Seven costs first-time buyers may not anticipate

Written by: Anne Kirk
If you're about to buy your first home, there are a few additional costs you may not have anticipated. Here are a list of fees and charges so you know what to expect. 
  1. Valuation

Mortgage lenders will demand the property you want to buy is assessed by a professional surveyor, who will check that it is worth what you intend to pay for it.

The lender’s valuation is a quick survey that only takes around 30 minutes and doesn’t go into great detail. The surveyor won’t report on any repairs that need making or structural problems, they’ll just tell you how much they think the home is worth.

The valuation fee depends on the value of the property. Expect to pay from around £100 for a £100,000 home, up to around £575 for a property costing more than £500,000. Normally, the buyer pays the valuation fee, though some mortgage companies will offer them for free.

  1. Survey

A survey is a more detailed look at a property, which is designed to assess its overall condition and any problems that need fixing.

There are two main kinds of survey:

  • Homebuyer’s report: This is a cheaper, less detailed survey that is suitable for properties in a reasonable condition. It will cost from £350 for a £100,000 property, up to around £950 for a property worth more than £500,000, and should uncover any major structural problems, like damp or subsidence. It will also give you an idea of what they would cost to fix, which can be handy when you are negotiating a price with the seller
  • Building or structural survey: This is more thorough and is recommended for homes that are more than 50 years old or in a poor condition. Again, the fee depends on the value of the home, so from around £500 for a £100,000 property, to £1,300 for a home costing £500,000+. It will take an in-depth look at the structure and condition of the property, providing the costs and timings for any repair work

It’s important that you get your own survey done by an independent surveyor who is a member of a recognised trade body like the Residential Property Surveyors Association or the Royal Institution of Chartered Surveyors.

  1. Solicitor fees

When you’re buying a home you must employ a solicitor to deal with the legal aspects. They will charge you solicitor fees, also known as conveyancing fees.

Some solicitors charge a flat fee, while others have a sliding scale depending on the property’s value. Expect to pay from around £400 for a £100,000 home, and up to £850 for a property costing more than £500,000.

  1. Local authority searches

Solicitors will submit searches to your local council on your behalf to make sure there are no planning issues on the property that you want to buy, like an extension that has been put up without permission, or a road that is due to be built next door. They will then pass the fees for these local authority searches on to you, which are likely to be around £200 to £300.

  1. Stamp duty

Stamp duty is a tax that must be paid within 30 days by anyone buying residential property costing more than £125,000. Your solicitor will arrange for it to be paid. How much you pay depends on the value of the property. Here’s a quick overview:

  • Up to £125,000: 0%
  • £125,001 to £250,000: 2%
  • £250,001 to £925,000: 5%
  • £925,001 to £1.5 million: 10%
  • More than £1.5 million: 12%

You only pay stamp duty on the portion of the property’s value that is taxable. So, for example, if you bought a home for £200,000, you would pay nothing on the first £125,000, as this has a stamp duty rate of zero.

However, you must pay stamp duty on the next £75,000, which falls into the two per cent bracket, giving you a total stamp duty bill of £1,500.

  1. Mortgage fees

Most mortgage lenders charge fees for setting up and administering your home loan, which usually depend on the value of the property.

Some mortgage providers will allow you to add the fees to your mortgage, but that way you will be charged interest, so it’s worth paying them upfront if you can.

Mortgage fees can vary from around £250 to £1,500 depending on the lender and the value of the property, but currently average at around £1,000.

  1. Electronic transfer fee

When you pay for the property that you are buying, you have to pay an electronic transfer fee to move the money from your mortgage provider to the person selling the home. This is typically £25 to £50.

Anne Kirk is marketing director at Swinton Insurance

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