Buying a home can be an expensive business. Not only do you have the cost of the mortgage to consider, but there are many other costs involved – some of which could catch you out. Here are some of the most important costs to be aware of so that you do not end up going over your budget when you buy a new home.
During the Purchase
There are a number of large costs to consider during the actual purchase process, and these are going to be where you spend the most money.
The first thing will be your deposit, which you may have to save for. This is often between 5 per cent and 20 per cent of the cost of the property, and this is the single largest expense for most home buyers. The larger the deposit, the more chance that you can get a mortgage, and you are also more likely to get a lower interest rate.
If you get a mortgage, you will have to pay certain costs for sorting this out. The arrangement fee can be up to £2,000, and there is also the booking fee and the valuation fee, where the mortgage lender determines the value of the property and how much they will lend you. The cost can vary greatly, from about £150 up to well over £1,000.
Surveyor costs should also be included. You should always hire a surveyor to check that the property is in good shape before you buy it, and this can cost as little as a few hundred pounds up to £700 or more for a structural survey. See this as an investment, however, because it could save you a lot of money on repairs later on.
You will also have to pay stamp duty. This is a land tax on homes that you will pay if your property costs over £125,000.
And then there are legal fees, such as if you hire conveyancing solicitors. Legal fees for the solicitor to handle all of the legal work, and fees can sometimes be over £1,000.
Don’t forget about bank charges. The money has to be transferred from the lender, and this is paid by CHAPS, which has a cost. And then there is a land registry fee, which can also catch people out.
After the Purchase
Once the sale has gone through and you have got your new home, you will still have a number of things to pay for. The big costs are out of the way now, but the smaller costs can add up.
First, you have to move your belongings. This can cost around £500 depending on how much stuff you have to move.
You will also want to sort out home insurance for your new home, and you may want to buy new furniture for your home.
And finally, you will probably have a mortgage to pay. This will be your main expense from the first month you move in, and you will have to pay this alongside council tax and running costs.
Budget Properly for Your Move
Buying a new home can be very expensive, but you can make the situation less stressful by budgeting properly for your move. Create a spreadsheet of all of the costs that you are going to have to pay, and when you have to guess, always use the higher value. That way, you will not have any nasty surprises when you buy your new home.
Callum Rhodes is a Dad of three who works from home. He enjoys writing and often draws inspiration for his articles from his life experiences.