Buying a house is one of the most significant financial commitments you will ever make. Most people focus on the two main figures: the deposit and the mortgage. However, these are just the beginning. The truth is, there are a number of essential “hidden” costs that can quickly add up, and failing to budget for them can derail your plans.
At KhanMather Solicitors, we believe in being transparent with our clients from the start. Here’s a guide to the key costs you need to budget for beyond the price of the property itself.
- Conveyancing Fees
This is the legal work required to transfer the property from the seller to you. It’s a non-negotiable expense. Your conveyancing fees will be broken down into two parts:
- Legal Fees: This is the cost for your solicitor’s time and expertise, covering everything from drawing up contracts to dealing with the Land Registry. The cost can vary depending on the complexity of the sale (for example, a leasehold property is more involved than a freehold one).
- Disbursements: These are the third-party costs that your solicitor pays on your behalf. They include all the essential conveyancing searches we discussed in a previous blog post, as well as the fees for the Land Registry to officially register you as the new owner.
- Stamp Duty Land Tax (SDLT)
This is a government tax that you must pay when you buy a property or land in England and Northern Ireland over a certain price threshold. The amount you pay depends on the property’s value and whether you are a first-time buyer, a home mover, or buying a second property.
It’s a “slice” tax, which means different rates apply to different portions of the price. The total can be a significant sum, so it’s vital to calculate it accurately and budget for it from the outset. Your solicitor will handle the process of paying this tax for you.
- Mortgage-Related Costs
While you might have secured a mortgage offer, there can be a number of fees associated with the loan itself:
- Mortgage Arrangement/Product Fee: Many lenders charge a fee to set up the mortgage, particularly for deals with lower interest rates. This can often be added to your mortgage loan, but remember you will pay interest on it for the life of the loan.
- Valuation Fee: Your lender will conduct a valuation to ensure the property is worth the price you’re paying. This is for their benefit, not yours, and may come with a fee. It is often a quick assessment and is not a detailed survey.
- Mortgage Broker Fees: If you use a mortgage broker to find the best deal for you, they may charge a fee for their service.
- Survey Costs
While your lender will conduct a valuation, it’s highly recommended that you instruct your own independent survey. This is your chance to get a detailed report on the property’s condition, which could save you thousands in the long run. There are different levels of survey, with prices increasing with the detail provided:
- HomeBuyer Report (Level 2): Suitable for most modern, conventional properties in a reasonable condition. It identifies potential problems like damp or subsidence.
- Building Survey (Level 3): The most comprehensive survey, recommended for older properties, buildings in poor condition, or those with unusual construction. It gives a detailed account of the property and offers advice on repairs.
If a survey reveals significant issues, you may be able to use the findings to renegotiate the purchase price with the seller.
- Moving Costs
The cost of physically moving your belongings can also add up. This includes:
- Removals Company: The price will depend on the volume of your belongings and the distance of the move.
- Insurance: You might want to take out insurance to protect your items during the move.
- Storage: If there’s a gap between moving out and moving in, you might need to pay for temporary storage.
The Value of Preparation
The key to a smooth and stress-free house purchase is to be fully prepared and aware of all the potential costs. At KhanMather Solicitors, we provide a clear and transparent breakdown of all legal fees and disbursements from the start. We work with you and your mortgage broker to ensure you have a complete picture of your budget, leaving no room for nasty surprises.
For a fixed-fee conveyancing quote and expert advice on your property purchase, contact Hannah on 0161 850 9911 today.