When it comes to buying a property of any kind, whether it’s a one bedroom flat or a 5 bedroom house, there are a lot of costs involved. Some of those costs are fairly obvious – like the cost of the house and the mortgage repayments. But there are some costs that aren’t quite so apparent, and if you don’t know what to look for they can have a nasty habit of sneaking up on you. At Northwood, we believe that every buyer should know exactly how much they are paying, and what they are spending their money on, at every stage of the buying process. So to help you out, we’ve pulled together a list of the most common costs involved in buying a property that you might otherwise miss.
Conveyancing is the legal procedure of physically buying a property and transferring ownership from one person to another. This is an essential part of buying a property, but one that many people don’t realise often comes at an added cost. The good news is you can use a solicitor or a specialist conveyancer for this, so you do have the option to shop around and find the best deal for you. The cost will vary depending on the value of the property you’re buying, which searches you have done and who you use to do them, but an average guide price is anywhere from £800 to over £1000.
Surveys & Valuations
When you buy a property, you want to make sure it’s all in sound condition and that there aren’t any problems with it that you didn’t know about. To achieve this you have a survey done. There are two types of survey you can have done:
- Homebuyers Survey: This is a comprehensive report that checks the overall condition of the property, reports any major faults or urgent issues that might require specialist advice, and generally gives you a very thorough idea of the condition of the property. For example, a homebuyers survey will look for damp within walls, timber and any damage to the condition of any damp-proofing, as well as drainage and insulation. This makes them incredibly useful if you want to negotiate the price of the property down, based on any work that needs doing to bring it up to code.
- Structural Survey: If you’re buying a property that need renovation, has had some damage or is in need of some serious changes, then you might want to go for a structural survey as well. These surveys take into account major issues and small defects in the structure of the house, estimate the cost of repairs, the materials used in the building or the property, and its location, making it easier to find what you need to renovate.
There is one more survey that needs to be done, and that’s a mortgage lenders valuation. This is the most common thing buyers rely on to reveal issues that can affect a property’s value. This valuation is done by a surveyor, and the results are given to you and your mortgage lender. The mortgage lender then uses this report to check that you aren’t asking for too much in relation to the value of the house. The mortgage lenders report looks at the overall condition of the property, its value in the area and the general housing market, and identifies any faults that might be present. A good point to note here, however, is that a mortgage lenders valuation is being done mainly for the mortgage lender, not you, so if you’re in any doubt about the condition of the property, consider a Homebuyers or Structural survey too.
The cost of these surveys can range from a couple of hundred pounds to over £1000, depending on the value of the property, so make sure you take them into account at the beginning.
Stamp duty is a tax levied on all legal documents relating to property purchases, and can add many thousands of pounds onto the total cost of buying a property. If this is your second property, or you are buying-to-let, then you may face even higher stamp duty charges. Your stamp duty will be calculated for you, and is due for payment in full 14 days after completion.
As well as the cost of your actual mortgage, you will also be asked to pay some other up-front mortgage fees. For example, there are usually:
- Arrangement Fees: These are charged by the mortgage company to cover their time arranging and processing your mortgage. These can typically range from just a few hundred pounds to up to 1% of the mortgage value. Some mortgage providers will roll it into the cost of the mortgage, but others will want to collect it up front.
- Indemnity Fees: Usually if you have a high loan-to-value ratio, the lender will charge a fee that covers the insurance they take out in case you can’t pay back your loan. Thankfully, most lenders won’t charge this fee, even for those borrowing a substantial amount.
- Broker Fees: Again, some mortgage brokers don’t charge broker fees, but others will charge up to 1% of the value of your mortgage, so make sure you check the fine print for this so you don’t get caught out.
Then of course, there is the actual cost of moving your belongings – which in itself isn’t cheap. If you don’t have much furniture and have some generous friends (or someone who owes you a favour), then you might manage it for little cost. But most of the time, people have a fair bit of furniture, which either means hiring large vans and doing it yourself, or hiring a removals company to help you. The costs of this can vary depending on which option you take and which companies you use, but it is definitely something to consider when working out how much it will cost you to move.
At Northwood, we believe advice doesn’t cost a thing, and we want you to make the most informed decisions possible at every stage of buying a property. That’s why our agents are always on hand to help with any questions or queries you might have, and can guide you through the process of buying a property from beginning to end. If you would like to know more, just get in touch with us today.