A house purchase is usually the biggest purchase we will make in life, and often involves daunting sums of money. Because the cost is so considerable compared to other purchases, it is usual to take out a mortgage over a long period of time, making the repayments much more palatable. However, when you actually add up the total cost of buying a house, what initially seems an already considerable cost can become exorbitant once all the hidden or extra costs are taken into account.

For a start, there are legal fees associated with the purchase. You’ll normally need a solicitor or licensed conveyor to carry out all the legal work when buying and selling your home. Legal fees are typically £850-£1,500 including VAT at 20%. The solicitor will also carry out an extensive range of local searches to check whether there are any local plans or problems, which are likely to cost around £250-£300.

There will be a valuation fee required against the property. The mortgage lender will assess the value of the property to establish how much they are prepared to lend you. Some lenders might not charge you for this, depending on the type of mortgage product you select. The cost can be £150-£1,500 based on the property’s value. The lender’s valuation will not be like a full structural survey so it might not identify all the repairs or maintenance that might be needed, so you will need to pay for a survey too.  You will almost certainly need to put down a deposit. This is the amount you put towards the cost of the property when you buy your home. On average, you need at least 5% to 20% of the purchase price, so this could be between £10,000 to £ 40,000 when buying a £200,000 home.

Once you have actually purchased your house, you will need to pay stamp duty. Stamp duty is one cost you’ll face unless the property you are buying costs less than £125,000. New rules also mean first-time buyers in England and Northern Ireland are exempt from paying stamp duty on property sales up to £300,000. If the property is worth between £300,001 and £500,000, first-time buyers only pay stamp duty on the amount over £300,000.

If the property costs more than £500,000, though, you will get no stamp duty relief at all. For everyone else, the stamp duty rates in England and Northern Ireland are 2% of the portion of the purchase price between £125,001 and £250,000, 5% between £250,001 and £925,000, 10% between £925,001 and £1,500,000 and 12% for £1,500,001 upwards.

If you are thinking of buying a property you will need to consider all of these aspects rather than just the monthly repayments that you will have to pay.  Many new customers – particularly those who are new to the market – may not appreciate all of the costs associated with a house purchase, and may find themselves running out of funds before they have even made their first mortgage payment.

If you are thinking about taking out a mortgage, or just want advice, come and chat to use at Grange Mortgages, and see what we can do for you.