Your home may be repossessed if you do not keep up repayments on your mortgage
You've found your dream home. You've saved up enough for a deposit and worked out how much your monthly payments will be. So that's that, you'll pay the price agreed with the seller and you'll own your home? Not quite, there are many hidden costs of moving home which can mean you'll have to budget more than you'd expect. Although we give an idea of what each might cost, this could vary greatly depending on where you live. There may also be other costs particular to you which are not covered here.
Most people hire a solicitor to act on your behalf in the purchase of your home. Local searches, which look for any plans or issues may cost between £250 and £300. Legal fees are typically between £500 and £1000 so it pays to shop around and look for the best possible quote. The Law Society's website (opens in a new window) is a good place to start or ask relatives or friends for recommendations.
Stamp Duty is a government tax which is charged on houses costing more than £125,000. It is charged at different rates depending on the price of your house. Up to £125,000 is free, the portion of your house between £125,000 and £250,000 is taxed at 2% and the portion between £250,000 and £925,000 is charged at 5%. The easiest way to determine what, if any, stamp duty you'd have to pay is to use an online calculator (opens in a new window). Since 1 April 2015, Stamp Duty does not apply in Scotland, instead you'll pay Land and Buildings Transaction Tax (opens in a new window). It offers a progressive structure that operates thresholds, much like the UK’s income tax rates.
In England and Wales your lender will require a valuation of your prospective property before they offer a mortgage. The cost of this will depend on the value of the property and could vary greatly. In Scotland this will be based on the home report, which is a valuation document that the seller is legally obliged to get and make available to prospective buyers at their expense.
The property valuation in England and Wales is not exhaustive and it may not identify all problems requiring action. A comprehensive structural survey can cost around £250 and £600 (opens in a new window) but will give you peace of mind that everything is well with your new home and to avoid costly repair bills down the road. In Scotland even though you have the home report, a more thorough survey may be required by some lenders.
Mortgage fees can vary from lender to lender and product to product. You may also have to pay a booking fee or a mortgage valuation fee. It may be possible to add these fees to your mortgage but if you do you'll be paying interest on them for the life of your mortgage.
The cost of moving your possessions obviously depends on how much you have to move. A removal company will typically cost between £300 and £600 (opens in a new window), although they will vary depending on where you live. You may be able to avoid this by moving your possessions yourself or with friends.
Redirecting your mail with Royal Mail costs from £24.99 for three months. Changing the address on your driving licence is mandatory and is now free online. Changing addresses with your banks, credit card and on all other official documentation won't cost you anything but is time consuming.
It is likely that as a condition of offering you a mortgage you'll be required to take out life insurance to the value of your mortgage and buildings insurance. The costs of both can vary greatly depending on where you live, the size of your property and other factors, so you should shop around to try to get the best quote for you. Critical illness cover is less likely to be required by your lender, but offers you coverage should you be unable to work for a long period of time, or permanently, due to illness or injury. Buildings insurance only covers the bricks and mortar of your home. You may want cover for the contents of your home as well. With your worldly possessions on the move it’s possible that some might get damaged. Some contents insurance will only cover goods in transit if you’re using a professional firm. Moving day insurance offers cover for things that might get accidently damaged on the day.
This varies depending on the area you live in and the size of your home. Find out what band your new home is and check with your local council (opens in a new window) how much this will cost.
Electricity and gas bills can be a surprise. Ask the current occupier how much they spend on average per month. Check in the survey whether the house has a good rating for energy efficiency and shop around on comparison websites for the best deals. Decide on your needs for a landline, broadband and television and compare many suppliers for the best price. It can be cheaper if you group all three into one package.
Yorkshire Bank's mortgage support will make the mortgage process an easier journey for you.
Help on the journey to owning your own home.
Is a buy-to-let property the right investment for you? Find out with our examination of the many aspects involved.