The True Cost of Buying a Home

JFinance stationery Mortgage application

How much can you afford to spend on your next home?

Make sure you include all the costs so you are not left out of pocket on moving day…

Here’s our rundown of those extra costs that you will want to take into account to avoid any expensive shocks as your house purchase progresses:

Stamp duty

This can be one of the highest costs when you’re buying a home. Stamp Duty is a land tax payable when you buy a residential property, or a piece of land. It applies whether the new property is leasehold or freehold.

First-time buyers are not liable for stamp duty on the first £300,000 of the purchase price. This is only applicable for property with a price of less than £500,000.

Sometimes, a new home builder may offer to pay the stamp duty for you, but otherwise you will be liable if your new property is worth more than £125,000. (or more than £40,000 for second homes)

The tax rises with the cost of the home:

  • between £125,000 and £250,000 it is 2%
  • up to £925,000 is 5%
  • up to 1.5m is 10%
  • after that it rises to 12%.

For example, if your home is worth £400,000, you will have to pay stamp duty of £10,000 or £5,000 if you are a first time buyer. This is due on the day you complete (moving day).

If you are buying a second home, or a buy-to-let property (unless you own no other property), the charge is increased by 3% of the whole purchase price.

You can use this handy calculator to work out how much you must pay on the website.

Mortgage fees

As well as paying your lender interest each month, there are a number of fees they will charge you – although these can often be added to the mortgage, so you don’t have to find the cash before you buy.

Some lenders charge booking fees to secure the interest rate until your purchase date. This can range from £99 to £500. Alternatively, there may be an arrangement fee, which is normally between £500 or £1000, but could be as much as 3% of the mortgage amount.

Many lenders offer mortgages without these fees, but the interest rate will be higher, so they may not be better value.

Valuation fee and Survey Fees

Before you get as far as buying your house, the mortgage company will make its own assessment of how much the house is worth, to determine if they are willing to lend you the mortgage. While some lenders don’t charge for this, if they do it could cost anywhere from £150-£1000 depending on how much the property is worth.

To understand if there are any problems with the property you will need either a Building Survey or a Home Buyers Report.

A Building Survey could be more than twice the cost of a Valuation and a Homebuyers report being somewhere in the middle. Both are optional; however, they may well avoid a large bill in the future if there are structural or other issues with your new home.

Much depends upon the age and type of property, but most reputable surveyors would be willing to give you an honest opinion of the best report for you.

Legal fees

You will need a licensed conveyancer or a solicitor to conduct all the legal work you need for your sale to go through. They will normally charge you somewhere between £750 and £2000. You also need to pay for local searches, which will highlight any planning applications or major works planned near your new property – this will be another £250-£300.

You may think that’s quite enough, but you’ll also have to pay to transfer the mortgage money through to your solicitor when you exchange contracts – this will cost around £40 or £50.

Moving costs

These can vary widely, depending on how many belongings you have, how far you are moving and any specialist requirements such as moving a piano or plants. Expect to pay anywhere from £300 to £3,000. Even if you decide to do it yourself you will have to factor in van hire for a couple of days and beer and food for the friends you enlist to help!

Estate agent’s costs

If you have utilised the services of an estate agent to sell your existing property, they will need paying once the house is sold. This can vary from 0.5 – 3% of the sale price (and they will add 20% VAT on top).

And finally, don’t forget to include costs such as buildings insurance, council tax payments and utilities bills when you are doing your calculations.

We have made it easy for you to add up all these costs with our handy chart, which will help you work out what costs you face to move home. You can download the pdf from our website here.

If you would like to discuss a new mortgage, any of the points mentioned above or any other financial matters, we will be happy to help. Please contact us without obligation.

Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. We serve clients across the South of England including Oxfordshire, Buckinghamshire and Hampshire. If you would like to discuss this subject or any other financial matter, please contact us on 01635 521 300 or email