Buying or house, or any property is a massive step both as a life step but financially. I initially bought a flat through the shared ownership scheme as a way of getting on the ladder. Then after selling the flat last year, me and my fiance bought a house which completed in March of this year. The expenses involved in buying a house can put people off as it’s not a cheap process. But it’s a big investment especially if it’s somewhere you can see yourself living for a long time.
Buying a house- The deposit
The deposit is the biggest part of buying a house as it’s a chunk of money you set aside to put towards the property. You can get away with deposits as little as 5% but the more you can put down the better your mortgage rate will be. I believe we put about 15% down in the end and the difference between 14 and 15 in the mortgage deals we could get was amazing.
A lot of the time it’s worth saving for longer to get a bigger deposit because of how much you’ll save in the long run.
Stamp Duty
Other than the deposit stamp duty is likely to be the biggest cost when buying a house, if you’re not a first-time buyer. If you’re a first-time buyer and the cost of the house is under £300,000 then you’ll not have to pay (currently).
But if the house you’re buying is more than that, or like me you’re no longer a first-time buyer then you’ll have to pay a percentage of the houses value as stamp duty. How much you pay depends on the value of the property. You pay 2% on properties between £125,001 and £250,000 and 5% on properties over that. You can work out how much stamp duty you’ll pay with this calculator.
Mortgage fees
Looking for your own mortgage can be time-consuming and you may not know exactly what you’re looking for. Plus some deals are only available to brokers or mortgage advisors. So you can save money in the long run paying for someone else to find you the best deal. We paid the estate agents we bought from a one-off fee for a lifetime membership which was £595 + VAT. This means every time our mortgage renews they’ll find the best deals and do the remortgaging for us. We found the advice invaluable.
Buying a house- Mortgage finder fees
It generally costs to set up and get a mortgage, anything up to £2,000. But this can be worked into how much you borrow. Sometimes a bigger initial fee can work out cheaper in the long-run if the rates are better. This is where our mortgage advisor was great and helped us understand the best long-term choices.
Buildings insurance
When you’re buying a house you can only get a mortgage if you have buildings insurance. If you’re being lent money to buy a property they want peace of mind that their investment is safe. It isn’t a lot of money (anything from £25 or so a month) but it’s something to factor in. You’ll need to continue getting buildings insurance every year, but this is something you’re likely to want anyway.
We didn’t pay anything until we completed which was nice. It was all set up and ready to go ahead of time.
Buying a house: A survey
You may get a free basic survey or valuation fee with your mortgage but it’s worth upgrading to a mid or full survey. This gives you a full report on the condition of the house. Mortgage lenders need this to know it’s worth the money you’re paying (and they’re investing).
But for you it will help you know if there are any underlying issues with the house. Or things which may need fixing in the near future. We paid an extra £480 to upgrade to a full survey for our own peace of mind. Thankfully ours came back pretty clear just a few electrical bits which is fine as Luke is an electrician.
And finally, solicitors fees
When buying a house (or any property) you’ll need a solicitor to handle all of the legal paperwork etc. Fee’s can vary depending on the solicitor but are generally between £1,000 and £2,000. This covers the local searches which are needed when you buy a property, land registry to register the property officially in your name and various legal paperwork.
