What are the costs involved in buying a home?

Buying a home is one of the most important and exciting decisions that you can make in your life. It can also be one of the most complex and stressful ones, as there are many factors and costs that you need to consider and plan for.

In this article, I will explain the various fees and charges that you may encounter when buying a home, such as stamp duty, solicitor’s fees, mortgage fees, property survey, removals, and other costs. I will also provide some tips and advice on how to save money and time on these costs, and how to make the most of your home purchase.

But before we dive into the details, let me introduce SLM London. We are a local estate agency based in South-West London. We have been helping people buy, sell, and rent properties in this area for over 20 years. We have extensive experience and knowledge of the local market, and we offer a range of services and support to suit every buyer’s needs and preferences.

One of the main benefits of using an estate agency like SLM London to help you with your home purchase is that we can help you find the best deals, negotiate with sellers, and handle all the paperwork and legal aspects of the transaction. We can also provide you with access to high-quality solicitors, surveyors, mortgage advisers, and removal companies at competitive prices. We can make your home buying process easier, faster, and more enjoyable.

If you are interested in buying a home in South-West London, or if you have any questions or queries about the process, please feel free to contact us anytime. We would love to hear from you and assist you with your property search.

Key takeaways

Cost	Description	Estimate
Stamp duty	A tax that buyers have to pay when purchasing a property above a certain value	Depends on the property price, type, and buyer status
Solicitor’s fees	The charges that buyers have to pay for the legal services involved in buying a home	£850 – £1,500 + VAT
Mortgage fees	The costs that buyers have to pay to secure a loan to buy a home	Varies depending on the lender, product, and service level
Property survey	An inspection of the physical condition and structure of the property that buyers are interested in buying	£250 – £1,000
Removals	The process of transporting the belongings of buyers from their old home to their new one	£300 – £1,000
Other costs	The additional expenses that buyers may incur when buying a home, such as insurance, utility bills, council tax, maintenance, repairs, etc.	Depends on the property size, location, condition, and usage

Stamp duty

Stamp duty is a tax that buyers have to pay when purchasing a property above a certain value. The amount of stamp duty that you have to pay depends on several factors, such as:

The price of the property
The type of property (residential or non-residential)
The location of the property (England or Northern Ireland)
Your status as a buyer (first-time buyer or not)
Whether you own any other properties (additional property surcharge)

The current stamp duty rates and thresholds for different types of buyers and properties in England and Northern Ireland are as follows:

Property price	Standard rate	First-time buyer rate	Additional property rate
Up to £125,000	0%	0%	3%
£125,001 – £250,000	2%	0%	5%
£250,001 – £925,000	5%	5%	8%
£925,001 – £1.5 million	10%	10%	13%
Over £1.5 million	12%	12%	15%

For example, if you are a first-time buyer and you buy a residential property for £300,000 in England or Northern Ireland, you would have to pay:

No stamp duty on the first £125,000
No stamp duty on the next £125,000
5% stamp duty on the remaining £50,000

This means that your total stamp duty bill would be:

(£0 x 0%) + (£0 x 0%) + (£50,000 x 5%) = £2,500

However, if you are not a first-time buyer and you already own another property (or properties), you would have to pay:

3% stamp duty on the first £125,000
5% stamp duty on the next £125,000
8% stamp duty on the remaining £50,000

This means that your total stamp duty bill would be:

(£125,000 x 3%) + (£125,000 x 5%) + (£50,000 x 8%) = £14,000

As you can see, stamp duty can make a significant difference to the cost of buying a home. Therefore, it is important to factor it into your budget and plan ahead.

There are some exemptions and reliefs that may apply to reduce or eliminate your stamp duty liability, such as:

First-time buyer relief: If you are buying your first home and the property price is £500,000 or less, you can claim a stamp duty relief and pay no tax on the first £300,000 and 5% on the rest.
Shared ownership scheme relief: If you are buying a property through a shared ownership scheme and the property price is £500,000 or less, you can choose to pay stamp duty only on the share that you are buying, or on the full market value of the property. If you choose the former option, you can also claim the first-time buyer relief if you are eligible.
Transfer of property between spouses or civil partners: If you are transferring property to your spouse or civil partner as part of a divorce or dissolution settlement, or as a gift, you do not have to pay any stamp duty on the transfer.

