What Costs Should I Expect When Buying a House?

You probably already know that purchasing a home is a pricey endeavour, but if you’re wondering about what costs money, and how much, you’re not alone. From Stamp Duty to running costs, we’ll break down some of the common fees, taxes, and charges related to a home purchase. This is just for the buyer’s side, however; check out our other guide about common costs associated with selling a home.

Costs before making an offer

These are the ones people often forget about; it’s not free to fill up the car with petrol or take time off work to attend viewings. You may need to put money down on a property to secure your interest, but then change your mind afterwards, losing that deposit. Plus, the stress of the property hunt may damage your mental or physical health, leading to more downtime and delay. Lastly, you may hire a solicitor to look over agreements and sample contracts before even making an offer, at no small fee.

The house you pick will have a huge impact on costs, too. Investopedia says, “when considering the affordability of a home, first-time buyers need to consider the condition and size of the property. After all, large isn't always good, especially if heating and cooling it breaks the budget. A quaint home sitting atop a picturesque hill may be a dream come true, but shovelling that long, steep driveway during the winter months could be a costly nightmare.”

Costs before move-in

These are the heavy hitters. For mortgage fees and charges, expect up to £1.5k in cost. For a valuation, budget up to £700. You’ll need a property survey, which can go as high as £1.5k, then you’ll need to get your conveyancing done, which is on average £780 – and that doesn’t include any enhanced searches done as part of the discovery. Lastly, you’ll need to clear the property of any hazards, and removals run between £50 and £1.5k in price. All this is according to Which? a trusted name in money advice. There will also be mortgage fees of up to £2.5k, and before you consider adding them onto your mortgage, remember you’ll be paying interest on them for years if you do.

Costs after you move in

If you’ve got a leasehold, you’ve got ground rent and service charges to contend with. These can vary widely and increase over time. You’ll need to pay to redirect your mail from your old address for a while at around £75 a year. You’ll have running costs from day one – you can’t live comfortably without gas, electric, water and the internet – and there will probably be repairs, too. While the house survey would have caught the most serious issues, you’ll likely need to do at least a few small repairs once you’re settled. MSE calculates the average cost of this at nearly £6k. They also state, “the lender will require you to take out buildings insurance to protect your new home against damage from fire, floods, subsidence and anything else. It’s also a good idea to have contents insurance for all your possessions, and life insurance to pay off your mortgage should you die before you’ve repaid the entire amount.” Oh, and we can’t forget about council tax. This can be thousands of pounds, but monthly payment plans can help you spread the cost out over the year.

Other costs that might apply

Ever thought about the extras that might apply to your particular circumstances? These can include things like:

• Pet kennelling or care for moving day
• Childcare for moving day
• Repairs or renovations needed to accommodate children or pets
• New furniture for your home
• Increased fuel costs if amenities, school, friends, family, church or work are further away
• Legal costs to prepare any tenant agreements for non-owning partners
• House removal insurance if you’re moving yourself
• Professional cleaning costs, especially if moving from a rental property
• Pest control costs at your new home
• Storage costs if you’re not bringing all your belongings with you
• Food delivery or takeaway costs on moving day
• Parking charges until you get residential permits
• TV license charges (if you watch TV)
• Boiler insurance or other bespoke insurance products you may want
• Loss of your rental up-front deposit if there were issues with its returned condition
• Cost of learning to drive, buying and insuring a car if your commute is not accessible by public transport

How can you prepare?

With any large purchase, it’s great to maintain a budget. Put all these costs down as line items (if they apply to you). Then, as you prepare for your house-buying journey, make sure you have enough resources to cover these costs. Remember that some costs are up-front, while others are post-sale, so you can account for that in your financial planning. If you don’t have enough right now, take some time. Save up a little more and revisit your budget. Is there anywhere you can save by doing it yourself? Can you cut out some nice-to-haves?

Wealthsimple says, “if you’re putting your down payment fund in the same place where you pay your rent and your bills, you’re going to see way more money coming out than staying in, no matter how hard you try to discipline yourself. Commit to a savings account or an investment account where you’ll contribute a set monthly amount plus anything else you can afford, and then literally just… forget about it. Deny it even exists.”

How can you keep track of costs?

Reuse your budget for this. Simply make a copy of it and use it to track your actual spend; you’ll see that some line items will cost more than you accounted for and some will be less. By tracking every single conveyancing fee or tax you pay, you’ll keep that spending in line with what you have saved up. Sometimes just keeping an eye on outgoings will provide you with more opportunities to cut out unnecessary costs.

If you’re starting your home-buying journey, you need a good conveyancer. That’s where we can help. Use our free and easy tool to get conveyancing quotes from local experts today.