property articles in hendon

5 Hidden Costs to Look Out For When Buying Your First Home

Published: 17/11/2017

We're pleased to have helped many first-time buyers purchase their dream home in Hendon. One issue we've written about before on our blog, and which we often encounter, is people being tripped up by hidden costs that have stretched their budgets and caused plenty of headaches.

Below you'll find some of the most common hidden costs when buying your first home, but remember that there are still many more additional expenses that can catch you out. It’s well worth talking to friends and family who’ve recently purchased a house, since they might have useful knowledge and advice to share with you, and keeping a reserve fund for emergencies.

  1. Mortgage Arrangement Fees - Banks charge an upfront cost for their mortgages, as well as making their money through interest. The former is known as an arrangement fee, and it covers the costs of the bank’s underwriting and legal staff. You’ll usually have the choice of paying this fee upfront or waiving it in exchange for a marginally higher interest rate. It’s often cheaper in the long run to simply pay upfront, but with fees often totalling £1,000 or more you may prefer the second option. 
  2. Stamp Duty - Any buyer should really already be aware of Stamp Duty, but it’s worth pointing out the way it works. Essentially, the value of a house determines the amount of tax that’s payable on it - the first £125,000 of a home is free from duty, the next £125,000 is charged at 2%, and the next £700,000 is charged at 5%. This means that for every £1,000 over £125,000 you’re paying £20 in Stamp Duty, whilst for every £1,000 over £250,000 you’re paying £50. Costs can mount quickly for homes in these higher brackets, so be sure to factor in these expenses when budgeting or you may find out that your desired home is out of reach.
  3. Survey Fees - RICS (the Royal Institute of Chartered Surveyors) offers a variety of surveys to suit different types of property. This ranges from “snagging” checks for new homes to full in-depth evaluations on larger, older homes - check the RICS website to find out which survey you require. You will need to have your new home surveyed, often as a condition of your mortgage, and it’s well worth the money to do so as it can highlight issues you will want to raise with the seller before completion. Costs range from around £250 to £600+, depending on the extensiveness of the survey.
  4. Moving-in Costs - Unless you're lucky enough to have a big group of friends with cars, you will probably need to pay for a van when you move to your new home, but there are also a few other associated expenses. It’s generally good practise to change the locks on your new home, for instance, which can cost a few hundred pounds, so you can be sure you are the only one(s) with access. It’s also a good idea to keep some money in reserve for the first few weeks in your new house just to cover any other little bits and bobs that turn up. 
  5. Repairs and Replacements - When you view a property you’ll get an idea of whether any repairs will need to be carried out on it. These should be accounted for in the final purchase price, but you might also need to make repairs when you move in. Some things can be missed during a short viewing, or hidden by furniture. In an older home, for instance, you might find you need to call in an electrician or plumber to sort out a pressing fault - this can cost a fair bit, so again it’s worth holding a little cash back to meet these unexpected costs.
Buying a home of your own can be a great investment, and pooling all your money into a deposit is often the best way to make it as affordable as possible. However, it’s important to be aware of the associated costs of a home purchase, because these will need to be met for peace of mind and safety. By understanding and budgeting for these additional costs you’ll be able to make the experience of moving into your new home smooth and hassle-free, so it’s well worth spending some time doing your research when drawing up an accurate budget.