Don’t get caught short! 7 ‘unseen’ costs that come with buying a home

Don’t get caught short! 7 ‘unseen’ costs that come with buying a home

It’s a widely accepted fact that buying a home is one of the most (if not the most) expensive things you can do. According to the latest Land Registry stats, the average house price in the UK now stands at £284,950. 

But remember: if you plan on purchasing a property in 2024, it’s not just the price of your bricks and mortar you have to factor in. There’s also the likes of legal fees, surveys and stamp duty to consider. 

 

Don’t get caught short!

“You might be nodding your head, saying ‘yes I know that’,” Mortgage adviser, Jo Jingree, explains. “But according to findings of a newly-released survey, 36% of homeowners said they want more guidance on the exchange of contracts and the costs of buying a home.”

The same research states that 77% of first time buyers were aware of legal fees. But only 53% knew about stamp duty costs and as little as 47% had heard about potential mortgage product fees before they applied for a mortgage. 

Getting your first (or next) step on the ladder is an exciting time. So to help you avoid being caught out, we’ve rounded up some of the ‘hidden’ costs that come with buying a home. 

1. Stamp duty 

Ah, stamp duty (or Stamp Duty Land Tax as it’s more formally known). Introduced many moons ago in 1694, this is a type of tax you pay when buying a property or piece of land in England and Northern Ireland. At present, this type of tax applies to properties over £250,000 (although the government has modified this over the years). In 2024, the amount you pay depends on:

  • When you bought the property
  • How much you paid for it
  • Whether you’re eligible for relief or an exemption

Here’s the good news: some first timer buyers may be exempt entirely, thanks to the government’s relief scheme which currently stands at £425,000. 

2. Mortgage product fee

Also known as an arrangement fee, lender fee and completion fee. The terminology can differ but the meaning is the same. That being the fee charged by lenders for setting up a mortgage. 

“After stumping up an already hefty deposit, if the mortgage product comes with a fee and the option is available, some home buyers choose to add this cost to their mortgage,” Jo explains. “This means you won’t have to fork out more money upfront. But doing so will increase the amount you owe, your interest and your monthly payments.” 

Not all mortgages have product fees. But that’s why it’s a good idea to speak to a mortgage adviser who can guide you through the process and help source the best option for you and your circumstances. 

3. The first mortgage payment 

First mortgage payments can be slightly higher than the ongoing monthly payment you agreed to. 

That’s because it includes interest from the date your chosen mortgage lender released the funds, up to the end of that month, along with your payment for the following. 

“However, all this info will be clearly stated in your mortgage paperwork,” Jo says. 

4. Mortgage advice

Of course, there are many benefits about speaking to a mortgage adviser when you’re remortgaging, moving home or a first time buyer. So much so, we wrote a whole blog on it.

 Just note: there may be a fee applicable for mortgage advice (although this will differ from adviser to adviser). Jo’s advice? “If you’re unsure, ask up front.”

5. Legal fees 

Home buying can be complex. From the valuation and transfer of ownership to performing searches and ensuring you’ve paid the Land Registry fee. There are bundles of paperwork to get through. Thankfully a solicitor can make light work of this. 

Which? says legal fees for buying a home can set you back around £500 to £1,500 depending on how tricky the transaction is, its location and the type of property. 

6. Home survey costs 

So, as we’ve said, buying a home comes at a price. However, imagine purchasing a pad and moving in, only to realise that the roof is leaky and the walls are crumbling. 

“To protect yourself from forking out more cash in the long run (and tears), it’s highly advisable to get an independent property survey done which checks for structural issues,” Jo notes. 

At present, there are three different levels of home surveys, according to the globally-recognized professional body, the Royal Institution of Chartered Surveyors (RICS), ranging from level 1 to level 3. Depending on which level you choose, prices can start from a few hundred pounds and tip over £1,000. 

7. Moving costs 

So, you’ve finally got the keys to your new pad — congratulations! But before you skip to the good part: how do you plan on getting all of your valuables there? 

Maybe you plan on doing it yourself. Or perhaps you need to hire a van for the day or a removal company to do all the heavy lifting? If it’s the latter, don’t forget to set a pot aside to make moving in as stress-free as can be. 

 

Mortgage help is just a phone call (or email) away

Dream of making 2024 the year you get the keys to your first (or next) home? No matter whether you’re self-employed, credit impaired or a first time buyer, Multi-award-winning mortgage adviser Jo has more than 20 years’ experience in the industry and offers a 30-minute no-obligation phone call, so 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.

Please be aware that by clicking on to the above links you are leaving the Mortgage Confidence Ltd website. Please note that Mortgage Confidence Ltd nor HL Partnership Limited are responsible for the accuracy of the information contained within the linked site(s) accessible from this page.

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