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  1. Guides
  2. The cost of buying a house
Buying a house
Buying a house
Last Updated 02 December 2021

The cost of buying a house

Sam Edwards
Writer
  1. How to buy a house
  2. 4
Table of contents
  1. 1. How much money do you need to buy a house in the UK?
  2. 2. What are the main house buying costs?
  3. 3. Essential costs
  4. 4. Optional costs
  5. 5. Conditional costs

Every year, thousands of people buy their first home in the UK. With so many people taking their steps on the property ladder, you would think the process was simple. Unfortunately, buying a house is both complex and expensive, with fees that far surpass those associated with selling. Thankfully, there’s been enough research into the costs of buying to make things a little easier for newcomers.

In this guide, we'll explore the different costs associated with buying a house. Each cost will be examined chronologically in the order of which you will pay it.

How much money do you need to buy a house in the UK?

According to Halifax, the average house price in the UK is currently £270,027 as of October 2021. The money you would need to buy a house of this price is as follows:

  • First time buyers: £23,602.025
  • Second home buyers: £26,814.25

What are the main house buying costs?

Essential costs:

Type of costAverage costTotalNotes
Conveyancing£1500 - £2000£1750Legal fees (not including disbursements).
Mortgage valuation£200 - £405£300House valuation before your mortgage can be validated.
Mortgage deposit5 - 10% of property price£20,252.025 (7.5%)How much money you need to buy a house worth £270,027.
Removals£900 - £1700£1300Removal fees vary due to a variety of factors.
Stamp Duty (SDLT)Fixed rateFree / £2,212Free for first time buyers up to a certain price.
Total£16,101.35 - £31,102.75£26,814.25

Optional costs:

Type of costAverage costTotalNotes
Financial advisor£75 - £350£150Provides advice on how to save for a mortgage.
Mortgage broker£300 - £600£450Provides advice on which mortgage package is best.
Property surveys£200 - £2000DependsMost mortgage packages require a property survey report.
Buildings insuranceFixed rate£119.22Insurance rates fluctuate.
Total£694.22 - £3069.22£1719.22Property survey average is £1000.

Conditional costs:

Type of costAverage costTotal
Mortgage exit£50 - £300£150
Mortgage repayment5 - 10% of remaining mortgageDepends
Storage£399 for 200 sq feet£399
Total£699 - £449£549

Essential costs

Conveyancing fees

Average cost: £1750 in legal fees

Once a vendor accepts your offer, you will need a conveyancing solicitor to take care of the legal side of things. Conveyancers are essential for both sides of the property transaction. Without them, transactions are not legally binding.

What do conveyancers do?

Conveyancers handle all the legal aspects of property transactions, including:

  • Property searches
  • Transferring the mortgage deposit
  • Exchanging contracts
  • Confirming the completion date
  • Receiving and transferring the property purchase amount
  • Registering your ownership with Land Registry
  • Paying Stamp Duty Land Tax (SDLT)
  • Paying all expenses associated with buying (Disbursements)

All of these things make conveyancers vital to all property purchases. They, along with the seller’s estate agent, act as a go-between you and the seller, who you will likely never meet.

How much do conveyancers cost?

On average, if you’re buying a house, a conveyancer should cost around £1,750 in legal fees, while disbursements could take the figure even higher.

Conveyancing for buying a property is more expensive than for selling a property. This is because buying a property involves a lot more legal work. As a result, fees are more expensive, and disbursements (expenses paid by the conveyancer on your behalf) are greater in number.

Disbursements

While some disbursements can be classified as optional and conditional expenses, it’s likely you’ll have to pay the bulk of these expenses.

Conveyancing search feesCostAverage
Local authority£40 - £250£120
Drainage£35 - £50£42.50
Environmental report£36 - £42£39
Chancel repair£12£12
Bankruptcy£2 - £2.90£2.50
Land charges£6 - £10£8
Other disbursementsCostAverage
Anti-money laundering£6 - £25£13.99
Mortgage Supplement£100 - £195£132
Leasehold Supplement£100 - £250£163
Telegraphic transfer£25 - £50£37.50
Stamp Duty Land Tax£60 - £80£70
Lifetime or Help to Buy ISA£50£50
Help to Buy£200 - £300£250
Government feesCost
Land RegistryFixed
Stamp Duty Land TaxFixed
Land Transaction TaxFixed
Land Buildings Transaction TaxFixed

Mortgage valuation fees

Average cost: £300

Once your offer has been accepted, and you’ve applied for a mortgage, your mortgage lender will send an expert to evaluate the property. This is what’s known as a ‘mortgage valuation’. Lenders order valuations to ascertain whether the property actually meets their mortgage guidelines. If the valuer deems that the property is worth less than what you applied for, the lender will either reject your application, or alter their conditions.

