Unpacking the Costs of Buying a House

Purchasing your first home is a huge milestone, and we’ll state the obvious: it’s an expensive process. But do you know exactly what costs are involved? Sure, you’re forking out on a mortgage and you’ve got your deposit in hand – but there are a few other fees that can catch buyers by surprise.

Read on to find out what you need to know about the costs of buying a home, from mortgage fees and moving costs to solicitors and stamp duty. And if you’re not sure how to secure the right deal for your budget, our advisors are on hand to help.

Deposit

Average cost: Between 5% and 20% of the home’s value.

If you’re in a position to buy, it’s likely you’ve been saving for your deposit for a while. And it’s usually the largest chunk of cash that you’ll need to part with in the initial mortgage process. Generally between 5% and 10% of the total house cost for first-time buyers, your deposit is a lumpsum that makes up part of your purchase – the other part will be your mortgage. This means the higher your deposit, the lower your loan to value, and the more competitive mortgage deals you’ll unlock.

There are lots of lenders out there, offering various mortgage types, rates, and deals. Our advisors can help you secure a competitive rate and the right deal for your circumstances.

Mortgage advisor

Average cost: £0 – £500 (or from 0.35 - 1% of your loan size).

A mortgage advisor takes care of the process of searching through a slew of deals for you. They’ll explain the pros and cons of each offer to help you find the most suitable deal for your circumstances. They also take some stress off by filling out the paperwork and submitting your mortgage to your chosen lender.

You don’t have to use a mortgage advisor – banks and building societies will lend money directly to you, but a broker can help shed some light on the process and make your life a lot easier. And, the majority of people in the UK do use one. In fact, a recent survey found that 90% of mortgages in the UK are set up with an advisor.

Stamp duty

Average cost: £6,500.

Stamp Duty Land Tax (SDLT), often shortened to stamp duty, is a tax imposed when you purchase a residential property in England and Northern Ireland. It applies whether you’re buying outright or with a mortgage.

How much stamp duty you’ll pay depends on a few factors, for example, whether you’re a first-time buyer. People purchasing for the first time have a higher threshold for when they’ll need to pay stamp duty. In England and Northern Ireland, the stamp duty threshold is £250,000, but is £425,000 for first-time buyers. The first-time buyer rate is applicable if you’re buying a property worth £625,000 or less – so it also matters how much you’re going to be spending. You can use our handy stamp duty calculator to find out exactly what you’ll owe.

In Wales, the amount you’ll pay is slightly different, and is known as Land Transaction Tax (LTT). The current threshold is £225,000 – and there’s no relief for first-time buyers. Buyers in Wales can calculate their LTT amount here.

Scots pay Land and Buildings Transaction Tax, with the first band for payment between £145,001 to £250,000 beginning at 2%. First-time buyers, however, will only need to pay if they surpass £175,000. Read more about the Scottish property bands here.

Conveyancing costs

Average cost: £1,100 - £1,800 + VAT.

Conveyancing is the legal process of transferring ownership of a property from the seller to the new buyer. You’ll usually need the help of a solicitor or conveyancer to carry out this work, which includes running searches, drafting and exchanging contracts, and setting you up for completion – which is when the property becomes yours.

They generally have a fixed fee which they tell you ahead of the work. This includes the cost of their service, as well as the searches they carry out with third parties (on things like the boundaries of the land and planning restrictions at your new home). When you buy the house, you send the deposit alongside other legal fees through the solicitor – so make sure you jot down those bank details right!

Having a good solicitor or conveyancer on your side when purchasing a house can be a real asset, so make sure to ask around, look at reviews, and gather a few different quotes before you make your pick.

Survey fees

Average cost: £300 - £1,500 (depending on the level of survey).

Next up is your survey – this is the process of a qualified surveyor snooping around the property to reveal any underlying issues. This includes nasty surprises you may have missed with your rose-tinted, ‘I-can’t-wait-to-start-renovating’ glasses on. They’ll look at things like the roof, damp issues, structures, fittings – and they often include advice for the future maintenance of the property. This works as a great (if expensive!) to-do list once you move in.

