Q&A with Graham - how much should i budget for?

Details: Published: 03 September 2023; Hits: 579

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A: You’re right to think about this as there are several costs associated with buying a home and you do need to take them into account.

The first thing is of course your deposit. You’ll need a minimum of 5% but in most cases 10%, or more if you can - interest rates are generally better for lower loan-to-value mortgages.

Stamp Duty (SDLT) is the largest cost. At the moment, in England and NI, the rates are 0% on properties under £250,000; 5% on £250,001-£925,000; 10% on £925,001-£1,500,000, and 12% on £1,500,001+. For first time buyers, it’s 0% to £425,000, then 5% from £425,001 to £625,000. You pay in proportion. So, for example, if you’re buying at £500,000 the first £250,000 is at 0% and you’d pay 5% of the remaining £250,000, so £12,500.

Conveyancing is the legal process carried out by a conveyancer/solicitor. The fee varies, but allow £500 to £1,150, then an additional £500+ for disbursements, including searches, Land Registry, etc. Note that SDLT and conveyancing fees may be more for leasehold properties.

Then there are valuation/survey costs. Your lender will probably charge around £200-£300 to do a valuation, and depending on the property, and you could opt for a more in-depth survey too, which could cost from £300 to £1,000+.

Some mortgages come with a Mortgage Arrangement Fee, which can range massively, depending on the mortgage. Some are paid upfront, others can be added to the loan.

If you buy at auction, there's a buyers’ fee. Other than removals, that’s about it in terms of the costs involved in buying, but it’s best to factor in the likely running costs: gas and electricity, Council Tax, water rates, TV/broadband services, insurances, and, for leasehold properties, ground rent and service charges. You may also want to get life insurance to pay off the loan in the case of your death.

It’s a costly business, but I think you’ll agree, homeownership is indeed a privilege, and the rewards are well worth it, providing you don’t overstretch yourself of course.

If we can help in any way, just give us a call on 01392 204800.

Good luck in your quest!