There are more costs than just the asking price when it comes to purchasing a property. From fees that come at the start of the homebuying process, to costs that come up during the negotiation period and after the sale is complete, there’s a lot to think about when organising your finances for a home move.
Following the release of the first episode of our home moving podcast, OnTheMove, we’ve put together some of the fees to be aware of as you embark on the journey to finding your next home so you can better prepare ahead of time and have an idea of some of the additional costs to expect and budget for…
Arrangement fees
If you’re buying home, you’ll likely need a mortgage to fund the purchase of your property.
To guide you through the process of securing your mortgage, you’ll need to instruct a mortgage broker who’ll guide you through the process and the costs involved with securing your loan. Your broker will charge a fee for their services, but when thinking about organising the mortgage itself, a cost to be aware of from the outset are arrangement fees.
Arrangement fees are what the lender will charge to engage you in a mortgage product and are sometimes called product fees. These can be paid upfront or added to the loan, however if they’re added to the loan, you’ll need to pay interest on them.
Valuation fee
When organising your mortgage, the lender will carry out a valuation of your home to work out what the home is worth to make sure it’s worth what you’re planning on paying for it to establish what they’re also willing to lend you.
Not all lenders charge for this mortgage valuation depending on the mortgage product you’re purchasing but some do. The fee will vary from lender to lender and depend on the value of your property so it’s worth keeping this in mind when thinking about the fees associated with organising your mortgage. It’s also worth noting that a mortgage valuation survey isn’t too in depth, unlike a full structural survey, which will be conducted for your property later in the moving process.
Survey costs
A survey should be conducted on the property you’re buying before you purchase it. There are lots of different types of surveys to choose from at different prices, but their aim is to uncover any potential issues with the property so investing in a good, in-depth survey can save you money going forwards and help you avoid any potential issues that might otherwise go unnoticed without a detailed survey.
Deposit
A deposit is perhaps the most commonly thought of sum of money when people think about what they need to budget for when buying a home.
Your deposit is the amount of money you put towards the purchase of your property and usually, the bigger your deposit, the more mortgage deals you’ll be able choose from with potentially lower interest rates.
A good deposit is typically considered to be 5% to 10% of the price of the home you’re buying, so it’s a good idea to start saving for your deposit as early as possible when thinking about moving home.
Stamp Duty
Stamp Duty is tax payable in the UK on the purchase of property or land. When buying a property, you get a certain proportion of your purchase price Stamp Duty free and if you’re a first time buyer, this is a larger portion up to £425,000 at the moment. Stamp Duty is payable within 30 days of completion and your conveyancer is responsible for paying it to the Land Registry.
Conveyancing and legal fees
To handle all the legal bits of your property purchase, otherwise known as the conveyancing process, you’ll need to instruct a solicitor or conveyancer. Conveyancing fees can vary case to case, so it’s worth asking for a quote from a few solicitors. Your estate agent might even have a recommended solicitor who they can put you in contact with, but in case you’ll be choosing your own, we’ve got a helpful two-part guide to help you choose the most cost-effective conveyancer.
The conveyancing process usually includes the drawing up and negotiation of contracts between yourself as the buyer and the seller, organising the payment of stamp duty and the payment transfer to your new home as well as local authority searches.
Solicitor’s fees can therefore be thought of in two parts: the legal fees which are what you’ll be charged by your solicitor or conveyancer for their services; and disbursements which include your local authority searches which look into things like flood risk and any local issues you might need to know about.
Land Registry fees
Land registry fees are due once you go through to completion to register the property as new ownership in your name and this process will be taken care of by your conveyancer.
Removal costs
While it’s incredibly exciting, moving day can also be extremely stressful so when it comes to moving all your belongings to your new place, it’s worth hiring a removal company to look after this for you.
If you only have a few things to take with you and you don’t mind a bit of heavy lifting, hiring your own van for the day may work out more cost-effective for you, but it’s worth asking for help from friends and family too as the more hands on deck the better.
If you do need to hire a removal firm, don’t leave this until the last minute as these companies, especially the good ones, tend to get booked up pretty quickly so it’s worth getting organised and booking a few weeks in advance of your moving date.
Your removals costs will depend on factors such as how much you’ll be moving, how far you’ll be moving and whether you’d like to purchase extras like packing materials from the firm. With this in mind, remember to shop around and get a quote from a few firms so you can compare the best deals, but choosing a firm which is reliable is the most important.
To help you prepare for moving day, declutter your current home to avoid taking unnecessary items with you and take a look at our top tips to make packing for your move easier.
Agent fees
If you have a property to sell, you’ll need to pay your estate agent fees for their services of selling your home. Their fee will usually be negotiated and agreed with you when you instruct them and your property is put on the market. Fees vary from agent to agent but can typically range from around 1% to 3% of the sale price of your property.
Your estate agent will also help you with your onward purchase but if you don’t have anything to sell and you’re solely a buyer, you may choose to instruct an agent to act as your buying agent. They’ll help you find the best property that fits your criteria and they’ll be able to support you with negotiating the best price too and their services will also come with a fee.
For a complete Moving 101 to get to grips with the home buying process, you can listen to the full first episode of OnTheMove here.
Content provided by OnTheMarket.com is for information purposes only. Independent and professional advice should be taken before buying, selling, letting or renting property, or buying financial products.
