Hidden Costs To Buying Your First Home

AD Buying your first home naturally comes with many mixed feelings, from the excitement of having a place that is truly yours to concerns over the cost to the anxiety over the paperwork. 

However, there are quite a few things you may want to know before getting started, such as the hidden costs. So, what are they? And how much would these put you back? Let’s dive in!

house keys representing buying your first home

Stamp Duty Land Tax

One of the most notable hidden costs of buying your first home is stamp duty. This a tax that new homeowners must pay when purchasing a property. 

This is a progressive tax (the percentage taxed increases with the value of the property) that applies only to properties valued in excess of £250,000. First time buyers purchasing a property of less than £625,000 can claim a discount so they pay no stamp duty up to £425,000 and 5% up to £625,000. If this is applicable to you, we recommend checking out Gov.uk’s stamp duty land tax calculator.

Valuation Fees

Another potential hidden cost is the additional valuation fee that a mortgage lender may charge. This fee could apply when the mortgage lender checks to see whether a property is actually worth the cost given (i.e., they will determine what the real value of the property is likely to be). A valuation fee may cost anywhere from £150 to £1,500.

Homebuyer Survey

A homebuyer survey sees a surveyor inspect a property to look for defects and evaluate the condition of various aspects of the building. While not legally required, a homebuyer survey could save you money in the long run by spotting issues in advance.

The average cost of a house survey is around £400 to £1,500. In general, the more money spent on a survey, the more extensive it will be.

Broker Fees and Mortgage Fees

Two similar hidden costs that can come with purchasing your first home are broker and mortgage fees. 

Firstly, since you may want to hire an independent mortgage broker, you’d need to consider broker fees. In some cases, this service is available for free since some mortgage brokers get paid through commission received via the mortgage lender. However, where broker fees do apply, they tend to land between £300 and £1,000.

As for mortgage fees, some lenders charge an arrangement fee (ie a fee for arranging your loan). This expense tends to end up around £1,000 to £2,000.

Legal Fees

Your solicitor or conveyancer may charge legal fees (a.k.a. conveyancing fees). These fees usually land around £900 to £1,500 in total. These fees would cover legal work related to purchasing a home such as:

  • Transferring property ownership.
  • Looking into environmental factors.

Other Potential Hidden Costs

There are additional hidden costs that you may need to consider, although they wont apply in all cases. With that said, other possible hidden costs include:

  • Indemnity insurance - £20 to £300
  • Moving costs - £20 to £75 per hour if you were to hire a van, although you might be able to combine this with a longer term hire of a van you could use daily eg a Ford Ranger Raptor.
  • Home improvements - Can vary greatly, potentially from as low as £10 to £20, or reaching into the hundreds or even tens of thousands depending on your requirements. 
  • Maintenance or/and renovation costs - Likely to cost between a few hundred and a few thousand pound.
  • Land registry and searches - Around £250 to £300.
  • Telegraphic transfer fee (may be charged by a mortgage lender when they send the mortgage money to your solicitor to purchase the property in question) - Generally between £25 and £50.

How to Limit Hidden Costs

One way of reducing or eliminating hidden costs is to look at online reviews of solicitors, brokers, and mortgage lenders to find out which ones appear to have hidden costs (and to what extent) and which ones don’t. 

We also suggesting asking around in case any of your friends or family members have positive experiences to report with specific professionals or mortgage lenders. The key lesson though is that the cost of buying your first home will cost more than just the amount you offer for the house.



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