It’s really hard to budget for all the expenses when buying a house, especially when you don’t know how much everything cost.
We have now purchased our house, but I can still see myself not long ago saving every penny to get a bigger deposit. I was thinking that was enough to secure the house of my dreams. How naïve I was.
Don’t get me wrong, you need a deposit: 5% at least most high street banks say.
What they fail to remind you is that you need to budget for so much more than that.
We all know the house doesn’t magically appear the moment our savings account reaches that 5%, but we are all so focussed on reaching this milestones everybody is reminding us of, that we forget all the other expenses when buying a house!
I will share with you exactly all the expenses we faced when buying a house and how much we spent from the day our offer got accepted to the day we moved in:
Deposit: variable, minimum 5%
Ok, let’s get this out of the way: you need a deposit, we knew that and so do you. On average the minimum the bank asks for is 5% but I have seen offers for less than that.
Ideally the more the better, as mortgage rates get better if you have at least a 30% deposit.
Stamp duty: variable
Another quite well known expense.
Stamp duty is a tax on the purchase of the house. Its amount is based on the value of the property and whether you previously owned a house, anywhere in the world. There are a series of bands with different rates, and if the property is below a certain threshold you might be lucky and not pay a penny. The easiest way to calculate what your stamp duty would be is to use a calculator. My favourite is: https://www.stampdutycalculator.org.uk/
Some builders offer to pay stamp duty for you so it might be worth looking into that if you’re buying a new build house.
Homebuyer survey: £385.00
As soon as your offer on the property gets accepted you will need to arrange for a homebuyer survey.
There are various types of surveys, the main ones we considered are:
- RICS condition report: £250.00 – This is the cheapest but provides only a very high level overview of the property
- RICS HomeBuyer report: £380.00 – A more comprehensive survey: will check for structural problems and will help you negotiate the price down if they find issues you will need to fix.
- RICS building survey: £500.00 – Full survey suitable for older properties or if you are planning improvement works
After placing an offer you clearly want to make sure you’re purchasing a property that’s worth the money, but on the other hand you’re conscious you’re about to embark on a series of expenses and you’re keen to keep costs down. We were so confused and no one was willing to advise on what to do.
Which survey should you pick?
My advice is, you’re never too careful: go for the building survey if the house you’re purchasing is 10+ years old, as it could save you loads in the long run.
Newer properties usually come with a guarantee from the builder that they will repair any issues for a fixed period of time, the most common is the National House Building Council (NHBC) warranty.
Our property was 3 years old when we purchased it and still covered by the NHBC warranty, so we decided to do a HomeBuyer report. Could we have done a condition report instead? Yes, and we would have saved £130.00, but better to be safe than sorry.
Arrangement / product fee: £999.00
To get a mortgage you will most likely need to pay an arrangement fee (also called product fee), which is basically how much the lender charges you to do the paperwork. Some mortgage deals offer free product fee, but don’t be fooled by it: sometimes in the long run it is cheaper to pay the fee with an overall lower interest rate, than to pick a shiny offer with no fee but with higher interest rates. Do your maths.
Standard mortgage valuation: £0.00 (but could be anything from £150.00)
The lender will also charge you for a ‘Standard Mortgage Valuation’ which is a very basic survey to satisfy themselves the house exist and it’s ok to lend you the money. It doesn’t check for any issues with the property and from what I’ve been told most times it is just a short drive past the house.
Why didn’t we pay for it?
As part of our mortgage offer, the lender didn’t charge us for this but it can cost you anything between £150.00 and £1500.00 depending on the value of the property.
Building insurance: £130.00
This is often an overlooked expense when buying a house.
To get a mortgage your lender will also ask for proof of building insurance. You won’t need it until completion day, but I recommend getting some quotes in advance.
Whilst our bank only required building insurance, it is good practice, and you can often get a better deal if you buy a content insurance as well. You’ll want to protect your house as much as what’s inside.
We went for one of the cheapest offers available, but it was also one of the most comprehensive deal. I suspect the price of this policy will go up dramatically next year, so I have set a reminder and will shop around before renewing.
Mortgage broker: £199.00
This is not a must have, but I think it’s worth paying for a professional when dealing with something that will impact your life for the foreseeable future.
Mortgage brokers can be either linked to one or more lenders, or be totally independent. They may not have access to the whole market, as some lenders don’t want to work with brokers, but they also have access to dedicated deals so I think it balances out.
A good mortgage broker will deal with the application for you, and most importantly will guide you and sometimes challenge you in the choice of your ideal mortgage and terms. I did my homework and had a clear-ish idea of what I wanted, but the expert advice was indispensable for us, for support and validation.
The estate agency will recommend you use their broker: there are key advantages of doing so, as the estate agent and broker can update each other or chase each other without going through you, and trust me they will contact you for one thing or the other all the time. But they may not be the cheapest, so as always it is better to consider your options carefully.
Solicitor/ Conveyancing: £1569.00
This includes £135.00 for land registry deeds, which is a fixed fee.
Even so, this is definitely the biggest single expense we had to face when purchasing our house. We tried hard to find cheaper options, however all the prices we found were in the range of £1500/£1700.
It is important to shop around for the best deal, but what’s most important is to find someone you trust and who worked with the estate agency managing the process, as they will be in contact constantly for your purchase. The agency will push you to pick one of their recommended partners, however it is key you feel comfortable with your choice as the conveyancer will represent you and negotiate the contract with the seller on your behalf.
Removal company: £264.00
This expense varies considerably depending on what you need to move and where. We were renting a one-bed flat before purchasing this house so we didn’t have a lot to move, and our new house was only 2 miles away. This quote was for: sofa, bookshelf, tv unit, table and chairs, bed, bedside tables, wardrobe and 20 boxes.
We used getamover.co.uk to find the best deal.
Professional cleaner: £100.00
This is something you might not have to pay, depending on your situation, but we definitely didn’t budget for it. When we signed the rental for the flat, we read we would have to get it cleaned before leaving, but a year or so later we completely forgot about that.
The cheapest professional cleaner we could find charged us £100 for a tiny (and empty) one-bed flat, but we had to contact a lot of companies to find one with a decent price. We did think we should just clean it ourselves but our estate agent required a receipt from a professional cleaner.
Luckily our budget covered all expenses but it was really hard to plan for something without knowing how much it would cost!
Hopefully you’ll find this guide useful if you’re saving up for your first property.
And if you need help with your budgeting strategy, check out these posts below: