then the payment tiers breakdown is as follows:
- £250,001 to £925,000 – 5 %
- £925,001 to £1,500,000 – 10%
- above £1,500,000 – and 12%
Stamp duty in England is also waived for first-time buyers on properties up to a value of £425,000.
Estate Agent
Excluding first-time buyers, those purchasing a new home will also need to factor in estate agents’ costs for selling their current property. While these vary between providers and the level of service you receive, most estate agents charge 1-2% of the final sale. Although there are alternative options you may wish to consider such as paying for an up-front package or using an online estate agent that waives their fee.
Surveyor
Engaging a surveyor is another cost to consider when buying a new home, and it’s one you won’t want to skip. This is because while using a surveyor is not compulsory, they can provide you with crucial information about the safety and structure of the property you intend to buy that will impact your decision. After all, only finding out that your new home needs an entirely new roof, has damp, or subsidence once you have paid up and moved in can be not only financially crushing, but emotionally devastating as well.
With that in mind, working with a Royal Institution of Chartered Surveyors member to get an RICS homebuyer survey is the most sensible option. In such a survey you can expect information on the condition of the building including any health and safety, or environmental issues or defects. A RICS surveyor can also provide guidance relating to planning permissions, and other legal issues. Prices for RICS surveys depend on the size of the property and can range from £300-14000.
Be sure to look for a RICS surveyor in your area. For example, if you are based in East London, then searching for the term ‘Chartered Surveyor East London’ should help to bring up the options closest to you. Then you can use the RICS register to check they are properly registered and endorsed, which will provide you with peace of mind that you will get the very best service completed to the highest standard possible.
Removal Costs
Last of all, something you will need to consider when purchasing a new home is the removal costs. Such costs will cover the transportation of your possessions from your old residence to your new one, and they will increase in price depending on the services rendered.
For example, you can hire a man with a van, and do most of the heavy lifting yourself and pay around £200 a day. Alternatively, you can use a professional moving company that comes with all the proper materials, experience and insurance for around £800. You can even pay extra to have them help you with the packing side of things which will bring costs up to approximately £1000.