As mortgages are an essential part of most property transactions in the UK, a mortgage valuation is an essential fee.

How much does a mortgage valuation cost?

Based on our research, the average mortgage valuation for a £264,244 property should cost from £200 - £405. However, rates may vary depending on the price of your property and the lender you choose.

Mortgage deposit

Average cost: £20252.025

Before the exchange of contracts, you should ensure your mortgage deposit is ready to be transferred to your conveyancer. Once this has been sent, your lender will ensure the mortgage is successfully transferred in time for completion day.

What is a mortgage deposit?

A mortgage deposit, or house deposit, is a percentage of the house sale price your lender requires paid upfront. Hopefully, thanks to the help of a financial advisor, you’ll have saved up enough money to afford it.

How much does a mortgage deposit cost?

A mortgage deposit is usually 5 -10% of the property’s final sale price, though this entirely depends on both your circumstances, and Loan to Value ratio (LTV). The more risk a lender takes on by investing in your property, the higher your LTV. This can affect the amount of the deposit your lender needs, as well as your mortgage interest rates. The higher your interest rates, the harder it will be for you to pay back your mortgage.

Removal costs

Average cost: £1300

Moving into your new home will require help from a local removals company. Their services aren’t exactly cheap, but there isn’t an alternative, especially if you’re moving into a second home and have a truckful of furniture to transport.

How much do removal companies cost?

Removal rates vary because they depend on several factors:

  • The size of your home
  • The amount of furniture you want moving
  • How far you are moving
  • Whether or not you want to insure your belongings

Stamp Duty

Average cost: Free for first time buyers, £3,212 for second-home

Stamp Duty Land Tax (SDLT) is a government tax on the purchase of land or property in England. In Scotland, Stamp Duty is called Land and Building Tax (LBT), while in Wales, it’s called Land Transaction Tax (LTT).

Stamp Duty is one of the first things that the government can change to boost the property market - most recently, the Coronavirus Pandemic saw the government lift SDLT on properties up to £500,000.

How much does Stamp Duty cost?

Stamp Duty is a proportional tax, which means you need to pay a percentage that increases with the final sale price of your property. If you’re a first time buyer, you don’t have to pay Stamp Duty up to £300,000, which means, in our example, you are exempt.

The current Stamp Duty thresholds are as follows:

Property or lease premium or transfer valueSDLT rate
Up to £125,000Zero
The next £125,000 (the portion from £125,001 to £250,000)2%
The next £675,000 (the portion from £250,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

If you’re a first-time buyer, you don’t have to pay

  • SDLT up to £300,000
  • 5% SDLT on the portion from £300,001 to £500,000

Optional costs

Financial advisor fees

Average cost: £150 per hour

While not essential, hiring a financial advisor can help you go a _long _way while you save up for that house deposit, especially if you’re a first time buyer. Mortgage deposits are extremely expensive and it can take years to save up for one.

What do financial advisors do?

Every person has a number of financial goals and a number of limited resources at their disposal. A financial advisor frames your home purchase (likely, just one of your financial goals) alongside your other goals, and judges how much, and how long for, you would need to save.

When you hire a financial advisor, they take a look at your income, outgoings and expenses. Every small detail is used to help create a savings plan. They will also help you consider what type of home is within your budget, including monthly mortgage repayments and taxes.

How much do financial advisors cost?

The average cost for a financial adviser in the UK is £150 per hour, although it can vary from £75 to £350 per hour, according to the Money Advice Service.

Mortgage broker fees

Average cost: £450

Again, like financial advisors, mortgage brokers are not essential - nevertheless, they are a valuable asset for first time buyers. Mortgages can be extremely difficult to navigate, and if you are nervous about your mortgage application, a broker can advise which mortgage package is likely to work best.

What do mortgage brokers do?

Like a financial advisor, mortgage brokers assess your financial situation and provide advice. Unlike financial advisors, these specialists provide advice about your mortgage options. Thanks to their extensive knowledge of all available mortgage packages and lenders, brokers can assess your credit report and help locate a lender that is likely to accept your application.

