Savings Tips

Savings Tips

Hidden costs when buying your first home

Did you really think that the deposit was the only sum of money you needed to secure a house? Think again.

I am sure that you first-time buyers, have all heard of things like stamp duty, conveyancing, survey etc. But what are they exactly?

My then girlfriend (now wife) and I bought our first house almost a year ago, in October 2019 to be precise, but our journey to enter the highly sought-after home owners’ club had started way earlier.

Happy as two clams in love (can you actually picture that?), we had our first meeting with the mortgage broker (here’s the first expense for you) back in April 2019. We waltzed into his office with our heads held high, hand in hand, both smiling but little did we know that our moods would shift dramatically and take a darker turn very quickly. We soon came to terms with the overwhelming - and, frankly, depressing - list of things we had not thought of when purchasing a house. Please don’t get me wrong: buying a house is so incredibly exciting, but in order to keep it that way and not to be caught unprepared, there are just a few hidden costs, deposit aside, to be mindful of. Here’s a list I have set out for you so you can budget accordingly and ultimately spend your first day in your new house feeling immensely proud:

Stamp Duty

This is undoubtedly the big elephant in the room. Until 31st March 2021, the Chancellor of the Exchequer has ordered a stamp duty holiday. From 8th July 2020, in England and Northern Ireland, properties worth up to £500,000 are exempt from stamp duty; in Scotland, from 15th July properties worth up to £250,000 are exempt, whereas in Wales, from 27th July 2020, properties worth up to £180,000 are exempt. Thanks, Rishi! 

Conveyancing

This is legal jargon, hence the tongue-twisting word. This basically represents the legal journey involved in purchasing a property, in other words the process for which you pay your solicitor. Conveyancing costs can go up to £1,500, plus any disbursements (another fancy pants word standing for things such as local searches and  registering change of ownership with the Land Registry) aren’t usually higher than £500.

Survey

Trust me, get a proper survey done. I am not talking about the standard one that the lender does (which still costs between £200 and £300!) so that they know that the property is worth at least the amount they are giving you, I am referring to a professional one carried out by a third-party that assesses IMPARTIALLY the conditions of the property. There are different types of survey, differentiating from each other by how deep you want to go in assessing a property. The costs usually vary from £400 to over a grand! I know, just for a blimmin’ survey.

Mortgage Broker Fees

You don’t have to go with one, but especially when it comes to first-time buyers, they help massively in scouting out the best deal for you. Trust me, they are really helpful! They cost a few hundred quid, but they are so worth the money and will help you save in the long term.

Mortgage Arrangement Fees

These are often charged by mortgage companies, and can range from a few hundred pounds to 1% of the mortgage. Some lenders want you to pay the fees up front, which means you won’t be paying interest on it; others add it to the mortgage, which I guess might be better if you can’t afford yet another cost when buying a home.

Estate Agent Fees

Fear not, the seller rather than buyer pays these. Still, watch out for dodgy sale-by-tender tactics whereby the Estate Agent tries to get the vendor and you to pay the fees. As the old saying goes, ‘It’s good to trust others, but not to do so is even better’.

Removals

You think you can do it all, but, trust me, moving into a property is a hard, physical endeavour, especially if you can only take one day off to move. Unless, of course, if you haven’t got a lot of furniture and only have a few bags of clothes. Which leads me to my next point... 

Furnishing the property

So, let me ask you: would you rather go to Ikea or West Elm? OK, let me rephrase that: are you a minimalist by necessity or by taste? Do you see what I am getting at? Unless you are prepared to sleep on the floor and eat Pot Noodles, you will definitely need a bed and a fridge, and all the other ‘essential’ furniture. It is possible to cut costs by buying second hand, but it is also just as easy to spend thousands. As they say, the sky's the limit, or was it the wallet? 

Redecorating

Are you good at DIY? Few new homes need no work at all done to them, most need at least some redecoration. DIY can certainly cut costs, but, speaking from personal experience, most new homeowners spend far more than they had budgeted for to do up their new property.

Gardening

If your new house has a garden, however big or small, it will need some TLC sooner rather than later, even just to keep it tidy. Grass - and, especially, weeds - grow and you can’t control it, so expect a few trips to Homebase to find the right weed killer or hunt for a good lawn mower. Be ready to get your hands dirty.

