How much does it cost to buy a property?

The short answer is more than you think! It is an expensive process with many one off charges as well as regular ongoing bills.

The one off costs include the following:

  • A mortgage arrangement fee-this can vary depending on the type of house you are purchasing and can be anything form £500-£1500. A re-mortgage or a Buy to Let will incur higher fees. If you do not have the money to pay these fees up front then you can possibly arrange to have them added to your mortgage loan, but if you do this you will have to pay interest on this on top.
  • Deposit-This needs to be at least 5% of the purchase price of your property. This needs to be paid before you can apply for a mortgage. For example, on a purchase price of £200,000, you will at have to pay £10,000 up front. If you are able to provide a higher deposit, then you will get a better mortgage deal. The government can also offer assistance with their Help to Buy scheme for those who have just managed to obtain 5% deposit. This scheme is designed for first time buyers or those who want to move up the property ladder.
  • Valuation fee-the valuation provides an idea of how much your property is worth and is usually arranged by your mortgage lender. In most cases the valuation will cost between £200-£600. You may also choose to have a Home buyers report or a Building survey conducted in order to obtain a more detailed assessment of the property and if there are any defects in the property. Please see our Carrying out a survey guide for more details regarding the different types of survey.
  • Stamp Duty Land Tax (SDLT) – Is a tax that you will have to pay on all properties purchased at a price greater than £125,000. The amount of SDLT you will have to pay will depend on the value of the property you intend to purchase and can be clearly set out as follows (these bands/percentages may be subject to change in the future):

Property Price         %of SDLT

£0-£125,000            0
£125,001-£250,000        2
£250,000-£925,000        5
£925,000-£1,500,000        10
£1,500,001+            12

It is to be noted that if you are buying a second home or a buy to let property –then you will have to pay an extra 3%.

  • Legal /Conveyancing fees- It is compulsory that you have a Solicitor or a licensed Conveyancer to deal with the legal side of purchasing a property. They may charge you a flat fee or a % of the value of the property. Fees will be wide ranging and will depend on the complexity of the transaction.
  • Land Registration fees- A fee will be charged for registering the property as the new owner.
  • Additional fees will include money transfer fees between mortgage lenders and fees for searches on the property (which may be included in your Solicitor/Conveyancer’s fees).
  • Removal Costs-these costs will vary and will depend on how many belongings you have.
  • Then, following on from the above one off costs, there are a list of continuous and ongoing costs that you must consider and which include:
  • Home and Contents Insurance-it is a compulsory requirement of the mortgage lender that you have buildings insurance in place in order to cover and protect your new home in case for example there was a flood or subsidence amongst other risks. Whilst not compulsory, it is a good idea to get contents insurance to protect your belongings.
  • Utility bills
  • Council Tax
  • Furnishings
  • Repairs and redecorating
  • In the case of leasehold properties-property owners will have to pay regular ground rent alongside service charges and possible sinking fund charges.

Not to forget your mortgage which is a long term continuous payment that you will need to meet until the loan you originally took with your mortgage lender plus interest is fully paid off.