How much does it cost to buy a home?

A brief guide to the additional expenses and hidden costs

If you’re thinking of buying a home, there’s a lot more to consider than just the price of the property. The total cost of buying a house is often underestimated. It’s not just finding a deposit.

Among the additional costs that need to be covered are legal fees, surveyor’s fees, stamp duty and moving costs.

Preparation is particularly important if you are a first-time buyer.

How much is a property in the UK?

According to the Office of National Statistics, February 2020 [1]:

  • In England, the average home costs £246,000
  • In Scotland, the average home costs £151,000 
  • In Wales, the average home costs £164,000
  • In Northern Ireland, the average home costs £140,000

Of course, there’s a lot of variance in price depending on the type of property and the location.

How deposit is required for a home?

Usually, when you buy a home, you’ll pay 5-20% of the total price as a deposit and take out a mortgage to cover the remaining cost, which you’ll repay over an agreed period (typically 25 years).

Taking that as a guide, and using the average home prices above, here are some example deposit amounts:

5% deposit

10% deposit

20% deposit

England

£12,300

£24,600

£49,200

Scotland

£7,550

£15,100

£30,200

Wales

£8,200

£16,400

£32,800

Northern Ireland

£7,000

£14,000

£28,000

If you don’t have this much then there are ways to buy a home with a smaller deposit or no deposit, such as a guarantor mortgage or the Shared Ownership scheme.

What are the other costs involved in buying a home?

Mortgage fees

Different mortgage providers charge different fees, and different amounts for those fees. Some of the common ones include:

  • Arrangement fee – up to £2,000
  • Booking fee – up to £250
  • Valuation fee – up to £1,500
  • CHAPS transaction fee – up to £50
  • Account fee – up to £300

You might have the option to add these fees onto the loan amount so that you don’t need to pay upfront – but this will mean you’ll also be charged interest on them.

Stamp duty

Stamp duty is a tax paid on property in England and Northern Ireland. There are similar taxes payable in Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax).

Fortunately, under the current rates (applicable until 31 March 2021) there is no stamp duty to pay on property up to the value of £500,000.

Above this amount, stamp duty is calculated as a percentage of the property price (between 5% and 12%, depending on the total value). This is a reduced rate, due to the coronavirus pandemic.

Survey costs

It’s crucial to have your property examined by a surveyor before completing the purchase, as this can identify many kinds of expensive issues that might arise in the future.

There are various types of survey, with different costs, including:

  • A basic condition report (£300+)
  • A more detailed homebuyer report (£400+)
  • An in-depth building survey (£450+)
  • A full structural survey (£600+)

Solicitors fees

Another essential cost is a solicitor, to draw up your contract and help to complete your sale. You should expect to pay between £800 and £1,600. This includes your legal fees, money transfer fees, land registry fees, and searches.

Source data:

[1] https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/february2020

All Rights Reserved. Information contained in this article and on our website does not constitute advice and is provided for information purposes only. Recipients should not act upon it, but should seek professional advice relevant to their own situation.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.