How much does it really cost to buy a house?

For many of us, buying a home is likely to be the most expensive purchase we will ever make. When you buy a property, there are other expenses to consider that all add up to the overall amount you spend when making that important big move. You don’t just have the mortgage and deposit to consider!

Overall, a list of the charges an average person faces when buying a home include:

  • The deposit
  • Lender arrangement fees (to arrange your mortgage)
  • Valuation fees
  • Survey fees
  • Legal/conveyancing fees
  • Stamp duty
  • Removal costs
  • Utilities
  • Extra costs (such as carpets/fittings in a new build property)

Saving a deposit

If you’re a first time buyer, the biggest expense for you will be scraping together a deposit. This is often the biggest hurdle for many people. You should aim to save at least 5% of the overall value of the house you intend to purchase. Remember that the more you can put down as a deposit on a property, the better your monthly repayments will be with your lender. If you put down a bigger deposit, you are also more likely to secure a better mortgage deal with a lender and have more options from various lenders, as you will be considered less of a risk. If you can only manage to save a maximum of 5% of the property value, you may be entitled to government aid through the Help to Buy scheme. Given the rising property prices, this scheme is designed to help both first time buyers and those who already have a house. For more information on Help to Buy, you can read our handy guide.

What is stamp duty?

Stamp Duty is short for Stamp Duty Land Tax (SDLT), and is required for all home purchases that cost more than £125,000. In Scotland, the tax is called Land and Builds Transaction Tax. In Wales, it’s referred to as Land Transaction Tax. First time buyers no longer have to pay stamp duty in England for house purchases that are worth £300,000 or less. If you are purchasing a property costing anything up to £500,000, you don’t have to pay stamp duty on the first £300,000, with a 5% stamp duty charge incurred for anything in excess of this figure. If you intend to buy a house that is over £500,000, stamp duty costs are applicable at standard rates. If you need help figuring out how much stamp duty you need to pay on a property, you can make a calculation using our stamp duty calculator. Alternatively, you can speak to one of our mortgage experts at iam mortgages. We are happy to help you and give as much advice as possible. There is no charge for our advice, so go ahead and fill in our simple online enquiry form, or give us a call.