Buying a new home, particularly your first one, is a huge commitment which involves a lot of time and money being spent. It is often only once you begin the house-hunting process that you realise what exactly is needed to get onto the property ladder.
Many potential buyers don’t know about or prepare for the various hidden costs that are involved with buying a home. Making sure you have the funds in place to cover the less obvious costs can help make the process run much more smoothly, and avoid taking an unexpected chunk out of your bank balance.
Estate agents Ryder & Dutton, who cover several areas of Greater Manchester, have shared their expert advice on what to budget for when buying a home.
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Stamp duty
Stamp duty is a tax that you legally have to pay when buying a new home, unless you are a first-time buyer.
Jake Rowson, sales director of Ryder & Dutton, said: “ The tax kicks in on properties valued at £125,000 and over, unless you’re a first-time buyer in which case the threshold rises to £300,000.
“The amount you pay depends on the value of your property, but there are plenty of online calculators you can use to work out how much you’ll have to pay based on your circumstances and the home you’re buying.
“The cost usually runs into the thousands, so make sure you know exactly how much you’ll need to pay and set it aside.”
Legal fees
When you buy a new home, a solicitor will look after all the conveyancing for you.
“They’ll do all the necessary checks to ensure the property you’re purchasing is sound, look after monetary transactions for you and work out and pay the stamp duty that you owe. Budget between £1,000 and £2,000 to cover legal fees,” Jake advised.
Surveys
Getting a survey done before purchasing a home is something that many estate agents advise.
“You don’t legally have to commission a survey, but I’d always recommend paying for one as it will show up any potential issues with your new home and could save you money on costly repairs in the long run,” says Jake.
“Surveys range from basic home condition reports that usually cost around £500, to full structural assessments that cost from £800 upwards.”
Estate agent fees
The sales director explained: “If you’re buying your first property, you don’t need to worry about paying these fees, but if you’re selling as well, make sure you factor in the estate agent’s fees.
“The cost is usually a percentage of the property’s sale price, so speak to your agent before signing an agreement with them to ensure you know exactly how much they’ll charge to sell your home.”
Indemnity insurance
This additional cost could prove very useful in the long run, says Jake.
“Sometimes your solicitor might suggest taking out indemnity insurance, a policy that protects you from potential problems with the property that could cost you money in the future,” he explains.
“If, for example, you are buying an extended property and the seller can’t provide a building regulation certificate, then you could take out the insurance to cover any costs involved if your local authority pursues a future claim because you don’t have the certificate.”
Mortgage and valuation fees
Most mortgage providers charge valuation and mortgage set-up fees, so it is advised to speak to a reputable mortgage advisor to find the best deals available.
“Valuation fees usually range from £150 to £250, and set-up fees to take out a mortgage usually start at around £500,” said Jake.
“You do have the option to reduce these set-up fees by agreeing to slightly higher monthly payments over the mortgage term, but it’s usually most cost effective to pay them upfront and avoid higher interest rates.”
Removal fees
Many people forget to consider the cost of moving out of your existing home.
“Removal companies charge different amounts depending on how much stuff you have and the type of service you want,” Jake added.
“If you have a have a fair amount of furniture and goods to move, then budget at least £1,000 to cover removal costs. If you don’t have loads, a cheaper option is to hire a van for a day and move your things yourself.”
Home insurance and improvements
Home insurance is an important purchase for your new home, and Jake says you should get this straight away.
“Make sure you take out home insurance before you move into your new property, to ensure you’re covered from the moment you get your keys,” he said.
“It usually starts from around £150 per year depending on the size and type of your house, but can run up to around £500 a year for larger and older properties.
“Set aside a little for home improvements too, as even if your new home looks like it’s ready to move into, you’ll usually need to carry out a few minor home improvements to make it feel like yours. If you can, set aside at least £500 to cover initial home improvement costs.”
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