Beyond the deposit: costs of buying a house

Last updated 04/08/2020 to update government Stamp Duty Land Tax changes no other figures revised since article published on 17 September 2019.

Let’s talk about extra costs. The expenses you might have to pay on top of your deposit when you buy your first home. Try not to be deflated if you’re finding out about them for the first time though. Because although they can be a pain, it’s better to find out about them now so you can budget for them. It may be that not everything on the list will apply to you, but you may have to pay some of these costs.

So – what’s on the list?

Mortgage fees

Mortgage fee/arrangement fee/product fee

Some lenders will charge you for carrying out a valuation on the property to make sure that it is suitable security for the money/mortgage that they’re going to lend you. They’ll usually give you the option to pay it up front or add it to your mortgage. If you add it to your mortgage, you’ll have to pay interest on it and it could increase your overall mortgage repayments.

How much could it cost? Between around £500 and £3,000.

Mortgage administration fee

This is the lender's administration fee for sorting out your mortgage. Not all lenders charge, including Skipton.

How much could it cost? Around £50.

Mortgage broker fee

When you use a broker to help you find a mortgage, you’ll either need to pay for them out of your own pocket, and/or the mortgage lender will pay them in the form of commission.

How much could it cost? Up to £500.

Mortgage booking fee/application fee/reservation fee

Some mortgages have an application cost that’s not refundable. So you won’t get it back if you don’t end up taking the mortgage or if the property purchase falls through.

How much could it cost? Between around £100 and £300.

Valuation fees

Some lenders will charge you for carrying out a valuation on the property to make sure it’s worth what they’re going to lend you. The cost is usually determined by the value of your property.

How much could it cost? Between £100 and £2,000.

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No charge for valuation with a Skipton mortgage

We won’t charge you for a valuation for mortgage purposes when you take a mortgage with us, as long as the property’s worth less than £1.5m.

Security is required for any loan.

Stamp duty

England and Northern Ireland

First time buyers don’t have to pay stamp duty on properties under £300,000, and they pay no stamp duty on the first £300,000 of properties that cost between £300,000 and £500,000. If you're not a first time buyer, stamp duty kicks in on properties over £125,000 (or over £40,000 if it's a second home). The cost is based on a tier system where you pay different stamp duty rates for different property values.

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Temporary changes to Stamp Duty Land Tax

On 8 July 2020 the government temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 31 March 2021. This means anybody completing on a property costing up to £500,000 will not pay any stamp duty, and any properties above this amount will only be taxed on their value above that amount.

Scotland

In Scotland you pay Land and Buildings Transaction Tax (LBTT), which is similar to stamp duty in that the rates are tiered. First-time buyers don't have to pay LBTT on the first £175,000 of the property. Home movers pay LBTT on property prices from £145,001 as long as it is your only property. Different rates may apply for second properties, for more information visit Revenue Scotland.

Temporary Changes to Land and Buildings Transactions Tax

On 15th July the Scottish Land and Buildings Transaction Tax threshold for residential property transactions was temporarily increased to £250,000 for both first time buyers and home movers until 31st March 2021. For more information please visit the Revenue Scotland website using the link above.

Wales

In Wales you’ll have to pay Land Transaction Tax (LTT) on properties over £180,000 whether it’s your first property or not (different rates may apply for second properties). It’s another tiered system like stamp duty, so the cost will depend on how much your property costs. For more information please visit gov.wales.

Temporary Changes to Land Transaction Tax

From the 27th July 2020 the Welsh Land Transaction Tax threshold for main residential rates was temporarily increased to £250,000 until 31st March 2021. For further information please visit gov.wales.

Surveys

There are a few types of survey you can get and they all come with a different price tag. That doesn’t mean you need to pick the most expensive one. It’s best to choose the one most appropriate to the condition of your property.

Homebuyers report

This one is for properties that are in reasonable condition. It will identify structural issues like subsidence and damp and can reveal problems you can’t see just by looking around. Where applicable, your report will contain suggestions for repairs, which you could use to negotiate down the price of the property.

