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The Hidden Costs of Buying a House

Buying a house is expensive. There’s no doubt about that. House prices have been steadily rising for a long-time, and the average cost of a semi-detached house in the UK is over £210000. Homes our parents’ generation bought for £30000 all those years ago are now on the market for over £200000 and not necessarily in better condition. For many of us, a house is the most expensive thing that we will ever buy. But, it is, of course, worth it. Getting on the property ladder means that you no longer pay rent, you’re on your way to paying off a mortgage and you’ll have something to fall back on, support you in retirement and leave your family when you are gone. It’s worthwhile.

However, many first-time buyers fail to budget for the other costs. While they’re not exactly hidden, there are plenty of other costs associated with buying a home that never seems to be mentioned. Let’s take a look at them to help you prepare for your purchase.

Mortgage Fees

Getting a mortgage isn’t as simple as the bank lending you money. There are other fees involved. First, your bank will probably insist on having your potential home valued to help them assess how much they are willing to lend you. This can cost up to £1500 depending on the value of the home. Then, there will be a mortgage arrangement fee. This is often a small percentage of the loan.

Stamp Duty

Stamp duty is a government tax on your home. You’ll need to pay it if your home is worth over £125001. First-time buyers don’t have to pay on the first £300000 of homes worth up to £500000. Your solicitor can file your Stamp Duty return to HMRC with your authorisation.

Surveys

If you need a mortgage, you’ll have to have the home surveyed. If you are making a cash purchase, it’s a good idea to have one anyway. Surveys aren’t all the same. A basic survey might be a lot cheaper, but the surveyor will only look for the most obvious problems.  

Searches

What are property searches? Is a very common question. What exactly are they searching for? Well, quite a few things, so it’s a good idea to do some research. A solicitor can carry out local searches for you which usually cost around £300.

Legal Fees

You’ll also have to pay for legal fees, bank transfers and other searches. Your total legal fees bill could be around £1500.

Postage

Most people overlook postage because it never seems like that much. But, if you’re sending documents, contracts and identification via recorded delivery could set you back up to £10 a time. Postage fees can quickly start to add up.

Moving

Then, when contracts have been signed, and it seems like everything is ready, you have to actually pack up and move to a new house. This in itself can be very expensive. You might need to hire a van, pay for two properties for a while, find storage space, buy boxes and packing materials and pay for extra childcare while you move. Make sure you budget for all of these costs.

When you come to apply for a mortgage, it’s important to know if these costs are coming out of your deposit or if you have money set aside for them, as this can make a sizable difference to your cost to loan ratio.