The hidden costs of buying a home

Mar 1

We all know what it’s like. You’ve had a new baby, or you’re now working from home full time, and you just know you need more space - and soon! But how do you decide whether to improve and extend the house you’re in, or move to a new one altogether.

Home renovation projects can be costly, with fees for architectural design, planning permission and building control on top of the build cost. But buying a new home can cost a lot more than you think with lots of hidden extras. In fact, almost 40% of recent home buyers said that their new home had cost more than they had budgeted for.

As well as the purchase price of your new home, extras such as mortgage fees, survey costs and legal fees can add more than 10% to your total bill. That home extension might be sounding like a better - and cheaper - idea after all!

Let’s take a look at some of those hidden extra fees:

STAMP DUTY

This can be the largest of the expenses you may face but until June 30th 2021 there is a stamp duty holiday which many people are taking advantage of. This rush to buy though is causing experts to warn that failure to thoroughly check your dream property before purchase could cost you serious money. This is more important than ever as the cost of property is soaring!

CONVEYANCING FEES

These fees cover the cost of the legal process involved in property purchases. The amount depends on the value of the property you are buying and the local searches you need to have done. And these searches sometimes throw up expensive issues as well, where property sellers have failed to get required permissions for projects they’ve carried out, such as planning permission for changing windows on listed buildings and loft conversions not being signed off by building control.

SURVEY COSTS

It’s always recommended that you get a professional survey done before you purchase a property. These can vary in price, ranging from around £500 to £1000 but can be more if a more in depth survey is required. Spending money on a good survey could save you money on repairs in the long run.

MORTGAGE VALUATION FEES

A mortgage lender will also want to carry out a valuation survey to ensure that the property is worth at least the amount they are preparing to lend you. Some lenders don’t charge for this, but if they do, typical fees are around £200 to £300.

MORTGAGE ARRANGEMENT FEES

These can range from a few hundred pounds to 1% of the mortgage. Some ask for this to paid up front but others add it to the mortgage, which is helpful to avoid another financial outlay at the time of purchase.

ESTATE AGENT FEES

These are paid by the seller and are negotiated when putting the property on the market. They’re usually around 1% to 3% of the sale price plus 20%. So, remember to take this into account if you’re planning on selling your home.

LIFE INSURANCE

Many people take this out alongside their mortgage to help their dependants pay off the debt if they pass away before the mortgage is paid off and protect their loved ones so they have one less financial burden. The amount that you pay for this type of life insurance may depend on your age, your health, the amount of money owed and the level of cover you’d like. As with all insurance types, make sure you shop around for the best deal.

REMOVAL COSTS

This can be cheap if you have helpful friends and not a lot of furniture - although you might owe several people a few drinks! But if you have lots to move then professional removal costs can range from a few hundred to many thousands of pounds! Final costs are dependent on the size of the property and how far you are moving.

As you can see, buying a new home might not be the best option with all those extra costs, but everyone’s circumstances are different and it might be the right - or perhaps only - option for some.

But if you’re thinking of staying put and adding some much needed extra space to your current property - and you’re based in the East Midlands - then contact our Nottingham team to book a free, no obligation design consultation. We’re always happy to chat through different ideas and we always advise the best ways to maximise space, add value and get the most out of your home.

Give us a call on 0115 874 8570 - or hit the button below.

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If you’re not quite ready to get started, or you’re based elsewhere in the UK, please feel free to check out the rest of our Advice Centre - and connect with us on Instagram and Facebook for tips and inspiration.