Costs That Come with Buying a First House

Buying your first house is an exciting milestone, a momentous step toward achieving homeownership. Many people, however, harbour the misconception that all they need is a hefty deposit to make this dream a reality. While a substantial down payment is undoubtedly a crucial component, numerous other financial considerations are involved in purchasing a home in the UK’s real estate market. In this article, we will delve into the various costs of buying your first house.

The Essential Deposit

It’s no secret that saving for a deposit is often the first and foremost challenge aspiring homeowners face. To secure a mortgage loan, you typically need to provide a deposit that serves as a down payment on the property. The exact amount required can vary significantly, but it’s generally recommended to aim for at least a 5% to 10% deposit of the property’s purchase price. However, a larger deposit can secure better mortgage deals and lower interest rates.

Solicitor Fees

Once you’ve saved up for your deposit, you must also factor in solicitor fees. A solicitor plays a vital role in the property buying process, handling legal aspects such as title search contracts and ensuring the transaction adheres to all relevant laws and regulations. Solicitor fees can vary, but they typically range from £500 to £1,500 or more, depending on the complexity of the purchase.

Mortgage Advisor Fees

While not mandatory, many first-time buyers opt to enlist the services of a mortgage advisor. These professionals can help you navigate the mortgage market, identify the best deals, and guide you through the application process. Mortgage advisor fees can vary, but they often charge a percentage of the mortgage loan amount or an hourly rate, so it’s essential to factor in this expense.

Stamp Duty

Stamp duty is a tax you must pay when purchasing a property in the UK. The amount you owe depends on the property’s purchase price and whether you are a first-time buyer. First-time buyers enjoy a stamp duty exemption on properties valued up to £300,000. For properties exceeding this threshold, you must pay a percentage of the purchase price in stamp duty. To work out what the Stamp Duty will be for a house you are looking at purchasing, then you can use this stamp duty calculator to give you a very good idea of how much you should budget for and expect to pay. Typically you have just 14 days after you complete on the purchase of a property to file a return to HMRC and pay any stamp duty that is due. 

Surveys

It’s wise to invest in a property survey to ensure that your property is in good condition and free from any major issues. Surveys can range from basic home condition reports to more comprehensive structural surveys. The survey cost varies based on scope and complexity but typically ranges from £250 to £1,000 or more.

Moving Expenses

You’ll need to consider moving costs once you’ve successfully purchased your new home. This includes hiring a moving van, which can range from a few hundred to over a thousand pounds, depending on the distance and volume of your belongings. Additionally, you may need to purchase new furniture or appliances to make your new house feel like home.

Utilising ISAs

Individual Savings Accounts (ISAs) can be valuable tools for saving money toward your deposit. ISAs offer tax-free savings, making accumulating the funds you need for your down payment easier. By saving diligently in an ISA, you can ensure that you have your deposit and the necessary funds for solicitor fees and other initial expenses.

In conclusion, while the deposit is a significant part of buying your first house, it’s essential to consider all the associated costs. Solicitor fees, mortgage advisor fees, stamp duty, surveys, moving expenses, and furnishing your new home are all expenses that should be factored into your budget. Proper financial planning and the use of ISAs can help you navigate these costs and turn your dream of homeownership into a reality.