Buying a house and moving expenses | The facts of buying a home

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Before taking out a mortgage, it’s important to make sure you’ve factored in all of the extra costs and fees associated with buying and maintaining a property.

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Compare a wide range of first-time home mortgages on our comparison charts

The fees involved can vary widely depending on the mortgage you choose and your personal circumstances. Here are the most common costs associated with buying a home.

  • Deposit: Determining How Much Deposit You Need Is The First Step To Getting A Mortgage

  • Mortgage repayments: Your mortgage payments will depend on the amount of your mortgage and its duration

  • Stamp duty: This is typically charged on all properties over £ 125,000 if you are already a homeowner and over £ 300,000 if you are a first-time buyer

  • Initial mortgage costs: Before taking out a mortgage, you must calculate your mortgage costs

  • Legal, estate agent and transfer fees: There are additional fees associated with taking out a mortgage, including legal, estate agent and transfer fees.

  • Running and moving costs: Moving your belongings to your new home also involves other costs

How Much Deposit Do I Need for a Mortgage?

To qualify for a mortgage you will need a cash deposit. Most lenders charge between 15% and 30% of the value of the property.

For example, if you are looking to buy a house worth £ 200,000, you will likely need an initial deposit of between £ 30,000 and £ 60,000.

In most cases, a larger deposit will give you access to cheaper mortgage rates. However, whether or not you can get a mortgage will also depend on your credit history and annual income, and not just how much deposit you can offer.

If you want to learn more about the different loan-to-value (LTV) ratios available in the market, these pages can help:

Mortgage repayments

How much you pay on your mortgage each month depends on how much you deposit and how much you borrowed, as well as the interest rate and length of the term. It is worth keeping all of this in mind when decide on your mortgage amount.

Increasing the term, say 20 to 25 years, will usually result in lower monthly repayments. But borrowing for the longer term will also mean paying more interest overall.

For example, on a property valued at £ 200,000 with a deposit of £ 40,000, the 10-year repayments are likely to be between 70-90% higher than the repayments on a 20-year mortgage.

However, by spreading the cost over 20 years rather than 10, you will likely end up paying off a total of about 15-30% more.

How much does the stamp duty cost?

Stamp Duty Property Tax (SDLT) typically applies to all residential properties over £ 125,000 if you are already a homeowner. First-time buyers benefit from stamp duty relief on properties of £ 300,000 and under. Above these amounts, the rate you pay depends on the value of the property and ranges from 2% to 12%.

So under usual circumstances if you are a former owner you will need to pay £ 5,000 stamp duty on a £ 250,000 property.

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Compare a wide range of first-time home mortgages on our comparison charts

However, at the time of writing (2020) homebuyers can take advantage of a stamp duty holiday put in place by the government to support the housing market in the wake of the Covid-19 pandemic. Under the terms of this initiative, there is no stamp duty payable on properties valued under £ 500,000 until July 1, 2021.

You can find out more about Stamp duty property tax rate to see which strip your property is likely to fall into.

Upfront Fees for Buying a Mortgage Home

The costs of buying a home include a range of up-front mortgage costs.

Mortgage set-up costs will probably be the biggest of these additional costs and can cost you up to £ 2,000. However, mortgage origination costs vary widely, which is why it is important to consider this cost as well as the interest rate when comparing mortgage deals.

If you don’t have the cash to pay the mortgage arrangement fees up front, you may be able to add them to your mortgage amount. However, you will pay interest on the fees if you do this, so it’s best to pay them up front if you can.

You may also be charged a mortgage loan establishment costs between £ 100 and £ 250. These fees are for booking the mortgage and booking a special limited rate.

Some lenders charge a mortgage account fees between £ 100 and £ 300 which covers the costs of setting up, maintaining and closing your account.

the mortgage appraisal fee can range from £ 150 to £ 1,500, depending on the property you want to buy. However, some lenders waive these fees to attract new customers.

A higher loan fees about 1.5% of a property’s value can be taxed if you can’t find a down payment of at least 20% – although some lenders only charge this if you borrow 90%.

Most lenders charge a wire transfer fee to transfer the mortgage money to the seller’s lawyer. This is normally around £ 50.

You will usually need to pay a lawyer or a transport agent to handle some aspect of your purchase. Their fees are typically between £ 850 and £ 1,500 plus the cost of local searches of £ 250 to £ 350 to ensure there are no planning or local issues affecting the value of the property.

Compare first-time home mortgage loans

Compare a wide range of first-time home mortgages on our comparison charts

The land registration fee for transferring the property to your name can cost between £ 500 and £ 750, excluding VAT.

You will also need a surveyor to verify that there are no structural defects with the property. A basic survey will cost around £ 250 and will be sufficient for new and conventional homes. Non-standard houses, such as thatched roof houses, may require a specialist survey costing £ 600 or more.

If you are selling your current home to move into a new one, most real estate agents will charge you between 1% and 3% of the purchase price for their services.

Moving and running costs

Paying a moving company to help you move into your new home will usually cost at least £ 500. The cheapest options include renting a van or borrowing a friend for the day using temporary auto insurance and do it yourself.

Other costs to consider once you’ve moved in include:

Home insurance – most mortgage lenders will insist that you have building insurance, while contents insurance is a good idea to protect your property.

Life Insurance – Many people buy life insurance to pay off their mortgage if they die during the term.

Service Fee – If you live in an apartment, you will likely need to pay maintenance and service fees. These can run into the thousands of pounds per year.

Housing tax – you can check online how much you have to pay.

Fluctuations in Mortgage Payments – If you’re going with an adjustable rate mortgage, it’s important to be prepared in case higher interest rates increase your monthly payments.

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