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From mortgage broker fees to removal costs to home insurance, moving home can be expensive, whether you are a first time buyer or not.
But there are ways to make sure you don’t pay over the odds.
Estate agent fees
Buyers do not pay estate agent fees; sellers do. If you’re selling up in order to move, estate agency fees can range from between 0.75% to 3.5% of your property’s purchase price, so it is worth shopping around.
It is also worth confirming what you are getting for your fee: does it include photos and a floor plan, and a ‘for sale’ sign? And what happens if you change your mind and decide not to sell?
You may prefer instead to list with an online estate agent, which typically charge a lower fee as managing the sale of your home will be down to you. You will probably be responsible for arranging viewings and speaking with potential buyers, among other things.
Mortgages
The world of mortgages can be a complicated place, which is why many buyers seek the help of a mortgage broker rather than finding a mortgage for themselves.
Many brokers charge a fee for helping you find a suitable deal, and will tend to handle the application and paperwork.
Make sure you use a reputable broker: ask friends and family for recommendations, or you can use a resource such as https://www.unbiased.co.uk/
When it comes to the mortgage itself, some lenders offer incentives such as cashback rewards, but try to focus on the total cost of your loan: the amount you are borrowing, plus interest over the lifetime of the mortgage, plus any fees.
As a general rule of thumb, the larger deposit you have, the more competitive mortgage deals you’ll have access to. This is because you’ll be considered less risky by lenders; so, if you can hold on for a little longer to build your deposit, you could be rewarded with lower repayments in the future.
Whether you visit a provider directly or use a broker, they’ll tell you the maximum amount they are willing to lend to you. This is a limit, not a target! Make sure that your monthly payment figure is sustainable and matches your current lifestyle, but also consider the length of the mortgage.
House surveys
Most surveyors offer three types of survey: A condition report, a homebuyer’s report, and a building survey.
A condition report should only be considered if the property is new with no previous problems. The other two are more in-depth.
A homebuyer’s report could cost between £350 and £950, depending on the price of the property. It will highlight 'surface level' problems such as subsidence, and point out areas in need of repair or maintenance. It will also likely include a market valuation and rebuild cost.
A building survey is the most thorough, and typically costs between £500 and £1,300. According to Which?, it provides a “comprehensive” analysis of the condition and structure of the property, listing defects and advising on repairs and maintenance.
Stamp duty
Unless you are a first time buyer stamp duty is charged on all properties worth over £125,000.
The rate depends on the value of the home you’re buying. For example, 2% stamp duty is charged on properties priced between £125,000.01 and £250,000; then 5% is charged on the amount between £250,000.01 and £925,000.
It's a little different for first-time buyers, who don't pay a penny in stamp duty on the first £300,000 and then just 5% of any proportion above £300,000 but below £500,000. However, if a first-time buyer is purchasing a property worth more than £500,000, the standard rules above apply from the start.
There’s no way of getting out of paying stamp duty, but you might want to think about haggling the price of the property if, say, it’s £255,000 and you want to get it below the £250,000 threshold.
Conveyancing fees (legal fees)
Moving house will involve you instructing a solicitor or licensed conveyancer to manage the legal side of things.
Costs will cover the conveyancing along with so-called disbursements, which include Land Registry Fees and local authority searches. Typically, you should look to pay between £1,180 to £2,035 for legal fees, depending on the price of your property.
Seeing as solicitors’ fees vary, it’s worth taking the time to get a number of quotes.
Removal costs
Know a man with a van? You could potentially save yourself hundreds of pounds by managing the move yourself (with the help of friends and family, of course).
Removal costs when moving into a three-bedroom house are estimated to be about £800, plus an additional £250 for packing. Just remember to stock-up on the bubble wrap if you plan on doing this yourself!
Home insurance
Arranging home insurance may be a condition of your mortgage, so you will need to have this in place. You can insure the building itself as well as the contents within it.
Insurance is not something to scrimp on; you want to be sure that, should the unexpected happen, your home and belongings are protected.
Zurich home insurance features a range of benefits as standard, such as automatic buildings cover up to £1,000,000 and contents cover up to £100,000; guaranteed repairs following a claim; and accommodation if something (an 'insured event') happens to your home.
You can also tailor your policy to suit your needs, choosing from a host of optional extras, such as cover for accidental damage. We offer separate buildings and contents policies, but you could save money by combining the two.
What now?
If you are ready, find out more about Zurich home insurance HERE.
Sources:
https://www.zurich.co.uk/home-insurance
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