HOW MUCH DOES IT COST TO BUY A HOUSE ?
Mortgage costs for first time buyers are are associated with the type of property you are buying and how much it is. So how much does it cost to buy a house ? Mortgage services for First Time Buyers are required by every First Time Buyer. We have broken this process down into four elements of the mortgage costs for first time buyers.
You are going to need a mortgage lender. A Mortgage lender will provide the finance to enable you to purchase your home. The lender will finance the difference between your deposit and the purchase price of the property.
There are two areas which have potential costs from a mortgage lender
1. Application fee – This can vary from anything from £200 – £1000 and depends on the price of your property. Normally the higher the purchase price, the higher the cost. This is because as a part of your application, the lender will be required to conduct a “survey” or “valuation” of the property. This is to determine if the lender feels the property is worth the value you are paying for it. This is what the application cost covers. There are also three different surveys you can have, which we will look at later, which can also influence the cost. The good news is that Mortgage Chain work with a number of high street lenders that provide can cover some or all of these initial costs.
2. Arrangement fee – Sometimes there will be an “arrangement fee” associated with your mortgage, that is payable to the lender. Typically this is usually around £999 and can be paid upfront or added to the loan. Should you add this fee to the loan, then interest maybe charged. A Mortgage quote (Key Facts Illustration or ESIS) will provide all the information about this.
Every First Time Buyer purchasing a home will need a solicitor as part of the transaction. A Solicitor for property purposes can sometimes be referred to as a Conveyancer, just in case you hear that term mentioned. Your Solicitor is their for your own protection and has a responsibility to make sure the property you are buying is all above board and will not have any associated problems can may run into later.
Your Solicitor will be responsible for:
- Conducting Local searches – Are there plans for a motorway in your new garden or to build a prison next door ?
- Environmental searches – the report will give information about contaminated land at or around the property, landfill sites, former and current industry, detailed flooding predictions, radon gas hazard, ground stability issues, and some other related information.
- Bankruptcy searches – This will be a search on yourself to see if you are current bankrupt or on the verge of being bankrupt
- Stamp duty – Stamp duty is a government tax paid to the HMRC for buying a property. This is dependent on the purchaser and purchase price of the property to the amount you pay. The Solicitor will request this from you and pay it to the HMRC on your behalf.
- Land Registry Search – A search to ensure the seller owns the property as they say they do. The Land Registry will hold this information.
- Land Registration – The Solicitor will register your new home on your name with the Land Registry
- TT Fee – Telegraphic Transfer to transfer the funds from the lender to the Solicitor
Solicitor fees vary and our advice is not to go with simply the cheapest Solicitor you can find. For example this could mean the Solicitor runs via post and email only. We fully recommend to check reviews on Trust PIlot and Google and the like to make a judgement. I would always favour paying a little more for quality and experience, as a lower cost Solicitor can end costing more in the long run.
A Solicitor will usually ask for between £200 – £300 at the start, to proceed with your searches as mentioned above. Searches sometimes can takes weeks or even months to obtain, so its best to get going with these early. We do however fully recommend your mortgage is at least agreed in principle before you make the initial payment.
Solicitor cost – This can vary between £500 – £1500 as the Solicitor fee. Shared Ownership purchases are usually around £500 more expensive as extra work is required.
- Conducting Local searches – £125
- Environmental searches – £125
- Leasehold fee – £400 (only if buying a leasehold property)
- Bankruptcy searches – £30
- Stamp duty – See stamp duty calculator below
- Land Registry Search – £5
- Land Registration – £135
- TT Fee – £35
You will require a minimum deposit of 5% of the properties purchase price.
e.g. – £100,000 purchase price = £5,000 deposit
Stamp Duty is a tax charged by the government when buying properties. You may or may not have stamp duty to pay which depends on your specific circumstances.
Use the calculator below.
Video: Mortgage Costs | The Associated Costs of Buying Your First Home by Alex Kerr
A common question first time buyers ask, is “how much does it cost to buy a house ?” In this video I go through all of the costs and when they need paying. Lets get to it.
Video includes: First Time Buyer Costs • Mortgage Costs – Application fee – Broker fee • Solicitor costs – Searches • Deposit • Stamp Duty • Removals
To see if you qualify for a First Time Buyer Mortgage, please book a free, no obligation Mortgage Analysis Call with us to discuss your options.