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Whether you’re about to step onto the property ladder or already own a house and are planning to up sticks, you’ll be aware that there are several costs associated with the buying process. But don’t let these costs put you off – with some smart planning, there are ways you can shave money off along the way.
From stamp duty to solicitor’s fees and home insurance, we look at the cost of moving home and how you can ensure you don’t pay over the odds.
Estate agent fees
Do you have a property to sell? According* to HomeOwners Alliance, estate agents charge between 0.75% and 3.5% of the agreed selling price, so comparing companies could save you money. Make sure you know exactly what you’re getting for your cash as well as the agent’s terms. For instance, does the fee include a ‘For Sale’ board, 360-degree photos or floorplans? Is there a tie-in period? What happens if you decide not to sell?
There are also a number of online estate agents that charge a significantly lower fee, as managing the sale of your home is down to you. You’re responsible for everything from booking viewing slots to speaking with potential buyers – if you’ve the time to dedicate to these tasks, then this option could be worth considering.
Mortgages
The world of mortgages can be a complicated place, which is why many buyers rely on a mortgage specialist to find them the best deal. Make sure you use a reputable advisor; ask friends and family for recommendations and bear in mind that many don’t charge for their services, as they get paid by the provider they set you up with.
Some lenders offer incentives for taking out a mortgage with them, like cashback rewards, but try to focus instead on the total cost, which includes the interest rate together with the 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 cheaper 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 you – this is a limit, not a target! Most importantly, you need to make sure that your monthly payment figure is realistic, sustainable and matches your current lifestyle.
House surveys
The majority of surveyors offer three types of survey. A condition report is the most basic and is only really suitable if you’re purchasing a new property with no previous problems. The other two, which are more in-depth and therefore can offer greater peace of mind, are a HomeBuyer’s Report and a Building Survey.
A HomeBuyer’s Report costs between £350-£950 depending on the price of the property, according* to Which?, and is generally suitable for properties that:
• were built within the last 100 years
• are of a more conventional design
• are built from common building materials
• are in a reasonable condition, as far as you can tell
A Building Survey costs between £500-£1,300 depending on the price of the property, according to Which?, and is generally suitable for properties that:
• are older and built more than 100 years ago
• have had major work carried out them
• are much larger and provide extensive accommodation
• you plan to renovate in the future
• are a non-traditional construction
If the report flags up any issues with the property, you could use it as a bargaining tool. The seller may be willing to drop the price, saving you money as a result!
Stamp duty
Stamp duty is charged on all properties worth over £125,000. It’s also tiered, so the rate depends on the value of the home you’re buying. For example, 2% stamp duty is charged on properties priced £125,001 - £250,000; and then 5% is charged on the amount over £250,000 and up to £925,000 if the property is over £250,000.
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 so you pay less.
Conveyancing 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. You should look to pay around £850-£1,500 for legal fees, says* the Money Advice Service, including VAT at 20%. 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). Which? estimates* the removal costs of a 3-bedroom house to be around £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
You’ll need to have buildings insurance in place for your new property from the moment you exchange contracts – and contents insurance when you’ve moved in. Insurance is a requirement by most lenders, but that doesn’t mean you need to pick the insurer they recommend.
Insurance is not something to scrimp on; you want to be sure that, should the unexpected happen, your home and all of your precious belongings are well protected. Choosing a reputable provider will give you peace of mind, and could save you from potential losses in the long-term. Zurich’s 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; cover for accidental breakage; and accommodation if something happened to your home.
And you can also tailor your policy to suit your needs, choosing from a whole host of optional extras. We offer separate buildings and contents policies, but you could save money by combining the two.
Hopefully, these tips will help with the planning process so that whenever you decide to take the plunge, you’ll be able to keep costs to a minimum.
Sources:
http://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/clever-questions-to-ask-the-estate-agent-when-selling-a-house-in-2015/
http://www.which.co.uk/money/mortgages-and-property/first-time-buyers/guides/buying-a-home/house-surveys
https://www.moneyadviceservice.org.uk/en/articles/estimate-your-overall-buying-and-moving-costs
http://www.which.co.uk/money/mortgages-and-property/first-time-buyers/guides/buying-a-home/the-cost-of-buying-a-house
https://www.zurich.co.uk/home-insurance
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