In England and Wales, the buyer is responsible for arranging a survey on the home (if they choose to). This is different to Scotland, where the seller arranges and pays for a survey before their property is put on the market. The most common types of property surveys in the UK are:

• Condition report

• Homebuyer report

• Building survey or full structural survey

Check out our guide for full details on what happens during a house survey.

Surveys are usually necessary as a condition of your mortgage offer, but they’re a good idea anyway, as if they do reveal a shock, it’s not the be all and end all. Depending on the issue, you may be able to request that the seller fixes it ahead of the sale, or knock some cash off your offer to cover the difference.

In England and Wales, you’ll generally conduct a survey after your offer has been accepted, but before you exchange contracts. This means you still have time to pull out of the purchase if your survey reveals a flaw that you’re not up to fixing.

Safety certificates

Average cost for gas safety: £35 - £99.

Average cost for electrical safety: £100 - £200 (depending on property size).

Although it’s not necessary ahead of buying the house, it’s a good idea to get a gas and electrical safety certificates on your home before you buy it. Sometimes the seller will have this in place, but they’re not legally required to, so it’s safe to assume you might be footing this bill.

A Gas Safe registered engineer can carry out a gas safety check, and an electrician can provide an electrical safety certificate on the property. This gives you peace of mind that the gas appliances are correctly installed, and the fuses, wires, sockets and switches in the home won’t give you a shock.

Mortgage fees

Average cost: £1000 - £2000+.

Many mortgages have an ‘arrangement fee’. It’s an amount charged by lenders for the admin of setting up your mortgage, and you can pay it upfront, or add it to the cost of your mortgage (although you’ll pay interest). It’s important not to overlook this when browsing rates and deals, as the amount can really vary, so a huge number can significantly impact what you’ll have to pay back.

Having a trusted mortgage advisor on hand to outline these fees for you is a great way to understand exactly what your repayments will look like.

Building and contents insurance

Average cost: £100 - £200.

When you buy something as important and expensive as an entire house, insurance is a must-have, with most lenders requiring building insurance before completion. There are a few options and cover levels, but most people opt for combined contents and building insurance. This is a good choice, as it covers the building itself, and everything inside it. Make sure to browse deals and costs to guarantee you take out enough cover for what’s most precious to you.

Estate agent fees

Average cost: £0 for buyers. 1% - 3.5% of the sale value for sellers.

First-time buyers – breathe a sigh of relief, you don’t have to pay a fee to the estate agent. This cost is usually covered by the seller, and is a percentage of the final sale value of the house.

This is something, however, for movers to keep in mind. Only sellers pay the fees – so luckily you won’t need to cover this cost for the new home you’re buying. Estate agents in the UK generally charge between 1% and 3.5% of the sale value, and this can cover a range of services. Usually, things like a property valuation, professional photos, an online listing, marketing, as well as managing viewings and acting as the middleman for sellers and buyers.

It’s a good idea when selling to compare a few different agents and see what’s covered by their offering to make sure you pick a service that suits your needs. And if a steep fee from an estate agent isn’t what you’re after, the team at Purplebricks can sell your home for free. With an expert local agent on your side, you can enjoy an entirely free selling service. Optional extras, such as Rightmove listings and drone footage can be added as needed, so you end up only paying for the services you want and need.

Moving costs

Moving your belongings into your new home can vary greatly in price. You might hire a professional company to package up your trinkets and tchotchkes and deliver them to your doorstep. This is likely to leave a bigger dent in your savings than if you hire a van and rope in your strongest family and friends to lug your furniture into your new home. Either way, don’t forget to plan for this cost in your moving journey.

After purchase 

As we’re sure you’re aware, the costs sadly don’t stop once you’ve moved in. On top of your mortgage payment, make sure you’ve made room in your budget for monthly bills as well as the ongoing costs involved in owning your own home. From painting the walls pink to patching up that pesky leak that’s sure to spring up in your first year – you’d be lucky to spend nothing on bringing the home up to scratch.

To keep your monthly mortgage payment in line with your budget, talk to our mortgage advisors.

Get in touch

If there are steps in the mortgage process you’re not sure about, you can get in touch with a Purplebricks mortgage advisor. We know mortgages like the back of our hand, so if you’re unsure about fees and processes, we’ve got straightforward answers.