To estimate how much stamp duty you would have to pay for a specific property and buyer scenario, you can use a stamp duty calculator. This will help you to budget accordingly and avoid any surprises.

Solicitor’s fees

Solicitor’s fees are the charges that you have to pay for the legal services involved in buying a home. These services include:

Conveyancing: This is the process of transferring the legal ownership of the property from the seller to the buyer. It involves checking the title deeds, contracts, searches, and other documents related to the property.
Searches: These are inquiries that solicitors make to various authorities and agencies to find out more information about the property, such as its planning history, environmental issues, flood risk, etc.
Land registry documents: These are the official records that show who owns the property and whether there are any restrictions or charges on it. Solicitors have to register the change of ownership and pay the land registry fees on behalf of the buyer.
Other legal matters: These may include dealing with any disputes, complications, or special conditions that may arise during the transaction, such as leasehold issues, shared ownership schemes, etc.

The cost of solicitor’s fees can vary depending on the complexity and value of the transaction, as well as the solicitor’s reputation and experience. However, a rough estimate of how much solicitor’s fees can cost is between £850 and £1,500 + VAT.

It is important to hire a reputable and qualified solicitor to ensure a smooth and secure purchase. A good solicitor will:

Communicate with you regularly and keep you updated on the progress of the transaction
Explain the legal terms and processes clearly and answer any questions you may have
Protect your interests and rights and advise you on any risks or issues
Complete the transaction within the agreed time frame and budget

At SLM London, we have a trusted network of solicitors that we work with regularly. We can provide you with access to high-quality solicitors at competitive prices. We can also liaise with them on your behalf and make sure that everything goes according to plan.

Mortgage fees

Mortgage fees are the costs that you have to pay to secure a loan to buy a home. There are different types of mortgage fees that you may encounter, such as:

Arrangement fee: This is a fee that lenders charge for setting up and administering the mortgage. It can also be called a product fee, booking fee, or completion fee. It can range from £0 to £2,000 or more.
Valuation fee: This is a fee that lenders charge for assessing the value of the property that you want to buy. It can also be called an appraisal fee or survey fee. It can range from £0 to £1,500 or more.
Broker fee: This is a fee that mortgage brokers charge for finding and arranging the best mortgage deal for you. It can also be called an advice fee or commission fee. It can range from £0 to £1,000 or more.
Other fees: These may include fees for transferring funds, legal services, early repayment, exit, etc.

The amount and type of mortgage fees that you have to pay depend on several factors, such as:

The lender: Different lenders have different fee structures and policies. Some may charge higher fees but offer lower interest rates, while others may charge lower fees but offer higher interest rates.
The product: Different mortgage products have different features and benefits. Some may have lower fees but higher interest rates, while others may have higher fees but lower interest rates.
The service level: Different service levels may have different costs and benefits. Some may offer more flexibility and convenience, while others may offer more security and certainty.

To compare mortgage deals based on the interest rate and the fees, you need to look at the annual percentage rate (APR). The APR is a measure of the total cost of borrowing over a year, including both the interest rate and the fees. The lower the APR, the cheaper the deal.

However, you also need to consider other factors besides the APR, such as:

The term: This is how long you have to repay the mortgage. The longer the term, the lower your monthly payments, but the more interest you will pay overall.
The type: This is whether your mortgage has a fixed or variable interest rate. A fixed rate means that your interest rate will stay the same for a certain period of time, while a variable rate means that your interest rate will change according to market conditions.
The features: These are any additional options or benefits that your mortgage may offer, such as overpayments, underpayments, payment holidays, cashback, etc.

Some mortgage fees can be paid upfront or added to your loan. However, you need to consider the pros and cons of each option. If you pay upfront, you will reduce your loan amount and interest payments, but you will also reduce your cash flow. If you add them to your loan, you will increase your loan amount and interest payments, but you will also preserve your cash flow.

At SLM London, we have a team of expert mortgage advisers who can help you find and secure the best mortgage deal for your situation. We have access to a wide range of lenders and products, and we can offer you impartial and personalised advice and guidance. We can also help you with the application process and the paperwork.

