Costs to expect when buying a home

When it comes to buying your home, it helps to know early on of the potential costs down the line.

Having an idea of this will help to avoid any unexpected expenditure that you hadn’t quite planned for and save you from raiding that sofa fund you’d put aside! We’ve put together a roundup of the key costs to consider along your buying journey…

Deposit

This is the amount you put towards the cost of the property when you buy your home.  Typically, with shared ownership its 5% of the share value so if you’re buying 40% of a home valued at £200,000 then you’ll need a minimum £4,000 deposit to secure against this.

Mortgage fees and charges

More than half of mortgages come with arrangement fees and other charges for setting up the loan, these fees can typically range from around £100 to £1,500 and can usually be incorporated into the mortgage amount.

When looking to get a mortgage, you can either go directly to a lender or speak to a financial advisor who will be able to search for the right mortgage product for you.

Some financial advisors can also charge a fee for searching for the best product for you. We have a select few Financial Advisers that offer their services for free - you can check out the full list of our approved panel of financial advisors.

Valuation fees 

When you apply for a mortgage, the lender will carry out a property valuation to check the home is worth roughly what you're planning to pay for it. The lender will usually arrange the valuation for you, but you may be expected to cover the cost upfront - expect to budget around £250 for this if it is required.

Conveyancing fees 

You'll need to hire a property solicitor or licensed conveyancer to handle the legal aspects of buying a property. This process is called conveyancing.

Your solicitor will either charge you a flat fee or a percentage of the value of the property. You can expect to pay between £500 and £1,500 depending on the type of property, its location and how complex the transaction is.

Bear in mind, there may also be other charges to look out for with your solicitor such as money transfer fees, land registry fees, local authority searches.

Sovereign has an approved panel of solicitors in place who specialise in shared ownership and can guide you through this process, full details can be found here.

Removals costs 

Moving costs will vary depending on how much furniture and belongings you have, how far you're moving and whether you opt for extras such as professional packing. There are lots of ways to save on this part by doing it yourself but in certain areas hiring a van – ideal if you have a relatively small amount of stuff – can cost around £70 a day.  If you have a lot to move, then you may want to consider a professional removal company which based on a 3-bed house could cost around £1,200.

Stamp Duty

Stamp duty land tax, to give it its full name, is a lump-sum tax that anyone buying a property or land costing more than a set amount has to pay. The rate at which you'll pay the tax varies based on the property price.

In response to the coronavirus pandemic, the Chancellor confirmed a cut to Stamp Duty with immediate effect, increasing the Stamp Duty threshold at which buyers start to pay the levy from its current £125,000 up to £500,000. This ‘holiday’ will remain in place until March 31, 2021 resulting in fantastic savings for home buyers and an ideal time to make your move on or up the ladder!

Now you’ve done your budgeting, you just need to find your perfect home!

FAQs