What are the costs of buying a property?

The prospect of buying a home can seem very daunting. Not only is it a huge financial commitment, but there’s an awful lot of paperwork and administration involved. That alone is enough to put some people off while soaring house prices mean many are having to rent for longer, which in turn is causing a shortage of rental properties. So what are the costs of buying a property?

If you’re a first-time buyer, it stands to reason that you’re unsure about the process, how it works and what costs are involved. There’s lots of information to try and digest – especially when it comes to the financial elements. You can use a Conveyancing fees calculator, and below we also share a breakdown of the main expenses and what they might look like.

The deposit

As of January 2022, the average house price in the UK stood at £274,000, having increased 9.6% over the preceding 12 months. As a first-time buyer, it’s unlikely that you’ll be in a position to pay the entire cost of the property upfront in one go. Instead, you’ll be required to pay a deposit and then take out a mortgage to pay off the rest. Let’s assume you’re buying a home worth £200,000. A typical deposit would be  10%, in this case, £20,000.

The mortgage

You take out a mortgage for the remaining £180,000. This is paid off in monthly instalments, with interest attached. To give you an idea, a 25-year mortgage at an interest rate of 2% means you’ll make monthly instalments of £763 and pay back £228,922 in total (the original £180,000 plus £48,922 in interest).

Lender fees

Your mortgage lender may also charge you a valuation fee so that they can calculate the value of your property and how much they’re willing to lend. This will vary from one provider to another and could be anything from £100 to over £1,000. There may also be a small extra charge of around £50 for the electronic transfer of the funds to your solicitor.

Conveyancing

You’ll need to hire the services of a qualified conveyancing solicitor to help you with all the paperwork and legalities involved in the process. This may cost up to around £1,500 while they’ll also carry out all the local searches for you, for something in the region of £300.

Stamp Duty

As a first-time buyer, there is no Stamp Duty for you to pay as long as the purchase price is £500,000 or less. If you’re not a first-time buyer, you will pay Stamp Duty on anything more than £125,000. So, for a home worth £200,000, you would be charged 2% on the £75,000 above the £125,000 threshold. This equates to £1,500. If you’re thinking of purchasing a buy-to-let property and wondering about stamp duty, you can read about the surcharge here to find out more information. 

Surveys

You’ll want to ensure there is nothing wrong with the home before you buy it, so you’ll need to pay for a professional surveyor, which could cost anything in the region of £200 to £750. It may seem like a lot, but it’s important to give yourself peace of mind that there won’t be any unforeseen issues once you move in.

See some more of my home-related posts here

Becky

Meet the award-nominated UK lifestyle blogger behind Spirited Puddle Jumper – a mum of three living in South East London! Becky shares the real ups and downs of family life, parenting tips, and lifestyle inspiration, proving that being a mum doesn’t mean you stop being fun or having other interests! Follow along for honest insights into UK family life and opinions on a whole range of topics, from travel and food, to beauty reviews, home and DIY, business and health and wellness.