There are a number of costs and fees involved in buying a new property. Before starting your home search, it is helpful to prepare a detailed budget of all costs that will be incurred throughout the process. This budget will help you plan cashflow and ensure that you have sufficient funds available to complete the purchase To assist you in the process, we discuss the main costs that should be budgeted below and our attached template should help you prepare for a successful purchase and move.
Potential costs to be budgeted
Deposit – you will need contribute a deposit for the property you wish to buy. Various lenders and mortgage products require differing levels of deposit contribution from the buyer, but you should budget for a minimum of 10% of the purchase price.
Stamp duty – stamp duty is a tax that you will have to pay based on the purchase value of the home you are buying. The amount of tax is determined by the purchase price and whether the property is additional to any property that you might already own. The Government provides an on-line tool to allow you to calculate stamp duty.
Solicitors fees – you will need to engage a solicitor or conveyancing firm to undertake the legal aspects of the purchase. Some conveyancing firms will act on the basis of “no completion, no fee” which can be an important safeguard in the event the purchase of the property falls through for any reason.
Surveyors/property inspection – many home buyers engage a surveyor to undertake an inspection of the property that they wish to purchase. There are different levels of property survey and you should choose one that best meets your specific needs. Aspire Residential’s guide to property inspections provides further information that should help you decide which survey would be right for you.
Mortgage arrangement fees – most lenders charge an arrangement fee for providing a mortgage. Lenders can have differing fee structures and you should shop around to ensure that you get the best mortgage terms available. It might be worth engaging a financial advisor to assess options available in the market and match each to your specific needs.
Mortgage break/surrender fees – one frequently overlooked cost by home buyers who have an existing mortgage is the potential "break or surrender costs" of ending their existing mortgage. Depending on the specific mortgage product terms, these costs could be substantial, so it is important that you fully understand them and factor them into your budget.
Mortgage valuation – if you are mortgaging the property, the lender will likely arrange for a valuation to be performed to ensure that the property provides adequate security for the loan.
Land registry – once the transaction is complete, your solicitor or conveyancing firm will need to register your ownership of the property with land registry. There is a cost associated with this.
Search fees – your solicitor will need to undertake a number of “searches” to enquire about specific information regarding the property.
Money transfer fee – there will be a small cost (charged by your solicitor) for moving the money to complete the transaction.
Insurance fees – you should budget for both buildings and contents insurance for your new home. There are a significant number of insurance providers available and it is definitely worth shopping around for the best deal based on your exact insurance needs. You will need to arrange buildings insurance from the date that you exchange contracts and contents insurance from the day you move into the property.
Removal company – if you are not going to do a DIY move, then you will need to hire a removal company. Be sure to get quotes from three local companies.
Storage costs – unless you are competing the sale of your current home and the purchase of a new home on the same day, you are going to have to budget for temporary storage costs. There are a number of useful websites that allow you to compare storage costs:
Moving day costs – depending on your family circumstances and when you are moving, you might need to arrange for pet minders or child care during the day of the move.
Set up fees for utility providers – certain utility providers such as phone and broadband might charge a fee for initiating services, particularly where they need to attend the home to set up the service.
New furniture and appliances – you might need to budget for new appliances and furniture depending on whether you are upsizing or using the move as an opportunity to buy new items.
Redecoration – unless your new home is newly built to your exact specification, then you are probably going to want to make some cosmetic (or structural) changes in relatively short order such as new carpets, wall painting, new kitchen cabinets etc. There might also be certain matters identified in the property survey/inspection report that require immediate attention as soon as you move in.
To help you prepare your budget please see our attached template;