Posted on 11 April 2018 by
Purchasing your first home is likely to be both an exciting and daunting experience, and it will probably be one of the biggest financial commitments you make in your lifetime. Once you have fallen in love with a property the last thing you want dampening your spirits are unexpected additional costs leaving you out of pocket. While many of these ‘hidden’ fees are unavoidable and a necessary evil, we have compiled a handy cheat sheet below of any extra fees you can expect as a first time buyer so you can plan your budget accordingly.
Sadly if the deposit on a house wasn’t eye watering enough, stamp duty (a tax) is also charged when you purchase a residential property. The amount you are expected to pay is calculated based on the property’s value and if your first home is worth £300,000 or less then you will be happy to hear you avoid these charges. First time buyers purchasing a property more than £300,000 are not so lucky however. If your home is worth between £300,001 and £500,000 you will be required to pay 5% of the property’s value as stamp duty. Homes worth more than £500,000 will be charged the standard rate that is paid on all residential properties over £125,000.
Before a mortgage provider can lend you any money they first need to confirm the value of your new property. Not all providers will charge you for this, but it is best to establish any fees with them beforehand to avoid any nasty surprises. This may also include a small additional administration fee on top of the original price.
A property survey is a sensible step to take after you have found your perfect home. This property may seem to be everything you dreamed of and more, but you are wise to get the house checked over by a professional to avoid paying through the nose for unexpected repairs later on down the line. Being informed of any problems with the property can also give you some leverage when it comes to negotiating over the cost of the property, so this upfront cost could pay for itself in the end.
Another recommended step is to employ a reputable conveyancer/solicitor to guide you through the minefield of contracts and legal hoops you need to jump through to properly secure your new property. This will ensure that everything is completed in line with current laws so you can have the peace of mind that no one is going to come and turf you out of your new home once you’ve finally finished putting your last novelty mug in the cupboard.
The role of a mortgage broker is to advise you on the best mortgage deals available to you based upon your personal circumstances and requirements. Using an independent mortgage broker allows the comparison of the maximum number of lenders and deals, making sure you are getting the best possible value for money. After finding a suitable deal their processing team guides you through every step of the process, saving you a great deal of time and stress compared to doing it all yourself. This isn’t a necessity, but relying on a mortgage broker is likely to save you a lot of headaches throughout the process.
Unless you have very accommodating friends and family, or have some owed favours ready to claim, then you may also find yourself factoring in the cost of a professional movers service to finish of your home buying journey. Even if you decide to do it all yourself, make sure you don’t forget to include some money in your budget for the van hire.
This is where you unfortunately have to start paying back the mortgages providers for the money that they lent you. There are different repayment types that you will have agreed with your lender during the application process, but the most common method is to make a monthly payment that will clear both the amount borrowed and interest charged by the lender by the end of the mortgage term.
The amount you spend here could be directly related to whether you decided to pay for a property survey when considering your new home. If you skipped and opted for the lender’s valuation, you may be regretting it once you have moved in and discovered that you now have to factor in tradesman costs. Renovations are also particularly expensive, so it’s important to mentally add these alterations to the house’s sale price when looking around the property.
So you’ve painstakingly moved all of your prized possessions into your new home…now you are going to want to make sure you are insured in case anything unexpected happens to them. There are many different types of insurance you will want to consider, including home insurance, contents insurance and life insurance, all of which can be explained to you in detail by your mortgage broker.
Finally, you will need to keep in mind the regular gas, water and electric bills, as well as the council tax that you will be required to pay. When viewing the property it is a good idea to ask the sellers how much they currently pay for these, so you can decide if these monthly outgoings are likely to be affordable.
It’s never fun hearing about hidden costs that you may not have originally considered when buying your first home, but it is important to be aware of these fees earlier rather than later. We hope this guide has shed some light on the fact that buying a property actually costs a lot more than just the amount that you pay for the property.
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.