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About the author
Savings Tips

Savings Tips

Hidden costs when buying your first home

Did you really think that the deposit was the only sum of money you needed to secure a house? Think again.

I am sure that you first-time buyers, have all heard of things like stamp duty, conveyancing, survey etc. But what are they exactly?

My then girlfriend (now wife) and I bought our first house almost a year ago, in October 2019 to be precise, but our journey to enter the highly sought-after home owners’ club had started way earlier.

Happy as two clams in love (can you actually picture that?), we had our first meeting with the mortgage broker (here’s the first expense for you) back in April 2019. We waltzed into his office with our heads held high, hand in hand, both smiling but little did we know that our moods would shift dramatically and take a darker turn very quickly. We soon came to terms with the overwhelming - and, frankly, depressing - list of things we had not thought of when purchasing a house. Please don’t get me wrong: buying a house is so incredibly exciting, but in order to keep it that way and not to be caught unprepared, there are just a few hidden costs, deposit aside, to be mindful of. Here’s a list I have set out for you so you can budget accordingly and ultimately spend your first day in your new house feeling immensely proud:

Stamp Duty

This is undoubtedly the big elephant in the room. Until 31st March 2021, the Chancellor of the Exchequer has ordered a stamp duty holiday. From 8th July 2020, in England and Northern Ireland, properties worth up to £500,000 are exempt from stamp duty; in Scotland, from 15th July properties worth up to £250,000 are exempt, whereas in Wales, from 27th July 2020, properties worth up to £180,000 are exempt. Thanks, Rishi! 

Conveyancing

This is legal jargon, hence the tongue-twisting word. This basically represents the legal journey involved in purchasing a property, in other words the process for which you pay your solicitor. Conveyancing costs can go up to £1,500, plus any disbursements (another fancy pants word standing for things such as local searches and  registering change of ownership with the Land Registry) aren’t usually higher than £500.

Survey

Trust me, get a proper survey done. I am not talking about the standard one that the lender does (which still costs between £200 and £300!) so that they know that the property is worth at least the amount they are giving you, I am referring to a professional one carried out by a third-party that assesses IMPARTIALLY the conditions of the property. There are different types of survey, differentiating from each other by how deep you want to go in assessing a property. The costs usually vary from £400 to over a grand! I know, just for a blimmin’ survey.

Mortgage Broker Fees

You don’t have to go with one, but especially when it comes to first-time buyers, they help massively in scouting out the best deal for you. Trust me, they are really helpful! They cost a few hundred quid, but they are so worth the money and will help you save in the long term.

Mortgage Arrangement Fees

These are often charged by mortgage companies, and can range from a few hundred pounds to 1% of the mortgage. Some lenders want you to pay the fees up front, which means you won’t be paying interest on it; others add it to the mortgage, which I guess might be better if you can’t afford yet another cost when buying a home.

Estate Agent Fees

Fear not, the seller rather than buyer pays these. Still, watch out for dodgy sale-by-tender tactics whereby the Estate Agent tries to get the vendor and you to pay the fees. As the old saying goes, ‘It’s good to trust others, but not to do so is even better’.

Removals

You think you can do it all, but, trust me, moving into a property is a hard, physical endeavour, especially if you can only take one day off to move. Unless, of course, if you haven’t got a lot of furniture and only have a few bags of clothes. Which leads me to my next point... 

Furnishing the property

So, let me ask you: would you rather go to Ikea or West Elm? OK, let me rephrase that: are you a minimalist by necessity or by taste? Do you see what I am getting at? Unless you are prepared to sleep on the floor and eat Pot Noodles, you will definitely need a bed and a fridge, and all the other ‘essential’ furniture. It is possible to cut costs by buying second hand, but it is also just as easy to spend thousands. As they say, the sky's the limit, or was it the wallet? 

Redecorating

Are you good at DIY? Few new homes need no work at all done to them, most need at least some redecoration. DIY can certainly cut costs, but, speaking from personal experience, most new homeowners spend far more than they had budgeted for to do up their new property.

Gardening

If your new house has a garden, however big or small, it will need some TLC sooner rather than later, even just to keep it tidy. Grass - and, especially, weeds - grow and you can’t control it, so expect a few trips to Homebase to find the right weed killer or hunt for a good lawn mower. Be ready to get your hands dirty.

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