Costs and fees to consider when you’re buying a home

Buying a home can be an exciting journey, but it’s important to be aware of the fees and costs involved, so that you can budget your finances accordingly. Here are some key things to consider.

Mortgage costs

A mortgage is a loan that you pay back in instalments. It usually includes an interest charge on the repayments. There are many types of mortgages available. Some lenders may charge you a mortgage arrangement fee, which you’ll need to pay upfront. If you’re using a broker, they may also charge you a flat rate or commission fee for their services.

Deposit

If you’ve got a mortgage, you’ll likely have to place a down payment, called a deposit, to show the lender that you’re serious about taking out the home loan. Here are some ways to save for a mortgage deposit.

Valuation fee

You’ll also have to pay for a valuation of the property you’re purchasing. This proves to the lender that your property exists, and establishes its value, for example, in comparison with similar properties in the area.

Surveyor’s fee

You’ll also have to pay for a survey of the property. This lists its key features, including any defects or required maintenance or repairs.

Legal and conveyancing fees

Buying a home involves legal paperwork. You’ll have to hire a solicitor or conveyancer to help sort out contracts, conduct local authority searches, deal with Land Registry and transfer the funds for the property purchase. These may incur additional fees, like for local authority searches.

Stamp duty

If the home you’re purchasing costs more than £125,000, you’ll have to pay stamp duty, which is a form of tax. The amount you’ll have to pay depends on how much your property is worth.

Moving costs

You may need to hire movers to help you transfer your belongings to your new home, or, if you’re doing it yourself, you may still find that there are costs to consider. These can range from the purchasing of boxes to pack your things in, to the hiring of a van.

Ongoing costs

Once you own your new home, you’ll still have ongoing costs to consider. Mortgage repayments aside, these can include:

  • leasehold costs
  • home insurance
  • maintenance and repairs
  • utilities.

If you’re planning on applying for a mortgage, you may want to check your Equifax Credit Report & Score beforehand – it’s free for the first 30 days, then £7.95 monthly. The credit report shows you your credit history, giving you the chance to spot any inaccuracies on it, whereas the score gives you an indication of how creditworthy lenders may find you.

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