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BEFORE YOU BUY


Before you decide to buy, you must work out how much you can afford.

First time house buyers often don’t realise that there are so many extra costs when calculating their overall budget. Costs can quickly add up, so it’s best to find out what’s involved before you start house-hunting. But most importantly, can you afford the mortgage? The Family Building Society has an online calculator which you can try here.

Having found the house you want to buy and had your offer accepted, there’s an array of expenses you’ll have to pay. The following is a simple guide to the costs involved:
  • The purchase price: The amount of money that you agree to pay to the person selling the property. The seller is also known as “the vendor”.
  • Stamp Duty Land Tax: This is a tax, paid by the buyer, on land and property transactions in the UK worth over £125,000. Under a new system, introduced in December 2014, you’ll only pay the rate for the proportion of the property that’s above that price. This means you pay nothing for the first £125,000, then 2% between £125,000 and £250,000, and 5% above £250,000 and so on.
  • Solicitor’s fees: A solicitor or a specialist lawyer called a conveyancer usually does the legal work. Charges vary enormously, and may depend on the complexity of the work.
  • Legal fees: There are additional legal fees for “searches”. These are essential legal checks about such things as whether the vendor is actually entitled to sell the property or whether you have any legal obligations once the property is yours.
  • Mortgage fees: Most lenders may make charges, such as an “arrangement fee” for doing the paperwork and a “booking fee” for reserving the loan for you at a particular rate. These fees will vary from lender to lender and loan to loan, and are an important consideration to budget for as what may appear to be an attractive headline rate may not be once the fees are taken into account.
  • Valuation and survey fees: Your mortgage lender will charge a fee for valuing the property to ensure that it is worth the money it is advancing. You should also obtain a report from a surveyor about the condition of the property, to find out whether there are any defects in the building. There are different types of survey (see “Types of survey” below) depending on how much detail you or your mortgage provider wish to consider in terms of the property’s value.
  • Removal fees: Whilst you can move yourself, particuarly if you do not have many possessions, most people use a removal company to transport their furniture and belongings. The cost varies depending on how much you are moving, the distance involved and whether you pack your possessions yourself. You should get a range of quotes and check that who you use is a member of the British Association of Movers (BAR).
  • Renovations and improvements: You should make an allowance in your budget for any alterations or improvements, not just for major structural works such as an extension or new kitchen but also for smaller things such as redecoration or external repairs.
  • Other incidental expenses: These include items such as a telegraphic transfer fee of around £50 to transfer the mortgage money to the seller’s solicitor, and an “insurance fee”. Many lenders charge this for checking that you have suitable insurance on the new property if you don’t buy insurance from the lender itself.

TYPES OF SURVEY


  • Home Condition Report: This is the lowest level survey. It is suitable for conventional properties and newer homes where no major defects are likely. It shows the general condition of the property, offers guidance to legal advisers, and highlights any urgent defects.
  • HomeBuyer Report: This is based on the Home Condition Report, but includes a market valuation and a calculation of rebuilding costs for insurance purposes. It will notify you of defects that may affect the value of the property and give advice on repairs and ongoing maintenance. This type of report will be suitable for most homebuyers wanting more than the Home Condition Report.
  • Building Survey: This type of survey is the most comprehensive report you can have and is essential for larger or older properties, or if you are planning major works. It will tell you about the property’s condition and includes advice on defects, repairs and maintenance options.
There’s more information on types of survey and how to find a surveyor on the website of the Royal Institution of Chartered Surveyors (RICS).

THE DEPOSIT


Having decided to go ahead with the purchase of a property, your largest expenditure will be the initial deposit, which is a one-off payment, and the mortgage, which is paid off over several years.

The deposit is the money that you put down yourself. Some people get help from parents, and at the Family Building Society we have introduced a number of new products to help you get on the mortgage ladder. You normally need to provide at least 5% of the purchase price and possibly more. This means that, if you want to buy a home costing £200,000 you need to have saved or been given at least £10,000. You can find out more about the mortgages we offer to first time buyers with a 5% deposit here, or the savings accounts we offer to first time buyers here.       
Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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