6 Other Costs to Save for When Saving for Your First Home

Congratulations! You’ve made the decision to save for your first home, and you’re probably aware that the deposit is not the only cost you need to save for. It’s essential to budget for all the other fees and expenses that come with purchasing a property to avoid any unpleasant surprises during the process.

To help you prepare, we’ve put together a detailed summary of the additional costs you should be aware of as a first-time homebuyer in the UK:

1. Mortgage Fees

When applying for a mortgage, there are various fees associated with the process. These include:

  • Mortgage arrangement fee: This is charged by the lender for setting up the mortgage and can range from £0 to £2,000. Some lenders allow you to add this fee to your mortgage, but remember that it will accrue interest over time.
  • Booking fee: Also known as a reservation fee, this is an upfront cost that some lenders charge to secure a mortgage deal. Fortunately most ‘high street’ lenders try to avoid upfront fees like this but where it is charged, expect a fee of £100 to £250 which is non-refundable, even if your mortgage application falls through.
  • Mortgage valuation fee: Your mortgage lender will require a valuation of the property to ensure it is worth the amount they are lending you and a suitable security for the loan. Most lenders will carry out this mortgage valuation at their expense however where a fee is charged, this fee can range from £150 to £1,500, depending on the property value and the lender.
  • Mortgage advice or mortgage broker fee (our BeAdvised fee): Our typical mortgage advice fee for a house purchase is £299 but does vary depending on the situation. Any advice fees are explained in full at the outset of our work together so are fully understood. The BeAdvised fee covers what you expect, the upfront advice, implementation, paperwork etc but also our additional support, our end-to-end service that doesn’t stop with just arranging the mortgage. We’re at the end of the phone throughout to help you with any queries throughout the home buying process.   

2. Conveyancing Fees

Conveyancing is the legal process of transferring ownership of a property from the seller to the buyer. You will need to hire a solicitor or a licensed conveyancer to handle this for you. Conveyancing fees usually range upwards from £1,500 and are dependent on the property’s value and complexity. This cost includes legal fees and disbursements, such as local authority searches, land registry fees, and bank transfer fees.

3. Stamp Duty Land Tax (SDLT)

When purchasing a property in England or Northern Ireland, you might be required to pay Stamp Duty Land Tax. First-time buyers are exempt from SDLT on properties up to £425,000 and will pay 5% on the portion from £425,001 to £625,00. If your property is over, £625,00, you cannot claim the relief. Keep in mind that these rates and thresholds may change, so always check the latest information on the government’s website.

In Scotland and Wales, there are different taxes called Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT), respectively. These also offer relief for first-time buyers, but the thresholds and rates differ from those in England and Northern Ireland.

4. Survey Fees

Before completing your property purchase, it’s important to have a survey conducted to identify any potential issues with the property. There are two main types of surveys:

  • HomeBuyers Report: Includes information on the condition of different components of the home. Often using a RAG traffic light system and often includes advice on repairs and maintenance. A Home Buyers Report or RICS Level 2 survey has costs starting from £400.
  • Building Survey: The most comprehensive survey, suitable for older or unique properties, which provides an in-depth analysis of the property’s condition and advice on repairs. This survey can cost around £700 or more.

5. Buildings Insurance

Your mortgage lender will likely require you to have buildings insurance in place before they release the funds for your property purchase. This insurance covers the cost of rebuilding or repairing your home if it’s damaged. The cost of building insurance varies depending on the property and the level of coverage you choose.

6. Moving Costs

Finally, don’t forget to budget for the cost of actually moving into your new home. This can include hiring a removal company, or renting a van if you plan to move. You’ll also need to factor in the cost of packing materials and any storage fees if required.

Conclusion

Saving for your first home can be both exciting and overwhelming. By understanding and budgeting for all the associated costs, you can be better prepared for a smooth home-buying process. So, start saving for these additional expenses alongside your deposit to make your dream of homeownership a reality!

At BeAdvised, we recognise the challenges that come with being a first-time homebuyer, and we’re here to assist you. Our aim is to provide guidance and insights to ensure you fully comprehend all the expenses, risks, benefits, and possibilities associated with purchasing your first home and obtaining a mortgage. If you need advice on first-time buyer mortgages and more, reach out to us today!

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENT ON YOUR MORTGAGE.

 

Approved by The Openwork Partnership on 8.2.24

 

We Offer Mortgage Solutions With Exceptional Service