Getting onto the property ladder for the first time is exciting for all of us and the prospect of owning your own property to do with as you wish is something to really look forward to, but it is not a cheap process and it is important that a first time buyer knows how much buying their first home will cost them and what fees will need to be paid. In this article we will take a look at the fees that a first time buyer will need to take into consideration.
Deposit
Perhaps the biggest outlay is the deposit. At the very least the amount of deposit will be 5% of the property value. So, for a property costing £100,000 the minimum deposit will be £5,000. It is very common, though for this to be anything from 5% to 25% with 10% – 15% being pretty typical. So, for that £100,000 property the deposit is likely to be anything from £5,000 to £15,000 typically. Clearly the more that can be put down the better as it reduces the risk of negative equity.
Stamp Duty
The next biggest potential outlay is Stamp duty or, to give it its proper name, Stamp Duty Land Tax (SDLT). The Government has made is a little easier for first time buyers as far as SDLT is concerned and no SDLT is payable on the first £425,000 and then only 5% on the portion between £425,000 and £625,000. If a property which costs more than £625,000 is being purchased, then there is no first time buyer relief and rates are paid at the standard residential rates. So, as a first time buyer if a property below £425,000 is purchased there is no SDLT, but if, for example, a property valued at £500,000 is being purchased then SDLT will need paying on £75,000 at 5% which is £3,750.
Legal Fees
Legal fees are broken down into two types. Conveyancing fees, which are the fees the conveyancer charges for their legal services and disbursements which are payments the conveyancer needs to pay to 3rd parties for things such as searches, registering the title or facilitating the money transfer on completion. Typical conveyancing fees are around £1,300 with disbursements coming to an additional cost average of £250 – £450.
Mortgage fees
When obtaining a mortgage there can be what mortgage providers call product fees. Quite often these are attached to mortgages with lower interest rates and lower monthly repayments. These fees can often be put onto the overall amount borrowed so there is no upfront cost, but you will pay more over the life of the mortgage. On top of these fees, your mortgage provider will also want a mortgage valuation survey carrying out. You will have to pay for this upfront and they typically cost between £250 and £400 depending on the provider.
Moving fees
At the very least you will be hiring a van which will cost around £150 for a day but don’t forget boxes, bubble wrap, tape and other packing materials which are likely to cost around £150 – £200. If you will be using a professional removal firm then, depending on the package being used, the costs can be anything from around £400 for a small property and a relatively local move to around £1,800 for a larger property or a more long distant move.
In all, every purchase is unique and the exact costs associated with the move will vary from property to property. Make sure, though to factor in all the costs before jumping in to buy your first dream home as it can be a lot more expensive than you think.
