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Before signing on the dotted line, there are alot of different costs when buying a home to consider. So you’ll need to look beyond the asking price before buying a house in the UK, or you’ll soon realise you can’t afford to complete the purchase.
Purchasing a property is a stressful and complicated process, so to help you understand the cost of buying a house in the UK, we’ve put together this complete guide to house purchase fees that includes the following:
· Hidden upfront costs when buying a house in the UK for first-time buyers
· Hidden upfront costs when buying a house in the UK when moving home or making a second home purchase
· Mortgage fees
· Ongoing fees
· Moving home costs
· Budget tracking
So, read on to find out which house purchase fees to expect so you can budget accordingly before buying your dream home.
What Are The Costs Of Buying A House In The UK
The house price is just one cost associated with buying a property in the UK (the biggest, of course). But once you’ve made an offer and it’s been accepted, other house purchase fees come piling in. When preparing your budget and determining what you can afford, you’ll need to factor these in to avoid surprises.
So, what are the costs of purchasing a house?
Deposit
The highest upfront cost you face when purchasing a house is the deposit. For most buyers, the minimum deposit will be 5%, but it’s likely to be higher than this for many, particularly if you’re applying for a mortgage with a high loan-to-value ratio.
For instance, in the UK, the average deposit for first-time buyers is around 15%, which means saving a considerable amount of money before getting on the property ladder. If the house is valued at £300,000, your deposit will need to be £45,000.
Stamp duty
Another cost many people forget about when buying a property is stamp duty. Stamp duty is a tax levied on buying properties and works on a rising scale.
If you’re buying a house for less than £250,000, you don’t need to pay stamp duty. For properties between £250,001 and £925,000, the cost of stamp duty is 5% of the property’s value (above the £250,000 threshold). Until 31st of March 2025 there's a tax break for first time buyers where they pay no stamp duty for the first £425,000 (With max purchase price of £625,000).
Since most first-time buyers (especially outside London) buy properties for less than £250,000, stamp duty isn’t necessarily a house buying cost you’re likely to meet, but you need to be aware of it.
Estate agent fees
In the UK, most estate agent fees apply to those selling a home. However, it’s essential to recognise that estate agent fees exist, as they can increase a seller’s asking price.
Therefore, if you can negotiate with a seller directly without going through an agent, you can typically negotiate a lower purchase price, as the seller isn’t responsible for paying expensive estate agent fees to complete the process. Buying a house costs can add up very fast, so it’s worthwhile trying to reduce some of your overall spend.
Legal fees
When purchasing a property, you must hire a solicitor or licensed conveyancer to complete the legal work and documentation connected to the purchase of a home. Solicitor fees vary significantly and depend on several factors. Still, you can expect legal fees to cost between £800 and £1,500 when completing a house purchase, so make a provision for this house expense in your budget.
House survey
A survey is a vital thing to factor into the cost of buying a house in UK. While some people take a chance and purchase a property without conducting a survey, it can be a risky move, particularly if you’re buying an older property.
A house survey considers things like the home’s structural soundness and whether it’s safe to move into or if work needs to be completed. The cost of a house survey is likely to be similar to the legal fees, but it depends on the size of the property and the scope of the survey to be undertaken.
Some mortgage providers might make a full survey as a condition of making a mortgage offer, so it's important to factor in the cost of a survey or you may not get the mortgage you need.
Electronic transfer fee
You must factor in the electronic transfer fee when purchasing your home. This is a cost associated with transferring mortgage money to the solicitor, and it’s not likely to cost more than £100. Still, it’s important to include it in your budget, as unexpected costs can quickly add up and eat away at the money you’ve made available for the house purchase.
Land registry fee
Should you make changes to the title documents held at the Land Registry when completing the purchase of your home, you will need to pay a fee. You can make changes online via the Land Registry portal or by post, and the cost depends on which method you opt for and how much the property is worth.
Presently, it costs between £45 and £1,105 to make changes to the Land Registry, with properties between £100,001 and £200,000 coming with fees of £230 per change.
Mortgage advisor fees
If you’re looking for independent advice it could be worth paying for a mortgage advisor before you start your house-buying journey as they’re perfectly positioned to help you find the best deals for your income level.
Some mortgage brokers charge a fixed rate for their services, while others bill hourly. It’s difficult to predict the exact cost of mortgage advisor fees given that there are so many variables, but you can expect your fees to come in at around £500 if you’re a first-time buyer. If you want to go solo you can check out the big comparison sites to see the range of mortgages on offer and approach those lenders directly.
Mortgage fees
Once you have your mortgage offer you’ll be able to see the mortgage fees attached to your loan. While every mortgage is different, some of the fees that you need to prepare for include the following:
· Mortgage arrangement fees (£0 - £2,500)
· Mortgage booking fee (£100 - £300)
· Application and underwriting fees (£100 - £200)
· Processing and administration fees (<£100)
You should ask your chosen mortgage provider directly for information regarding their fees to make sure that you don’t get stung by hidden mortgage costs when you think the process is done and dusted. Unfortunately, you often need to look at the smallprint carefully, to ensure that this cost of purchasing a house doesn’t come as a nasty surprise.
Buying a thank-you present
Of course, you aren’t obliged to buy a thank-you present when buying a property, but it’s common to do so.
You can buy a thank-you present for people who were key to getting the deal over the line for you, be it family members, friends, or even professionals you have hired. Set aside £100 or so to buy some thank-you gifts, and you will make your life much easier if you need help from the same people in the future.
Ongoing Fees When You Buy Homes In The UK
Congratulations! You’ve just purchased a house and covered all of the house purchase fees associated with the process. But now that you’ve moved in, there can be several unexpected home buying expenses that you need to budget for to maintain your property.
Every home is different, and the costs associated with ongoing fees will vary from family to family, but you should budget for the following:
· Insurance – you will need to apply for buildings and contents insurance to start on the day of you owning your new home.
· Maintenance and repairs – it’s always a good idea to create an account to cover maintenance fees and repairs to keep your house in good shape.
· Council tax – council tax bands are set depending on where in the country you live. Make sure you research the monthly cost of your council tax obligations and factor them alongside your other major monthly expenses.
· Energy bills – Energy bills have soared in recent years. If you’re upsizing, make sure you can afford the increased energy bills as well as managing your mortgage repayments.
Conclusion: How to budget for the cost of buying a home in the UK
As you can see there are many costs involved when buying a house, which is why creating a budget is important before purchasing a home.
You can refer to our budgeting basics blog post to help you create a comprehensive budget for your house purchase, and our household finance and budgeting templates guide will help you plan for ongoing costs after moving in.
Once you’ve calculated how much you need to save, the HyperJar app makes it easy to create jars so that you can save up for some of the different costs. You can use the HyperJar card to pay directly from the jar.
Ultimately, you need to look beyond the guide price when buying a place to live and consider the other upfront house purchase fees you must cover before signing on the dotted line.
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