Costs To Consider When Buying A New Home

We’re looking to move home next year. We were first time buyers in 2015 and were pretty clueless when it came to what costs and fees we needed to consider, other than the obvious price of the house itself. This time we’re more prepared, we’re saving for all the additional costs so when the time comes, we have all the money ready.

Here’s some of the things you need to consider when buying a new home.

Stamp Duty

Stamp Duty is a tax you have to pay if you buy a residential property in England and Northern Ireland. If you’re buying your house before 31st March 2021, you will not have to pay Stamp Duty on properties costing up to £500,000. The Money Advice Service has a helpful guide on how much you will need to pay.

From the 1st April 2021, the fees are returning to pre-covid rates. These rates can be found below.

Stamp Duty needs to be paid within 14 days after you complete on the purchase. There’s a Stamp Duty Land Tax calculator on the government website.

Deposit

The minimum deposit for a mortgage is usually 5% of the property’s value, however a lot of lenders at the moment insist on a deposit of 15%. The bigger your deposit, the more likely you are to secure the best mortgage rates.

If you’re a first-time buyer in England, you might be able to apply for a Help to Buy Equity Loan. This is a loan from the government that you put towards the cost of buying your home. This however only applies to newly built homes. You can borrow a minimum of 5% and up to a maximum of 20% (40% in London) of the full purchase price of a new-build home.

You can find out more on the Help To Buy website.

Conveyancing fees

You will need to consider conveyancing fees when buying or selling a house. They cover the cost of exchanging contracts and carrying out all the steps needed to complete your purchase or sale. You should be able to receive a fee estimate before you work with your solicitor or conveyancer. This can help you prepare ahead for their payment.

Mortgage Fees

Before applying for a mortgage, use a loan to value calculator to calculate the loan-to-value (LTV) ratio/percentage that you might require for a mortgage. LTV is a financial concept that quantifies the proportion between the borrowed amount and the property’s appraised value in a purchase transaction. This ratio, typically presented as a percentage, enables lenders to evaluate the level of risk associated with a loan. A greater LTV signifies an increased risk for the lender, as it indicates that the loan amount is more likely to exceed the property’s assessed value.

When you get a mortgage your mortgage lender will want to conduct a valuation survey. This is produced for the lender who wants to know the property is worth at least what they are lending you. Some lenders don’t charge a mortgage valuation fee but if they do they usually vary according to the value of the property.

Mortgage arrangement fees are often charged by mortgage companies, and can range from a few hundred pounds to 1% of the mortgage. Some lenders insist you pay the fees up front which means you won’t be paying interest on it while others add it to the mortgage. This may be a better option if you can’t afford yet another financial outlay at the time of buying your home. You can find out what fees your lender charges by contacting them directly. You can check online for opening hours for a variety of lenders including Leeds Building Society to discuss your options.

Mortgage Repayment Costs

Your mortgage repayments will need to be paid on a monthly basis. Use a mortgage calculator to help determine your monthly costs and whether they would be realistic with your budget.

Removals Cost

If you have too many belongings and/or heavy furniture to move, you may want to consider using a removals company to help you. This can be anything from hiring a van to hiring a company to do all the heavy lifting and packing/unpacking.

Summary

Buying a new home is an expensive time but if you’re aware of the fees you need to pay beforehand, you can prevent a lot of stress further down the line.