Buying your first home is an exciting milestone, but it is important to understand that the property price is only part of the overall cost. From your deposit and mortgage fees to legal costs and moving expenses, there are a number of additional costs that should be factored into your budget before you start viewing properties.
Knowing what to expect can help you plan with confidence, avoid unexpected financial pressure and ensure the buying process runs as smoothly as possible.
At AFG Law, our Residential Property team regularly helps first-time buyers through every stage of the conveyancing process. This guide explains the main costs you should budget for before buying a home.
How Much Does It Cost to Buy Your First Home?
The total cost of buying a house will vary depending on a number of factors, including:
- The property price
- The size of your deposit
- Your chosen mortgage
- The property’s location
- Whether the property is freehold or leasehold
While every purchase is different, budgeting for all associated costs, not just your deposit, can help prevent unexpected surprises later in the transaction.
How Much Deposit Does a First-Time Buyer Need?
Your deposit is usually the largest upfront payment you will make. Most mortgage lenders require a minimum deposit, although the exact amount you pay will depend on the mortgage product you choose. While some lenders offer mortgages with a 5% deposit, putting down a larger deposit may allow you to access more competitive mortgage products and lower interest rates.
It’s also worth remembering that your deposit is separate from the other costs involved in purchasing a property.
Do First-Time Buyers Pay Stamp Duty?
Depending on the purchase price of the property and the tax rules in force when you buy, you may need to pay Stamp Duty. If you’re buying property in Scotland, different rules apply and you may instead pay Land and Buildings Transaction Tax.
As tax thresholds can change, it is always sensible to check the latest position before making an offer on a property.
What Mortgage Fees Should First-Time Buyers Budget For?
Many buyers concentrate on their monthly repayments but overlook the mortgage fees that can apply when arranging a mortgage. These may include:
- An arrangement fee
- A booking fee
- Mortgage broker fees
- Product transfer fees
Some lenders allow certain fees to be added to the mortgage, while others require payment upfront.
Your mortgage adviser or mortgage lender can explain which fees apply to your chosen mortgage product.
Do You Need to Pay for a Mortgage Valuation?
Most lenders will require a valuation of the property before approving your mortgage application. A valuation fee may apply, although some lenders include this free of charge.
It is important to remember that a mortgage valuation is carried out for the lender’s benefit. It confirms that the property provides suitable security for the loan but does not provide the same level of detail as an independent survey.
Should First-Time Buyers Pay for a Survey?
Although surveys are optional, they are often a worthwhile investment. A survey can identify structural issues, damp, roof problems or other defects that may influence your decision to proceed or help you renegotiate the purchase price.
The cost of a survey varies depending on the type of survey required and the age and condition of the property.
How Much Are Conveyancing Solicitors’ Legal Fees?
One of the most important costs to budget for is your solicitor’s fee. Your conveyancing solicitor carries out all of the legal work involved in purchasing your property, including:
- Reviewing the contract.
- Carrying out searches.
- Raising enquiries.
- Liaising with your mortgage lender.
- Exchanging contracts.
- Completing the purchase.
- Registering your ownership.
When comparing legal fees, it is important to understand exactly what is included. A lower initial quote may not always represent the best value if additional charges are added later.
Choosing an experienced conveyancing solicitor can help avoid delays and identify legal issues before they become expensive problems.
What Property Searches Will You Need to Pay For?
As part of the conveyancing process, your solicitor will carry out several searches to identify any issues affecting the property.
These commonly include:
- Local authority searches.
- Environmental searches.
- Water and drainage searches.
- Mining searches where appropriate.
Search fees differ between local authorities and are an important part of the legal process.
Are There HM Land Registry Fees?
Once your purchase has completed, your solicitor must register your ownership with HM Land Registry. The registration fee depends on the purchase price of the property and the method of registration.
This is a standard cost that applies to most residential purchases.
Do You Need Buildings Insurance Before Completion?
If you are buying a property, your mortgage lender will usually require buildings insurance to be in place from the date contracts are exchanged.
It is sensible to obtain quotations early so cover can begin at the appropriate time. Contents insurance can usually be arranged separately once you’ve moved into your new home.
What Extra Costs Are There When Buying a Leasehold Property?
If you are purchasing a leasehold property, such as a flat, there may be additional ongoing costs.
These often include:
- Service charges
- Ground rent (where applicable)
- Building maintenance contributions
- Management company fees
Your solicitor will explain these costs before you exchange contracts so you fully understand your future financial commitments.
What Moving Costs Should First-Time Buyers Budget For?
The cost of moving itself is often underestimated. Depending on your circumstances, you may need to budget for:
- Removal companies.
- Storage.
- Utility connection charges.
- New furniture.
- Decorating.
- White goods and appliances.
Although these expenses may seem relatively small individually, they can quickly add up.
How Does Mortgage Interest Affect the Cost of Buying a Home?
When considering affordability, don’t just look at the monthly repayment. The interest rate on your mortgage determines how much interest you will pay interest on over the lifetime of the loan.
A lower interest rate could save you thousands of pounds over the term of your mortgage, so it’s worth discussing the available options with your mortgage adviser before making a decision.
How Can First-Time Buyers Budget More Effectively?
Preparing a realistic budget before making an offer can make the entire buying experience much less stressful.
Try to set aside funds not only for your deposit, but also for legal costs, mortgage fees, surveys, Stamp Duty (where applicable), moving expenses and any immediate repairs or improvements you may wish to carry out once you’ve moved in.
Seeking advice early from your solicitor and mortgage adviser can also help you understand the full financial commitment before you proceed.
How AFG Law Can Help First-Time Buyers
Buying your first home is one of the biggest financial commitments you are ever likely to make.
At AFG Law, our experienced Residential Property team will guide you through every stage of the transaction, explaining the legal process in straightforward language and keeping you updated from instruction through to completion.
We can assist with:
- Freehold and leasehold purchases.
- Reviewing contracts.
- Property searches.
- Liaising with your mortgage lender.
- Completing all of the legal work.
- Registering your ownership with HM Land Registry.
Whether you’re just starting your property search or you’re ready to make an offer, we’re here to help make your first home purchase as straightforward and stress-free as possible.