You're probably well aware that to buy a home, you need save a mortgage deposit. But do you know about the other costs involved in buying your own place?
Before you start your homebuying journey, you should be fully aware of the extra costs of buying a house so you don't get caught off-guard.
In this article, we outline what you need to budget for and share a few tips to help you save on those extra costs.
What are the extra costs of buying a house?
They won't all impact you, but here are the main costs that are often involved in buying your own place:
- mortgage deposit
- mortgage adviser fees
- solicitor fees
- surveys
- Stamp Duty
- moving costs
- furnishing and decorating.
Mortgage adviser costs
A mortgage adviser can help you get the right deal for you, saving you a lot of money in the long run. They can also apply for the mortgage on your behalf and will be able to tell you what paperwork you need.
Before you choose a mortgage adviser, check how much they charge.
If they’re paid by whoever they recommend, you might not have to pay anything. In this case, it's worth asking them if they’re independent. Some will be more likely to recommend a particular mortgage provider, especially if they work for this provider. This could mean you miss out on a better deal.
How you can save money on mortgage advice
Ask friends and family if they’d recommend the mortgage adviser they used. You can sometimes get a discount on fees by being referred by a previous client.
Solicitor fees
When you’re ready to make an offer on your first home, you’ll need to hire a conveyancer (also knows as a conveyancing solicitor).
This person is legally qualified to do all the paperwork involved in changing the ownership of a home. So this is an essential cost.
Your solicitor will also handle the searches and checks that your mortgage provider will ask for, and make any other necessary payments to third parties on your behalf. They’ll then add the cost of these searches and other payments, called disbursements, to your final bill.
The average conveyancing fee for buying a house is around £1,743.
How you can save money on solicitor fees
Shop around! It’s worth looking around for good deals as solicitors don’t all charge the same rate. You often get what you pay for, so it's worth asking friends and family for recommendations.
If you live in a relatively expensive area, like London, look for a conveyancer slightly out of your area as they’re likely to be cheaper.
You could look for a “no sale, no fee” conveyancer. You’ll still need to pay a deposit when you ask the solicitor to represent you. But if the sale falls through you won’t need to pay the full fee.
You can also hire an online-only conveyancer. These tend to be cheaper and they’re also more likely to offer no sale, no fee services.
Be cautious about any quote that seems too good to be true though. Make sure you ask for a detailed breakdown of what's included. This can help you make sure you won't be hit with hidden or extra costs down the line.
Get up to £1,000 extra towards your first home deposit every year with a OneFamily Lifetime ISA
Surveys
Your mortgage provider will carry out a survey before formally offering you a mortgage. However, this tends to be fairly basic. They’re looking to find out if the property you want to buy is worth the money you want them to lend you. So if you can’t pay your mortgage and they need to repossess your home, they know they can sell it and get their money back.
You're unlikely to be sent a copy of this survey.
Many people choose to carry out their own survey to look for potential issues. This includes things like damp in the property, which can be an expensive problem. So doing so could save you a lot of money in the future.
There are a few types of surveys you can get:
| Type of survey | What it includes | How much it costs |
|---|---|---|
| RICS Home Survey Level 1 | A general idea of the condition of the property, without any advice or valuation. | Between £300 and £900. |
| RICS Home Survey Level 2 or RPSA Home Condition Survey | General condition of the property, advice on how much repairs could cost and how much maintenance you might have to do in the future. Can include a valuation of the property for an extra fee. | Between £400 and £1,000. |
| RICS Home Survey Level 3 or RPSA Building Survey | All of the above, as well as any risks or hidden defects in the property, what kind of remedial work you’ll need to do and how long that work might take to complete. Usually recommended for older properties or properties in poor condition. | Between £630 and £1,500. |
Stamp Duty
As a first-time buyer you're unlikely to need to pay Stamp Duty, unless you're buying a property for more than £300,000.
How does Stamp Duty for first-time buyers work?
For first-time buyers the Stamp Duty threshold is £300,000. This means you don't pay any Stamp Duty if your first home costs less than £300,000.
If your property costs more than £300,000, you’ll need to pay 5% on the portion from £300,000.01 to £500,000.
If it costs more than £500,000, you'll be charged the same rate as those who've bought property before. This means you don't pay Stamp Duty on the amount up to £125,000, then pay a percentage on the rest depending on how much the home is worth.
Moving costs
If you’ve rented before, you probably know how expensive it can be to move house!
The cost of hiring a moving van varies. It'll depend on the size of the property you’re moving out of, how far you're moving and how many people you want to hire to help.
On average, moving from a two-bedroom home to a property in the same town can cost you around £603.
How you can save on moving costs
There are many ways to save on moving costs, but the first one is to shop around and compare quotes. Man and van services tend to be a bit cheaper than more comprehensive removal services.
Pack up everything you can yourself, as some movers offer to pack for you but will charge you for the service. Having everything packed in advance will also help you get more accurate quotes as it'll also give you a better idea of how big of a van you’ll need.
Do it yourself... with a little help
Ask friends and family to help you move your belongings to your new home. Make it easier for them by covering any parking fees and petrol costs, and show your appreciation by buying them dinner and drinks. You could also hire a van for the day and drive it yourself, roping in friends and family to help you load and unload it.
Furnishing and decorating your new home
Another hidden cost of buying a home is getting it ready to be lived in.
Even if you already own a lot of furniture, it’s likely you’ll end up having to spend some money to make your new home truly feel like home.
How you can save on furnishing and decorating your new home
This is one of the easiest areas to save on. Costs can be spread over time, as long as you have the essentials when you move in.
You can find second-hand furniture online on sites like Gumtree and Facebook Marketplace. Or you can shop in-person for bargains at charity shops and car boot sales. If you’re lucky, you might even find good quality items available for free on apps like Olio and Freecycle!
As long as you’re not making structural changes, it’s worth considering decorating your home yourself. This is cheaper to do, and goes a long way to changing the look and feel of your home.
How do I save a mortgage deposit?
Out of all the costs of buying a house, your mortgage deposit will be the highest and hardest to save for.
It can feel like every penny is going into your deposit fund, but there are ways you can hit your goal faster with some help from the government.
Boost your deposit fund with a lifetime ISA
Lifetime ISAs are savings or investment accounts designed to help you save for your first home faster. You can put up to £4,000 in each tax year and the government gives you a 25% bonus on everything you put in.
Max out your yearly allowance and that’s an extra £1,000 for your house deposit each tax year!
You have to use your lifetime ISA to buy your first home or wait until you’re 60 to take your money out. If you use that money for anything else before you turn 60, you’ll have to pay a 25% penalty fee on everything you take out. This can mean you lose some of the money you put in.
So, if you’re undecided about becoming a homeowner, putting your money in an ISA or another savings account for now could be a good idea while you decide. You can always move it into a lifetime ISA later.
Open a OneFamily Lifetime ISA
Our Lifetime ISA comes with a 25% government bonus, worth up to £1,000 a year!
Our Lifetime ISA invests in stocks and shares, so the value is likely to go up and down over time. This is normal for this type on investment, but it means there is a risk you could get back less than you put in if you withdraw at a time when the value is lower.
