When you make the decision to move house, it always costs more than you think it’s going to initially. There are many upfront costs that you need to consider, but there are other costs that seem to sneak up on you when you least expect it. It isn’t all about the mortgage deposit; I’m afraid! You need to include all of the costs you’ll be faced with when working out an overall budget for your move. Let’s take a look at the true cost of moving home to help you:
The Usual Up Front Costs
- The Deposit – you will need to save up an amount based on a number of factors, so I can’t give you an exact figure. However, it is usually 20% of the total cost of the home you are buying. For example, this would be £30,000 on a house costing £150,000. In order to get a mortgage, you’ll need to save a deposit. The more you can save, the better the mortgage you’ll be able to get.
- Set Up Fees – this is usually anything from £99 up to £250. It could be refundable if your application happens to fall through before completion. You should always check this before you continue, however. Some lenders charge a mortgage booking fee to reserve funds on a fixed rate product.
- Arrangement Fees – you may not have to pay for this, or you may have to pay up to £2000. This will depend on the lenders and the interest rate charged. It can be added on toy our mortgage amount if you can’t afford to pay it, but remember you will have to pay interest on it. Many mortgage products have an upfront fee, which is the arrangement fee. It may be in addition to a booking fee.
- Valuation Fee – this could be as little as £150, or as much as £1500. It will depend on the value of the property – in some deals, the lender will even pay this off for you. It’s the fee charged by a lender to have the property’s value checked over to make sure that it’s worth your mortgage.
- Account Fee – this is usually £100 – £300, and separate to your arrangement fee. It’s the fee charged by the lender that is supposed to cover the set up of your mortgage, maintenance, and any closing down costs. When you repay your mortgage, you won’t have to pay a separate exit admin fee.
- Higher Lending Charge – the higher lending charge is dependant on the amount of money you borrow and how much you’re going to put towards the deposit. If you must pay when, then it’s more often than not 1.5% of the amount you’re going to borrow. For example, a mortgage of £150,000, as discussed earlier, would be £2,250. This only applied when you’re borrowing most of the value of the property. The fee covers insurance cover and protects them in case one day you cannot pay back the loan and they must sell the property for less. However, the lender can still come after you for what you owe them.
- Searches – the searches may cost up to £300. Fees for these searches cover looking for any planning issues that could possibly affect the property’s value. A drains search is usually conducted also.
- Legal Costs – your legal costs are paid to either a solicitor or conveyancer in order for them to carry out legal works involved. Both the buyer and seller will need a solicitor, and it could cost around £500-£750. Vat will be applicable on top of the price quoted too.
- Stamp Duty – you may not have to pay stamp duty, but you may also have to pay up to 7%. This is tax paid by you, and is based on the purchase price of the property. You can use plenty of special calculators online to help you work this out.
- Survey – there are usually 3 kinds of survey. A home condition survey, which is the most basic kind, could cost you £250. A homebuyer’s report, which is a more detailed survey with a thorough check over could cost up to £400. A building or structural survey is the highest most thorough kind of survey you can get, and could cost more than £600.
- Moving Costs – you’ll need a company like ‘The Professionals‘, for example, to help you move your things to your new property. This could cost anywhere from £300 – £600.
- Estate Agent Fees – the estate agent’s fees range from 1-3% of the sale price, and then you must add on VAT at 20%. It’s paid by the seller to an estate agent for them marketing the property, showing around any potential buyers, and then negotiating the price with them.
- Telegraphic Transfer Fee – usually up to £50, it’s paid to the lender for transferring the mortgage money to the seller’s legal aid.
- Buildings Insurance Fee – some, but not all lenders charge customers who take out building insurance with another company. It could be cheaper for you in this case to take out buildings insurance with a company recommended by your lender. If not, you may pay an extra £25 on top of everything else.
Some of these fees don’t seem like much in comparison to your deposit, but I assure you, they all add up rather quickly. In total, you could pay a massive £38,075 or more, and that’s just for starters. It could be more or less based on your deposit, the cost of your house, and your own personal situation. However, there will always be more costs once you’ve moved in. You may need to make adjustments, renovations, and repairs. You’ll also want to have at least a few months mortgage payments behind you as an extra cash cushion, just in case anything else crops up. In fact, in some cases, it may be cheaper for you to rent. Weigh up your options and see what you think is best for you in the long run!
