If you are considering a move whether that be for the first time or you’ve moved before, it is vital that before you begin your search you understand the costs involved. There are three main considerations to factor in when first deciding about a new move; if there are any up front costs, your Stamp Duty and Land Tax charges and your mortgage and insurance costs.
The deposit is crucial to securing the property you would like to purchase. This is the amount you have to put towards the overall cost, prior to purchasing the property. Currently in the UK, you need at least 5% of the purchase price (e.g. £15000 on a property valued at £300K).
When your offer has been accepted on a property, your mortgage lender mandatorily carries out a valuation to check the property you have purchased is worth around the cost you have paid to secure it. This ranges from £150 to £1,500 depending on the value of the property – some lenders might not charge this so make sure you check when arranging your mortgage what this cost will be.
One of the key considerations to factor in to your costs when moving, is the amount of stamp duty you’ll pay on the purchase. On the first £125,000, buyers in England and Wales do not pay stamp duty. From 250,001 to 925,000 you will pay 2% on the price between £125,001 and £250,000 and then a further 5% on the rest of the costs. As of November 2017, stamp duty is not owed by first time buyers on property up to £300,000 and you will only pay stamp duty from £300,000 up on properties over £500,000.
You can find out how much Stamp Duty you will pay on different prices in our Cost of Moving Calculator below:
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*The above calculations are examples and not guaranteed. Prices subject to VAT at the prevailing rate
There are hundreds of mortgages available and a number of different product types. Around 60% of mortgages come with arrangement fees and other charges for setting up the loan. These fees usually range from around £500 to £2,000. You may have an idea of how much you’re able to borrow but speaking with a mortgage broker early on when you decide to move, and potentially even getting a mortgage decision in principle, can save time later on with your onward purchase. A good estate agent should work with a mortgage broker who will review your financial history and perform affordability tests, before helping you to choose the right mortgage product for you.
A survey is an inspection of a property's condition. There are various types of survey's available but the more extensive the survey, the easier it will be to find out the essential information you need to know about the property you intend to purchase.
A mortgage valuation is carried out on each property to determine whether the lender agrees it is worth the amount you have negotiated. This is something that you will pay for and it will be organised by your mortgage lender. This usually falls between £120 and £350 depending on the property type.
A HomeBuyer Report is a survey you can opt in or out of however is not mandatary. A HomeBuyer Report is recommended if you intend to purchase a property that appears to be in a decent condition and has not had significant alterations since it was initially built. The surveyor will only inspect visible areas which they can access. The report will help you to make an informed decision on the property you are interested in purchasing. The price ranges between £400 and £1,000 depending on the property type.
RICS Condition Report
RICS offer a survey which is a cheaper version of the HomeBuyer Report however it does not include a valuation. This survey simply shows the condition of the property and is intended to complement the information provided with a mortgage valuation survey.
Once you have had a good look into the finances surrounding your property purchase, before you get your sights set on your property it’s worth instructing a financial/mortgage advisor and secure a decision in principle. This will put you in a much stronger position early in the process and make you more appealing to the vendor selling the property. A mortgage broker is useful at this stage if you need advice on mortgages and they can often get you the best deals by scanning the entire market for the right mortgage to suit hour individual needs and budgets.
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