We all know that buying a house is probably the biggest purchase we will make. But it’s not just the headline costs of the house itself and the deposit. There are a number of other homebuyer costs that need to be factored into your planning.
Mortgage Adviser, Jo Jingree, said: “Moving home can be a financial juggling act, with lots of costs coming due at similar times. I try to encourage my clients to think ahead so they are less likely to be tripped up by something unexpected”
Here are five potential homebuyer costs to add to your financial planning:
Stamp Duty
Stamp Duty is payable when purchasing property above a certain price. For first time buyers there is no stamp duty due on the first £300,000. Otherwise, the rates of stamp duty due are tiered according to the value of the property (for main residences):
- Up to £125,000: 0%
- £125,001 to £250,000: 2%
- £250,001 to £925,000: 5%
- £925,001 to £1.5m: 10%
- Over £1.5m: 12%
Stamp Duty is usually paid on your behalf by your Solicitor, who will collect the funds from you prior to completion.
Legal Fees
Your Solicitor will form an integral part of your house buying team. Make sure you understand how they work and that they are contactable at times and in ways that suit you. It’s always best to go on personal recommendation and your mortgage adviser will be able to signpost you to a couple of reliable professionals. Prices can vary widely. So do get a detailed quote with a full breakdown of costs.
Valuation and survey costs
Your mortgage lender will want to do a valuation on your home for mortgage purposes. This is to reassure themselves that it’s worth the money they’re lending you. This assessment is brief and sometimes virtual. It centres much more on valuation than condition. This is often free of charge or has a fee of around £100. (Please check your mortgage illustration for all fees payable).
There is no legal requirement to get your own survey, but it is advisable to do so. Particularly with unusual or older properties. A survey can identify any structural issues or potential problems that could lead to additional costs. You can use this information to get quotes, encourage the vendor to address a problem before the sale completes or even renegotiate the purchase price. There are different levels of survey but an average price for a RICS Level 2 Homebuyers Survey in Greater London is typically between £700 and £1,300.
Moving costs
Lots of different options here depending on your circumstances and budget. For a first home you may be able to get by with a hired van and some willing friends and family. But if you have lots of furniture and possessions, or are moving a long distance, then you may want to consider professional movers. And you can choose whether you want to pack everything up yourselves or have the company pack for you. It’s worth getting several quotes and making sure you compare like with like. Do your research early to ensure you can secure the company you want.
Balancing rent and mortgage
For those making the move from rented property, it can be a challenge to balance giving notice to your landlord with getting into your new home. Jo generally advises renters not to give notice before exchange. Just in case the process gets derailed in some way and the client ends up having to leave one property before the other is available to them.
Jo said: “The average period between exchange and completion is 1-2 weeks; but the average rental notice period is 1-2 months. This can be tricky to coordinate. One option is Skipton’s Delayed Start Mortgage, where no repayments are due for the first three months. Clearly, suitability is dependent on circumstances but it’s a good illustration of the fact that there are solutions to most issues if we can think ahead.”
Incidental Costs
With a house move, there will always be that unexpected cost that pops up. All you can do is to plan ahead as best you can.
There are a couple of things that you might want to consider for moving day if costs allow. First, a deep clean. There’s no better time to deep clean a house than when it’s empty. Particularly if the carpets are a little older or perhaps the vendors are smokers or have pets.
The other thing to consider is getting the locks changed. You don’t know necessarily know how many sets of keys there are for the house or who has them. Changing the locks as a first move can bring valuable peace of mind.
To sum up, Jo said: “It seems like there’s a lot to think about. But if you’ve not bought a house before then why would you know about these additional homebuyer costs? I’m always happy to offer a free 30 minute phone call with people thinking of buying or moving. This can be a useful first step in the process”
Multi-award-winning mortgage adviser Jo deals with first time buyers, remortgages and has a wide range of experience in helping self employed people onto the property ladder.
So, whether you’re coming to the end of a mortgage deal or are looking to buy your first home, do get in touch.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £399.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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