We all know that securing your first home or moving to a new one is a costly task. With so many fees, taxes and ‘administration costs’ you might need to put aside a lot more money than expected. Here’s a comprehensive guide to the hidden costs of buying a house:
Okay, this isn’t technically a hidden cost but did you know you could actually save yourself money by signing up for a Government scheme? Help to Buy, Right to Buy and Shared Ownership are most commonly made use of but you can find out more information here about the schemes available. It can literally pay to be aware of these options.
When it comes to buying your house expect to have lots of hidden fees and charges added on as you go along. Stamp Duty is the first fee to consider if the home you are buying is worth more than £125,001.
Stamp Duty was discussed regularly in the media and because of this the Government amended legislation to make the system fairer last year. Before, a property priced at £125,001 would have accumulated £1,250 in Stamp Duty, but now under the new legislation this cost is just £0.02. Use a Stamp Duty calculator to work out what you will owe if your house is worth more than £125,000.
Valuation fees are another hidden expense many people don’t realise exist until they are charged up to £1,500. The mortgage provider will value your property to ensure it’s worth the amount you wish to borrow. Some lenders will waive this fee but others won’t and as questionable as this charge seems to be – and let’s face it, it’s quick and simple to establish a property’s value – it’s another cost to bear in mind.
An electronic transfer fee is another hidden charge to look forward to and can cost between £40-£50, to cover the transfer of money from your mortgage lender to your solicitor. Solicitor fees are something else to plan for and can amount to £250-£300 for local searches, plus £500-£1,000 legal fees, to pay for the management of all paper and legal work.
Wait, there’s more.
Surveyors’ fees must be paid to cover a check over of the house, to ensure there is no subsidence or rising damp for example. The costs could amount to £1,000 for a full structural survey, but still may not discover everything potentially wrong with the property.
Then you’ve just got your moving fees to pay, which should cover the cost of packaging and the rental van. You can easily do this for a small price (by bribing friends and family with alcohol and food to help), unless you need the moving service to come in and pack up everything you own as well.
So, yes, there are lots of costs to consider before you can move home and many people are not even aware they exist, but now you know. Plan accordingly and just keep thinking about your lovely new home at the end of it all as you hand over your bank details to cover each cost.
• This post was provided by the Money Advice Service. For details on how I work with brands, see my Work With Me page. Photo: DTTSP.