How much could it cost? They can start from £400.

Building survey

A building survey is the belts-and-braces option and can be good for older buildings or ones that are very large or slightly unconventional.

How much could it cost? Between £400 and £500

In Scotland it is the seller’s responsibility to obtain a Home Report and Skipton, like many lenders will request a transcript of this for mortgage purposes, there will be no cost for this.

Legal costs

Conveyancer/solicitor/legal costs

A solicitor (aka conveyancer) will take care of all the legal paperwork when you buy a house. You’ll usually need to make payments to the solicitor as you go along for the various bits of work they do for you.

How much could it cost? Between £1,000 and £1,500.

Electronic payments

CHAPS

Clearing House Automated Payment System (CHAPS), is the electronic payment method your lender will use to send funds to your solicitor.

How much could it cost? Around £25.

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Did you know,

With Skipton CHAPS payments only cost £6

Moving costs

There are a few ways you can do this. The cheapest way involves rallying your mates and borrowing a van. It’s practically free, but might set you back a few pizzas. If you can’t find a van, you could hire one. Or you could pay for an actual removal firm that will do all the legwork for you.

How much could it cost?

Doing it yourself = free(ish). Van hire = from around £35 per day. Removal firm = between £400 and £1,500+ depending on the size of the house.

Top tip: Ask at supermarkets if they’ve got any spare cardboard boxes for packing. You can usually get these for free.

Storage

If you have a lot of stuff that you can’t fit into your new home, you might end up putting some of it in storage. The price of a storage unit will depend on its size, so get a few quotes before choosing one.

Pet/kennel costs

Cats and dogs are likely to get under your feet on moving day, so if you can’t get a friend to look after them you might have to give them a couple of days’ holiday.

How much could it cost? Boarding kennels can cost between £15 and £50 depending on how posh they are, and catteries can start from around £9 per day.

Leaseholder fees

Leasehold is when you own the property but don’t have a stake in the building it’s in or the land it sits on. Leaseholder charges vary and usually include things like maintaining communal areas, which could include electricity bills and repairs, or for things like ground rent.

How much could it cost? Prices vary from property to property, so check before signing that you can afford your mortgage and the leaseholder fee.

Land registry fees

The Land Registry is responsible for transferring your name over to the property you’re buying and the cost will depend on how much your property’s worth. Your solicitor will deal with the Land Registry, so you’ll actually pay through your solicitor.

How much could it cost? As an example, properties valued at between £100,001 and £200,000 will cost around £200.That cost rises with the house price. If you do this electronically it could cost you half the price.

Insurance

Buildings insurance

As soon as you exchange contracts, you’ll need to have buildings insurance in place (usually a condition of your mortgage). It could cover things like burst pipes and putting your foot through the ceiling, but check your policy carefully because they don’t all cover the same things.

How much could it cost? Prices vary so you might want to get a few quotes. We provide buildings insurance through Legal & General.

Get a quote

Contents insurance

It could cover your belongings and can include things like money, jewellery, garden furniture and even the contents of your freezer. Again, price and type of cover varies, so you’ll need to get quotes and check closely what your policy covers.

How much could it cost? All dependent on the level of cover you need, so get a few quotes. We provide contents insurance through Legal & General too.

Get a quote

Life insurance

Life insurance could pay off your mortgage if you die. So it’s useful for looking after dependants who would be left behind if something happened to you.

How much could it cost? This is another one where you’ll need to get a few quotes to find insurance that's right for you. We provide Life Insurance through AIG Life Limited.

These figures are intended to be a rough guide only.

Please note this list is not extensive and there may be other fees which you may be required to pay, this article is designed to highlight some of the most common.


Get in touch

We want to help you get into your first home and might be able to help you find ways to make your savings stretch.

If you’d like to talk to us about how to plan for additional costs, call us or drop us a line by web chat.

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