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When buying a new home, there are many hidden costs which can surprise buyers. The gap between what buyers think the true cost of buying is to what the actual costs of buying a house are can be significant and make buyers rethink whether or not they are in a financial position to buy a house.
So, really how much does it cost to buy a house? House Network explains the extras that you should budget for.
The figures below are based on the current average UK house price of £226,000 as outlined by the UK Land Registry in October 2018. Average estate agent fees are usually between 1.2% - 3% (including VAT) based on research conducted by Which?.
(Payments usually start 4-6 weeks after you move in)
£0 (first time buyers up to £300,000)
£4,500 (2% for a second property)
|Estate Agent Fees (for home-owners)||£795 - 6700|
|Survey||£150 - 1500|
Arguably the biggest payment, and one of the most expected costs when buying a house, is the deposit. People save up for years for a deposit on a house and usually, the deposit is on average between 15-25% of the property's value although you could go as low as 5 or 10% of the asking price of the house for first-time buyers.
It helps if buyers can put down a big deposit as this reduces the monthly costs of buying a house on your mortgage repayments significantly. If you already have a home, selling your current home may give you the deposit on your next home.
Remember to factor your monthly mortgage payments into the total cost of buying your home as it’s essential that you are able to make the payments.
Some mortgages also have a sign-up fee when you register which can be up to around £400 so shop around for the best deals before choosing a mortgage provider. Use this handy mortgage payment calculator to get an idea of what you may be paying when purchasing a new property.
One of the hidden costs involved when buying a house is the solicitor’s fees. To ensure a house sale goes through properly with all the correct legal documentation you’ll need a solicitor to deal with the paperwork on the purchase of your new home.
This could cost anything from around £600 to £1000. Solicitors fees can vary depending on the firm you choose to go with and the type of service you require. If you need a solicitor to help with the sale of a current home too then your costs will definitely be more.
One of the hidden costs of buying a house that has made a lot of headlines recently is the Stamp Duty Land Tax. Anyone buying a home over the value of £125,000 must pay Stamp Duty at the rate of 2%, and 5% on homes over £250,000.
If you’re buying a buy-to-let home rather than a residential property, recent changes to Stamp Duty rates mean this tax becomes an even greater hidden cost of buying a house. You can use the stamp duty calculator to get a good idea of the costs, depending on your location (England, Wales or Scotland) and whether you're a first time buyer or secondary buyer.
Budgeting for estate agent’s fees is essential when you decide to put your property on the market. Estate agents are one of the main costs involved in buying a house as they charge between 1% and 3% of the property’s value plus 20% added VAT.
Often, if you’re looking for a really comprehensive service you may even need to pay more. When you use an online estate agent, like House Network, we charge a flat fee which includes no hidden costs.
When you get a mortgage offer from your bank it’s highly likely that they will insist on a survey of your current home before agreeing to lend you the money to buy your new house. Surveying fees are a hidden cost of moving house that can be huge if anything of significant fault is discovered within the property.
You can do the survey yourself but it is recommended that a professional comes in to uncover anything dangerous for the new buyer.
There are many hidden costs of buying a house and the true price of buying a home is not to be underestimated. If you’re thinking ‘how much do I need to buy a house?’ it doesn’t stop once you’ve covered all the initial costs.
Things like decorating, renovating and bills make being a homeowner more costly than you perhaps first thought. So make sure you’ve factored in all the hidden costs before you make a big decision on buying a new home.
As shown above, the total cost of buying a property is quite high, but by taking the necessary steps and researching carefully for the best mortgage deals, rates and savings you can keep these costs down as much as possible. Key steps to reducing the total cost of buying a property include:
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