Buying your first home? Here are the 7 fees you’ll have to pay during the purchase process.
Buying your first home is exciting, but it can feel overwhelming and challenging. You’ve saved your deposit, but you may not be aware of the other fees you'll have to pay during the mortgage application and purchase process.
Understanding these costs is essential to a stress-free home purchase. Here, we cover the most common fees and costs so you can prepare your budget and prevent any surprises.
1. The Deposit – The Big One
Of course, the deposit is typically the largest cost of purchasing your first home. How much you can put down will impact your mortgage options; generally, the bigger the deposit, the better the mortgage rate.
For first-time buyers, most lenders will want to see a 10% deposit, but some will accept 5%.
2. Mortgage Fees
As well as your deposit, you’ll have other costs for your home purchase. For example, you’ll have to pay broker fees when working with an expert, allowing you to access a much more competitive mortgage rate.
Once you’ve found the right home mortgage rate, you need to factor in lender charges, such as:
- The lender arrangement fee - This is the charge you pay to the lender to arrange your mortgage. It typically costs up to £2,000 or can be a percentage of the property value, but some lenders offer it for free as an incentive.
- The valuation fee – This is what lenders charge to assess the property’s value. It is typically fixed depending on the property’s value.
3. Solicitor or Conveyancing Fees
Conveyancing is the legal process you go through when buying your property, and you’ll need to instruct a solicitor or conveyancer. These can cost anywhere from £500-£1,500+, so it’s worth exploring lots of quotes. However, checking the reviews is important, as cheapest isn’t always best, and a bad solicitor could significantly delay your mortgage application process.
To simplify this process, we’ve partnered with SortRefer, an online portal that allows you to generate conveyancing quotes in under a minute from a panel of nationwide suppliers. Plus, they’re free to use and quote.
See what quotes you could access here.
4. Survey Costs
You’ll have the option to complete a survey on the property before you exchange contracts. There are different types of surveys, from a homebuyer report to a full structural survey, ranging in cost from £400 to £1,500.
Getting a survey done is optional, but skipping it can cost you more in the long run. Getting the most thorough survey would be best if you’re particularly concerned about the property’s condition.
You can use SortRefer to get a quote for your home survey here.
5. Stamp Duty (or Land Transaction Tax in Wales)
Whenever you purchase a residential property, you may be liable for Stamp Duty Land Tax.
As a first-time buyer, you may benefit from a discounted rate if the property value is below £500,000. If the property value is below £300,000, there’s no Stamp Duty to pay!
For example, if the property you’re purchasing costs £450,000, you’ll still qualify for first-time buyer relief, which brings down how much you’re liable to pay. Therefore, in this example, you’ll pay £7,500.
However, if you’re a first-time buyer purchasing a property of £500,001 and above, you no longer qualify for first-time buyer relief. The Stamp Duty for a property valued at £500,001 would be £15,000, regardless of whether it was your first purchase or not.
Take a look at how much Stamp Duty you could pay using our online calculator.
6. Moving Costs
You’ll also need to factor in the moving costs when budgeting. For example, will you need a removal company, or will you hire a van? Book these in early and compare quotes from different providers, but be aware that prices can spike at the end of the month.
7. Other Sneaky Extras
Insurance is another necessary cost when purchasing a home. From life insurance, which could be up to four different policies and may be required for a mortgage approval, to buildings insurance, which is often needed before exchange
Then you have costs that can seem to come out of nowhere. For example, setting up your mail redirection, getting new locks, setting up your broadband, and a new TV license. These add up fast, so having a budget for these ‘miscellaneous’ or unexpected costs is recommended.
Your mortgage costs
Seeing the complete list of costs like this will feel overwhelming, but knowing what’s coming gives you more control.
Speak to one of our experts
Our expert homebuyer team can explain the costs to consider when it comes to your first mortgage. To chat with our friendly team, call 0345 345 6788 or submit an enquiry here.
