Buying a new home can be a costly business. Sometimes we can underestimate just how much it might cost. There’s more to saving up to buy a house than pulling together a deposit. Conveyancing, mortgage arrangement, and survey fees are just some of the expenses you’ll incur when you set off to buy your dream home.
Property transactions can be complex and so it’s imperative that you engage the services of a good conveyancing solicitor. They will handle the legal side of your move. Legal fees can range between £850-£1500. The actual amount you’ll pay depends on various factors, such as the value of the property and the complexity of the transaction.
Be mindful of any additional fees that may be needed if the transaction becomes more complex than first anticipated. For example, if your solicitor needs to complete a lease extension at the same time as completing the purchasing process.
Land Registry and search fees
In addition to the conveyancing fees, you’ll also need to pay for Landy Registry and search fees, which could range between £250-£300 each.
The Land Registry is responsible for keeping records of all properties that are bought and sold in England and Wales. When you buy a property, it needs to be transferred into your name and the Land Registry fee covers the cost of this process. It’s usually paid after the completion of the property sale, and you’ll pay via your solicitor. The fee you pay can vary with the value of your property.
Your conveyancing solicitor will carry out a variety searches, including but not limited to local authority searches, Water and Drainage Search, Mining Searches and Environmental Searches. The searches aim to identify any local plans or issues that may impact your property. This could range from known flooding issues in the area to the proposed redevelopment of land near your property.
Money transfer fees
Transferring money from the lender to your solicitor’s account and ultimately to the seller incurs a fee known as a money transfer fee, telegraphic transfer fee or simply, a CHAPS fee. Your conveyancing solicitor will typically charge these fees on the day of completion, and you can expect to pay around £40-£50.
When you buy a new home, it’s a good idea to have a survey done so you’re not taken by surprise by any unexpected defects. There are a variety of different surveys that can be undertaken, and the cost will vary according to the type of survey you choose. Common examples include a Homebuyers Report or a Full Building Survey.
If the survey identifies any significant issues, this is usually the time to go back to the negotiation table with the sellers and adjust the price. Skipping the building survey may be tempting, but it can be more costly in the long run if you’re hit with an unexpected repair down the line.
After your deposit, Stamp Duty Land Tax (SDLT) is usually the next highest cost that you’ll incur when you’re buying a new home. The SDLT applies to all houses bought in England or Northern Ireland, which are valued over £250,000. The amount you pay increases as your property purchase price increases and the current rates were set on 23rd September 2022.
If you’re buying a property in Scotland or Wales, you’ll need to pay the equivalent of SDLT. For Scottish properties, this is the Land and Buildings Transaction Tax, while Welsh property purchases incur the Land Transaction Tax.
It can be prudent to purchase indemnity insurance, as it gives you peace of mind and protection against any future, unexpected council or legal action. For example, if your new home has had an extension or loft conversion, you might find yourself falling afoul of planning permission rules later on if the seller didn’t have the right building regulation certificates in place.
The good news is that indemnity insurance is a one-off payment and the policy applies in perpetuity.
If only getting a mortgage was as simple as making the monthly repayments! There are also fees involved in applying for a mortgage, such as an arrangement fee and a valuation fee.
Often if you can afford to do so, it’s best to pay your mortgage fees upfront rather than add them to your mortgage, which could be more costly in the long run as you’ll pay interest on them. However, if you can’t afford to pay upfront or if it turns out the arrangement fees are non-refundable if the mortgage application falters, then you may want to opt for adding them to your loan.
Mortgage valuation fees
When you make a mortgage application, the lender will require that a mortgage valuation survey is conducted. This survey is different from the Homebuyers or the Building Survey.
This survey provides assurance to the mortgage lender that the property is worth the amount you’re paying for it. Ultimately, the mortgage lender needs to know that the property will provide sufficient collateral for the loan they’re giving you.
Mortgage valuation surveys are conducted by a professional surveyor. You may or may not get charged the mortgage valuation fee depending on your lender and the type of mortgage product you’ve opted for. If paying the fee upfront, you can expect to pay anything between £150-£1,500, depending on the property’s value.
Mortgage arrangement fees
Some mortgage lenders will charge you a mortgage arrangement fee, also known as an administration fee or a booking fee. Essentially, this is the cost the lender charges for setting up the mortgage.
Sometimes the fee is charged at a flat rate and other times, it’s calculated as a percentage of your loan. The amount you pay can vary widely and is often non-refundable. In the latter circumstance, it may be beneficial to have the mortgage arrangement fee added to your mortgage, despite the fact that you’ll pay interest.
Mortgage broker fees
If you’ve engaged the services of a mortgage broker to advise you on the different types of mortgage products available on the market, you may find that you need to pay their fee. Some mortgage brokers will charge you a fee, which could be an hourly rate, a flat-rate charge, or a percentage of your mortgage value. In this case, typical mortgage broker fees could be around £500 or 0.4% of the mortgage.
In some cases, the mortgage broker is paid via a commission they receive from the mortgage lender, so you won’t need to pay them.
Life insurance is another useful type of insurance to buy when you’re buying a new home. It protects your family in case you die before you’ve repaid your mortgage, by paying out a lump sum of money to cover the debt. Just be sure to take note of any commission and cancellation fees so you’re fully informed about what you’re buying.
As you can see, buying a new home can incur many different costs, but you’ll want to make sure you’ve budgeted for the coveted day that you finally get to move in!
Opting to rent a van yourself and calling in favours from friends and family is one way to save some of the removal costs. Of course, you also have the option of using a fully inclusive removals service. However you choose to move, the costs will depend on two things – how much stuff you’ve got and how far it needs to go.
Don’t forget the other costs that come part and parcel with moving, either. Storage, cleaning, mail redirection and even child or pet care all need to be planned for.
Buying your dream home can be an exciting time in your life. The best way to manage the buying process is to be prepared and budget carefully so you know what you can reasonably afford.
Engaging an experienced conveyancing solicitor can take the headache out of moving and our friendly team at Waldrons are ready to assist. Give us a call to find out how we can help you with your next property purchase.
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Last reviewed on 11/07/23 by Abigail Gray who is an Associate Solicitor