A mortgage broker might come in useful in the unfortunate event of your mortgage application being rejected. Most lenders won’t tell you why your application was rejected. Brokers however, can quickly assess the issue, and help you get on top of things. In some cases, mortgage hopefuls have been rejected even after an agreement in principle (AIP). In such a scenario, a broker will prove invaluable, especially if you’ve already agreed to purchase the property.

How much do mortgage brokers cost?

Mortgage brokers usually charge an upfront payment of £300 - £600, but this isn’t always the case. Some brokers charge a fixed rate flat payment which can be incurred whenever their services are provided. Make sure you understand exactly how much you will be charged before hiring a broker.

Property surveys

Average cost: £200 - £2000

Before you purchase a property, it’s in your best interest to ensure your new home is structurally sound and secure. Many mortgage lenders require the results of a property survey in order for the application to be processed.

What types of property surveys are there?

There are several types of surveys available for different types of properties. The most common include:

Homebuyer’s report

Designed for properties less than 100 years old, a homebuyer’s report is a non-intrusive survey that takes from two to four hours to complete. They provide specific advice on any problems that will affect your property’s value, including the estimated cost of repairs and ongoing maintenance.

Snagging survey

Snagging surveys are designed for newly built homes (otherwise known as ‘new builds’). A property that has been built, converted or refurbished in the last two years is classed as a new build. In a snagging survey, the surveyor will identify any unfinished bits and defects, allowing you to push the developer to swiftly address them.

Structural survey

A full structural survey is recommended for particularly old, or structurally distinctive properties. These surveys require a comprehensive investigation into the nooks and crannies of the property. Often intrusive, they include actions like drilling holes into walls to check the structural fidelity, as well as lifting up floorboards. Once complete, you will be provided with a full report of everything, including any problems that impact the property’s safety and value.

How much do property surveys cost?

Property survey typeCostNotes
Snagging survey>£300Increases depending on the size of the property.
Homebuyer report (RICS Level 2)£400 - £600N/A
Homebuyer report (Sava)£400 - £600N/A
Structural survey (RICS Level 3)£600 - £2000You should expect a cost of £1000, but this can vary depending on how large or unusual your property is.

Buildings insurance

Average cost: £119.22 a year

While required by most mortgage lenders, buildings insurance is not essential - but it is highly recommended to any buyer looking to take that first step on the property ladder.

What is buildings insurance?

Buildings insurance is a type of insurance policy that protects you from losing money if your new home is destroyed. It covers several types of damages, including:

  • Fire
  • Flooding
  • Earthquakes
  • Thefts
  • Vandalism

Buildings insurance does _not _cover damages from pests, frost and leaking gutters.

How much is buildings insurance?

There isn’t a set price for buildings insurance because many firms offer different rates. Some of the most popular websites to compare quotes are Comparethemarket.com and Moneysupermarket.com.

According to the AA, the average UK home price is £119.22 a year. Combined with contents insurance, which protects your belongings, buildings insurance can be around £163.83 per year.

Conditional costs

Mortgage exit fee

Average cost: £50 - £300

If this is your second property purchase and you’re looking to remortgage or exit your previous mortgage, you’ll need to pay a mortgage exit fee. If you’re still in your tie-in period, you may have to pay an early repayment charge (see below).

How much do mortgage exit fees cost?

Mortgage exit fees generally cost between £50 - £300. They are sometimes known as a ‘deed release’ or ‘final fee’.

Early mortgage repayment charge

Average cost: 5 - 10% of remaining mortgage

If this is your second property purchase, you may or may not have a mortgage left to pay off. If you’re looking to move before the end of your mortgage tie-in period, you’ll have to pay what’s called an early mortgage repayment charge.

How much does an early mortgage repayment charge cost?

Early repayment charges can be 5 - 10% of the remaining mortgage amount. To avoid paying the fee, make sure you remortgage after the tie-in period is complete.

Storage costs

Average cost: £399 for 200 sq feet for 1 month

If you’ve sold your home already, or are currently renting, you’ll need somewhere to store your furnishings and items before moving day. There are several storage facilities available, with England’s most popular being Big Yellow Storage.

How much does storage cost?

Storage units vary in cost. Big Yellow Storage for example, requires a call to discuss several factors before providing a quote, including room size and duration of stay.

According to Safestore’s UK Annual Industry Report 2021, a 200 square foot storage unit room would cost £399 a month to rent. If you have a lot of furniture and belongings, 200 square feet would probably be enough to house everything.

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