Property survey

A property survey is an inspection of the physical condition and structure of the property that you are interested in buying. It is carried out by a qualified and experienced surveyor who will examine the property and produce a report that will highlight any defects or issues that may affect the value or safety of the property.

There are different types of property surveys that you can choose from, depending on your needs and budget, such as:

Condition report: This is the most basic and cheapest type of survey. It provides a summary of the condition of the property using a traffic light system. It does not include any advice or valuation.
Homebuyer report: This is the most common and popular type of survey. It provides a more detailed assessment of the condition of the property, as well as advice on any repairs or maintenance that may be needed. It also includes a valuation and an insurance reinstatement figure.
Building survey: This is the most comprehensive and expensive type of survey. It provides a full analysis of the condition and structure of the property, as well as advice on any defects or issues that may require further investigation or specialist attention. It does not include a valuation or an insurance reinstatement figure.

The cost of a property survey can vary depending on the type, size, location, and age of the property, as well as the surveyor’s reputation and experience. However, a rough estimate of how much a property survey can cost is between £250 and £1,000.

A property survey is essential for buyers, as it can reveal any problems or risks that may not be obvious from a visual inspection or from the seller’s information. A property survey can help you to:

Negotiate a lower price or ask for repairs if the survey reveals any significant issues
Avoid buying a property that may have hidden defects or require costly repairs in the future
Plan for any improvements or renovations that you may want to make to the property
Obtain mortgage approval from your lender, as some lenders may require a certain type of survey before lending
Obtain insurance coverage for your property, as some insurers may require a certain type of survey before insuring

At SLM London, we can arrange property surveys for you from qualified and experienced surveyors. We can help you choose the most suitable type of survey for your property and budget, and we can liaise with the surveyor on your behalf. We can also help you interpret the survey report and advise you on any actions that you may need to take.

Removals

Removals are the process of transporting your belongings from your old home to your new one. This can be a stressful and exhausting task, but also an opportunity to start fresh and celebrate your new home.

The cost of removals can vary depending on the distance, volume, and service level that you require. However, a rough estimate of how much removals can cost is between £300 and £1,000.

There are some tips that you can follow to save money and time on removals, such as:

Declutter: Before you start packing, sort out your belongings and get rid of anything that you don’t need or want anymore. You can sell, donate, or recycle your unwanted items. This will reduce the amount of stuff that you have to move and the space that you need.
Pack efficiently: Use sturdy boxes and bags that are suitable for the size and weight of your items. Label them clearly with the contents and the destination room. Pack fragile items carefully with bubble wrap or newspaper. Pack heavier items at the bottom and lighter items at the top. Pack essentials separately and keep them handy.
Compare quotes: Get at least three quotes from different removal companies and compare them based on the price, service, and reputation. Check what is included and excluded in the quote, such as insurance, packing materials, parking permits, etc. Ask for references or reviews from previous customers.
Book early: Book your removal company as soon as possible to secure your preferred date and time. This will also give you more time to prepare and plan for the move. Avoid peak times such as weekends or bank holidays, as they may be more expensive or busy.

At SLM London, we can assist you with removals and make them easier and more enjoyable. We have a friendly and professional team that can help you with packing, loading, transporting, unloading, and unpacking your belongings. We can also provide you with storage solutions if you need them. We offer competitive prices and flexible options to suit your needs.

Other costs

Besides the costs that we have discussed so far, there may be other costs involved in buying a home that you should be aware of and budget for. These include:

Insurance: You will need to get building insurance to cover the structure and fixtures of your property in case of damage or loss caused by fire, flood, storm, etc. You may also want to get contents insurance to cover your personal belongings in case of theft, vandalism, etc. You may also need to get life insurance or mortgage protection insurance to cover your mortgage payments in case of death or illness.
Utility bills: You will need to pay for the services that you use in your home, such as gas, electricity, water, phone, internet, etc. You may need to set up new accounts or switch suppliers when you move in. You may also need to pay for any installation or connection fees.
Council tax: You will need to pay council tax to your local authority for the services that they provide in your area, such as rubbish collection, street lighting, etc. The amount of council tax that you have to pay depends on the value and location of your property, as well as the number of people living in it.
Maintenance: You will need to pay for any repairs or improvements that you may want or need to make to your property, such as fixing leaks, painting walls, replacing appliances, etc. You may also need to pay for any regular services that you may require, such as gardening, cleaning, etc.
Repairs: You will need to pay for any unexpected or emergency repairs that may occur in your property, such as broken pipes, faulty wiring, etc. You may also need to pay for any professional help that you may need, such as plumbers, electricians, etc.

