The cost of buying your first home
Received wisdom has it that the cost of getting on the property ladder these days is prohibitively high. More and more millennials and young adults are choosing to stay in the family home, or rent long-term, rather than buy a property.
The need for a large deposit, job instability and increased house prices are among the factors cited for this change. But as with everything you read in the news, you might want to take all this doom and gloom with a pinch of salt. Yes, it’s harder these days, but people are still managing to get on to the property ladder – it’s certainly not impossible to do so.The key is to be armed with the facts before making any kind of long-term commitment – whether that’s to renting, or to buying. So what does it really cost to buy your first home in 2018?
Deposit
Most lenders ask you to contribute at least 10% of the cost of the property, in the form of a deposit. So the total amount you need to save will depend on the price range of the properties you’re looking at.
You should also bear in mind that the more you can save towards a deposit, the better mortgage deals you’ll unlock. Save more than 30% of the purchase price and you’ll get access to the best available rates. But with the average UK property price standing at £224,000, you’ll need to save £67,200 to achieve that!
With those kinds of figures, it’s easy to see why it can take years to get on the property ladder. But with careful planning, it can be done. And remember, while saving a higher deposit is usually going to be the best option, it’s not an absolute necessity. Save 10-15% and then review the situation. If you’re not in a rush, carry on saving. But if living with mum and dad is starting to get old, or you’ve found your dream home, why wait?
Conveyancing
As soon as you’ve had an offer accepted on a property, you should instruct a conveyancer, who will manage the legal aspects of your move. You can use the services of a full-service solicitor, or specialist conveyancer.
The latter can often be more cost-effective, and offer a more efficient, dedicated service. Online conveyancers are cheaper still, and can be a great choice for busy professionals who are happy to communicate by phone and email, rather than face-to-face.
Budget – £800 – £1,500
Valuation
Once you’ve had an offer accepted, your mortgage lender will carry out a property valuation, which you’ll need to pay for. The amount payable will usually depend on the cost of the property.
Budget – around £250
Survey
One of the early steps in the homebuying process is to commission a survey on the property you’re buying. This is a report which tells you about its overall condition, and highlights any problems that you’ll need to know about.
Surveys, which should always be carried out by a RICS-accredited surveyor, range from basic reports (suitable for new builds) to full structural surveys for unusual structures and older homes.
Read our guide to surveys here.
Budget – up to £600 to a full structural survey
Stamp duty
If the property you’re buying is worth more than £125,000, you’ll usually need to pay stamp duty. However, as a first-time buyer, you can claim a discount (relief) so you don’t pay any tax on properties up to £300,000 and 5% on the portion from £300,001 to £500,000.
Calculate your stamp duty here
Budget – depends on property value and how many properties you own or have owned
Searches
As part of the purchase process, your conveyancer will order a number of searches to be carried out, which you’ll need to pay for. These are to check for any issues which may affect your property in the future, such as a history of subsidence, or a nearby planning application.
Budget – approx £350
Mortgage fees
Most lenders will charge you a fee for arranging a mortgage. These are typically between £1,000 and £1,500 but can be charged as a percentage of the loan. It’s best to pay upfront if you can, to avoid paying further interest, but most lenders will give you the option of adding this to your mortgage and paying it off over the term of your loan.
Budget: £1,000 – £1,500
Moving costs
When it comes to the big move, you can either use the services of a professional removal company, or choose the DIY approach. If you do decide to go it alone, you may still need to hire a van to you’re your belongings, so get a few local quotes.
Budget – £250 – £1,000
For a more specific quote which is tailored to your personal circumstances, use our quoting tool below:
