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10 forgotten costs when buying a home

Everyone knows that buying a new home can be costly, but the cost of buying a home includes so much more than simply paying for the house itself. Make sure you don’t get caught out with some of these often-forgotten costs.

10 forgotten costs when buying a home

It can be startling, especially to First Time Buyers, to learn how many different things you’ll have to pay for in order to purchase your new home.

Obviously, you will be aware of the price of the home you wish to buy. The other three main costs we often mention are: the cost of a conveyancing solicitor, a survey (or Home Report if you’re in Scotland) and removals.
But throughout the moving process there are many additional costs, some small and some rather sizable. These are often hidden, or just forgotten about, and will increase your total cost of moving.

We’ve compiled a list of 10 costs that you should be aware of before you buy a home, so that you can plan your finances accordingly. This way there will be no nasty surprises, and you’ll eliminate the risk of your house purchase falling through.

Insurance

When applying for a mortgage in the UK you are generally required to take out a Buildings Insurance policy for your new home, protecting it from accidents and theft. This is often necessary to secure a mortgage, and some lenders will also require you to get contents insurance along with it as a home insurance bundle.

The cost of insurance can vary dramatically based on your property (e.g. based on its size, age and location) but the average price for UK home insurance is around £163.83 per year.

There are some instances, with Shared Ownership, or flats in a block, where Building Insurance is not required as part of your mortgage. Make sure you discuss this with your mortgage adviser and conveyancing solicitor to check whether you need to purchase it.

Find out more about insurance.

Mortgage fees

You might be surprised to find that even though your mortgage lender is ‘giving’ you the money for your property, you need to pay them for organising it. The charge to receive a mortgage from a lender has a few names, it may be referred to as the arrangement fee, booking fee or mortgage fee. The fee can be anything from £99 to £2,000, depending on the interest rate of the mortgage itself. Make sure to find out the cost of the booking fee when choosing a lender.

Sometimes this fee can be added to the total of the mortgage amount, rather than being paid as a separate upfront cost, but this may end up costing you more because of the interest of the total loan. Chat with your mortgage adviser about what options you have.

Lenders may also charge you for a property valuation, to make sure that the property is worth what you intend to pay for it. If the mortgage valuation finds the property is worth less than the asking price, they may not lend you the full amount.

It is also often worth getting a mortgage broker or adviser before you start the process of getting a mortgage. They can help you to find the best deal for you, as well as give you help and advice on the mortgaging process. You don’t need a mortgage broker when buying a home, but it is recommended in order to save time and money in the long run.

We recommend Mortgage Advice Bureau, who are offering free mortgage advice to reallymoving visitors.

Legal fees

When moving home you will need to hire a conveyancing solicitor to help you with the legal side of moving to a new house, ensuring that the property is legally transferred into your name. You will be quoted a fee when you hire a conveyancing solicitor, but it is worthwhile to note that many will offer other services to you, which will come with extra costs.

One notable charge is the cost of your solicitor doing a search to note any problems your property or it’s area may have with regard to conveyancing. It is a small charge but worth it to avoid or anticipate any problems (and extra costs) you may encounter in future.

You should also anticipate a small charge of around £20-£30 to transfer your mortgage funds to your conveyancing solicitor speedily so that they can help, come time for completion.

It’s also worth being aware of disbursements. These are things your solicitor will pay for on your behalf to speed the process up, but that you will have to pay for when you pay your conveyancer.  Have a look at our full list of disbursement costs.

Land registry

When you become the new legal owner of a property, the government will need to make a note of this. They will update the information about the property in the Government Land Registry. For this you will need to pay a small fee depending on the price you paid for the property. This means it can be anywhere from £50 to £1,000. The government can give you advice on how much land registry will cost you.

If your property is in Scotland there will also be a title registration fee, to put your property title in the land register. Learn more about land registration in Scotland.

Stamp Duty

When buying a property in the UK, you will be charged a government tax. In England this is Stamp Duty Land Tax, in Scotland it’s Land and Transaction Tax, and in Wales it’s Land Transaction Tax. They all work on a similar approach, but the thresholds for payment are different.

The charge is calculated as a percentage of your property’s price. Stamp Duty is paid when you exchange on your property, within 14 days of completion.

The percentage of Stamp Duty you pay will be dependent on many variables. The total price of your property determines how much you pay, for example if a residential property is between £125,000 and £675,000, Stamp Duty will cost 2% of the total price. You don’t have to pay any Stamp Duty if your residential property is under £125,000 (as of 1st April 2021) or under £150,000 if it’s non-residential.

Stamp Duty can also be reduced or raised based on your circumstance. A First Time Buyer’s Stamp Duty will be discounted as long as the property is under £500,000. If you are buying a second home, your stamp duty will be increased by 2%.

You can find out how much Stamp Duty/Land Transaction Tax/Land and Building Transaction Tax you need to pay by using our Stamp Duty Calculator.

Fraud checks

Any time you’re paying out large sums of money  there are likely to be many fraudsters around hoping to take advantage. While this is obviously a devastating situation for you, it is also a bad circumstance for any solicitors, mortgage brokers etc who are working with you on the move.

This means that those you work with will likely want to perform multiple security checks. These costs are very small, usually around £10, but be aware you will probably have to pay for multiple fraud checks.

Shared spaces

You may be purchasing a property with shared spaces like gardens and stairwells. This is usually the case with leasehold properties, where you may have to pay a monthly cost that ensures all shared spaces are kept clean and tidy. When you first move in you will likely have to pay in a deposit of around £50 (it may be more) upfront towards this fee. Otherwise, this may be included in the service charge.

In some cases, if there are works that need to take place in the future, you may be obliged to pay into a sink fund. This is where all owners in a building put in an amount towards future works, perhaps on fixing a roof or making improvements. If you are required to pay into a sink fund, the details will be in your legal paperwork.

VAT

Remember that, as with most purchases, VAT will be added to most of the costs you incur, like legal fees or mortgage fees. So be aware of this additional cost throughout the process.  

If you are using a smaller firm, they might not be registered to charge VAT, as their annual turnover does not meet the requirements to do so. However, many firms still register to charge VAT in spite of not meeting the legal requirement.

It is wise to always budget for VAT regardless of the size of companies you use when buying a home.

Moving day

Aside from the obvious cost of a removals firm, there are many costs associated with moving day itself that you’ll need to be aware of.

Packing materials, like boxes, bubble wrap and tape are a good place to start. You may be able to source these from  friends and family who recently moved, or get them for free on Gumtree/Facebook marketplace/Freecycle. You might also be able to rent some from your removals firm, which is environmentally friendly and means they’ll take them away when you’re unpacked.

Along with your removals firm costs, consider removals insurance to protect your belongings should an accident occur on the move. This can be domestic or international, with different rates depending on where you’re moving to. Often your removals firm will be able to provide this.

If you can’t transport everything on moving day, you may need to pay for self-storage.

If you can’t move into your new house on the same day that you must move out of your old one or you’re travelling a great distance to your new home, you may need to budget for temporary accommodation.

Utilities

Once you’ve moved in, you don’t want to be ages without internet. Setting up your utilities, or transferring them over should be your first priority. If you want to switch, be sure to compare before you move to get the best deal. Be aware that for some broadband providers you might need to pay a set up fee, especially if a technician has to come out to install things. Be sure to be aware of upfront costs and when your bills might start.
 
Buying a house is a huge investment, so make sure you know how much you may need to pay out before you decide to move. For a rough estimate on what moving will cost you, you can use our Moving Cost Calculator.
 

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