The amount and frequency of these costs depend on the size, location, condition, and usage of your property. However, you can reduce or manage these costs by:

Shopping around for deals: Compare different providers and products and look for discounts or offers that may suit your needs and budget.
Switching suppliers: Change your suppliers if you find a better deal or service elsewhere. You may be able to save money by switching to a cheaper or greener option.
Making energy-efficient improvements: Invest in some measures that can reduce your energy consumption and bills, such as installing insulation, double-glazing windows, LED lights etc.
Setting up a budget: Plan ahead and allocate a certain amount of money for each cost category. Track your spending and income and adjust accordingly.

Buying a home is not only about costs but also about benefits. Buying a home can give you:

Equity: This is the difference between the value of your property and the amount of mortgage that you owe. As you pay off your mortgage and as your property value increases over time you build equity that you can use for other purposes such as investing renovating or retiring.
Security: This is the sense of stability and peace of mind that you get from owning your own home. You don’t have to worry about rent increases, eviction notices, or landlord rules. You can also customize your home to your liking and needs.
Freedom: This is the ability to make your own decisions and choices about your home. You can decide where to live, what to buy, how to decorate, etc. You can also enjoy more privacy and independence in your own space.

Conclusion

In this article, I have explained the various costs that you may encounter when buying a home, such as stamp duty, solicitor’s fees, mortgage fees, property survey, removals, and other costs. I have also provided some tips and advice on how to save money and time on these costs, and how to make the most of your home purchase.

Buying a home can be a complex and stressful process, but also a rewarding and exciting one. One of the main advantages of using an estate agency like SLM London to help you with your home purchase is that we can help you find the best deals, negotiate with sellers, and handle all the paperwork and legal aspects of the transaction. We can also provide you with access to high-quality solicitors, surveyors, mortgage advisers, and removal companies at competitive prices. We can make your home buying process easier, faster, and more enjoyable.

Q&A

Here are some common questions and answers that you may have about buying a home:

Q: How much deposit do I need to buy a home?
A: The deposit is the amount of money that you have to pay upfront when buying a home. The minimum deposit that you need depends on the lender and the product that you choose, but it is usually between 5% and 20% of the property price. For example, if you buy a property for £300,000 and you need a 10% deposit, you will have to pay £30,000 upfront.
Q: How do I get a mortgage?
A: A mortgage is a loan that you take out to buy a home. To get a mortgage, you need to apply to a lender (such as a bank or a building society) and provide them with some information about yourself, your income, your expenses, and the property that you want to buy. The lender will then assess your affordability and creditworthiness and offer you a mortgage deal based on the interest rate, the term, the type, and the features that they can offer you.
Q: What is a mortgage in principle?
A: A mortgage in principle is a statement from a lender that indicates how much they are willing to lend you based on some basic information that you provide them with. It is not a guarantee or a formal offer, but it can give you an idea of how much you can borrow and show sellers that you are serious and ready to buy.
Q: What is an offer?
A: An offer is a proposal that you make to the seller of the property that you want to buy. It includes the price that you are willing to pay and any conditions that you may have. The seller can accept, reject, or counter your offer.
Q: What is an exchange of contracts?
A: An exchange of contracts is when you and the seller sign and exchange the legal contracts that bind you both to the sale of the property. It is usually done after all the checks and searches have been completed and both parties are happy with the terms of the transaction. Once the contracts are exchanged you cannot back out of the deal without losing your deposit and neither can the seller.
Q: What is completion?
A: Completion is when you pay the remaining balance of the purchase price to the seller and they hand over the keys and legal ownership of the property to you. It is usually done on a date agreed by both parties after the exchange of contracts. Once completion takes place you can move into your new home.