Fees when buying a house can be expensive..
Buying a house can be expensive when your not sure what your doing. There are many things to consider when moving house such as how to decide on which estate agent to choose and factoring in what fees to pay when buying a house.
Make a list of what are the fees when buying a house so there’s no nasty surprises:
- If you buy a property for £125,000 or less there is no Stamp Duty to pay to the taxman.
- A property of between £125,001 and £250,000 purchase price will incur Stamp Duty of 1% ie £1,250.01 – £2,500 on these figures.
- A property costing £250,001 up to £500,000 will incur Stamp Duty of 3% ie £7,500.03 up to £15,000.
- £500,000.01 – £1,000.000 – 4%
- £1,000,000.01 – £2,000.000 – 5%
- £2,000,000.01+ – 7%
Estate Agent’s FeesAs the buyer, you will not have to pay estate agent’s fees. Count yourself lucky. The poor seller could be paying out thousands to an agent in order to shift their house. Estate agent’s fees can be substantial and will run into thousands if the seller opts to use a traditional high street estate agent. For example, VAT is currently 20% so a 1% fee including VAT would be £3,600 on a £300,000 home. A seller should always aim to get a fee that is 1% + VAT for a sole agency contract or, better still, use an online agent such as Zevizo Properties as we are able to pass on savings direct to the customer, charging only a few hundred pounds and offering a choice of fixed fees instead. (Worth remembering if you are also selling your house!) Contact us today to see how we can help save you a bundle.
For properties over £500,000 or £1M, some traditional estate agents may be willing to drop below 1% of the sold price as a sole agent (+ VAT). A survey for “Which” found the national average was 1.8% + VAT but, in general terms, the percentage fee a typical estate agent charges can be anything from 0.75% to 3.5% of the agreed selling price.
Valuation FeeThis is a fee charged by the lender to prove that the property actually exists and that it is worth the asking price ie good enough collateral to be used as security against the loan (which is what a mortgage is). Typically, this fee will be of the order of £300. Cost will vary according to lender and asking price.
Mortgage Arrangement FeeMost mortgage lenders will charge a fee for arranging the mortgage and this fee could well be non-refundable even if the house purchase falls through and, remember around one in three transactions do not proceed beyond “under offer” so it’s worth shopping around but expect to pay typically around £1,000 for this service.
Survey FeesThe average survey fees when buying a house cost between £400 and £700. As the purchase can often fall through it is very annoying but you may find you have to budget for several surveys if your initial property purchase falls through. A full structural survey (to assess potential severe defects such as subsidence) can cost over £1,000 and whether you opt for this will depend on the age and condition of the property in question. A mortgage company may ‘retain’ part of the mortgage until some works are carried out e.g. under-pinning, so you may have to make sure you have sufficient cash to rectify serious problems if buying a renovation project, for example.
Legal FeesIf you are paying your own conveyancing fees, budget for between £500 and £800 depending on the asking price of the property. Some lenders will contribute to the costs of conveyancing if you use a solicitor they recommend.
Other costs to be factored in include removal costs (anything from £500 for a small van up to over £1,000 for larger loads depending on the size of van required and the distance to be traveled from where you are now to your new home and furnishings and repairs and maintenance – either putting right things in your current rented accommodation before you leave, to making your new place fit to live in and habitable to a reasonable standard.
There’s no doubt that the fees when buying a house can be costly – most people reckon the average cost is now between £5,000 and £10,000 to move home so, if you can save fees, it make sense, particularly on the more costly items such as estate agent’s fees. Ask us today for some free advice on how we can help save you money on buying your next home.