How much money do I need upfront to buy a house?

How much money do I need upfront to buy a house?
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How much money do you need to buy a house? This is a really common question. After all, buying a house is a big commitment, and it’s vital that you’re financially prepared. So, to help, here’s a rundown of the main costs involved in buying a new home, and how much money you might need.    

1. Deposit

First, you’ll need to pay a deposit, which is essentially a percentage of the purchase price. Normally, you’ll need at least a 5% deposit to buy a house. For example, if you’re buying a house for £200,000, you’ll need a £10,000 deposit. 

Just remember, though, that the more you put down as a deposit, the smaller the mortgage you’ll need. So, if you can afford to put down 10% or 15%, it might make sense to do so. Get financial advice if you’re unsure.

Do you need help with a deposit? Check out government-backed options like the 95% mortgage scheme.   

2. Mortgage fees

When you apply for a mortgage, you’ll pay charges like an arrangement fee and a booking fee. If you use a broker to find a mortgage, you’ll also need to pay broker fees. 

On average, expect to pay around £3,000 in mortgage fees. Some lenders allow you to add the arrangement fee, which is the largest expense, to the cost of your loan, but this isn’t always a desirable option. 

3. Valuation costs

You’ll also need to pay for a mortgage valuation, which is how your lender confirms that your property’s worth the loan amount. Some lenders offer a free valuation, but otherwise, prices start at around £100. 

If you decide to get a home survey to check for structural problems, you’ll need to pay for this separately. A home survey will start at around £400

4. Conveyancing fees

The amount of money you need to buy a house will need to include conveyancing fees. These are the legal costs you pay to a solicitor. How much you pay depends on the complexity of the sale, but the costs can include:

  • Money transfer fees
  • Contractual costs
  • Property registration charges

As an estimate, set aside at least £800 for conveyancing fees.

5. Home insurance

Don’t forget you need to insure your new home!

The cost of home insurance varies considerably depending on your home and the policy you take out. However, the best way to get a good deal on home insurance is to use price comparison websites like MoneySuperMarket.  

6. Stamp duty land tax (SDLT)

You can’t forget stamp duty when calculating how much money you’ll need to buy a house.

Stamp duty is a tax you pay on any property you buy over a certain value. Normally, you don’t pay any stamp duty unless a property’s worth more than £125,000. So, if you buy a property worth £100,000, you wont pay SDLT.

The rate you pay depends on how much your property’s worth – you can calculate stamp duty on the gov.uk website.   

7. Removals 

Do you need to pay a removals company to help you move? Not necessarily. If you only have a few belongings, you could always ask friends and family to lend a hand. On the other hand, if you’re moving the contents of one house to another, you might need to hire a moving company.

Home removals start at around £300, but the costs vary considerably depending on how far you’re travelling and the size of the property. 

Takeaway: how much money you need to buy a house

How much money will you need to buy a house? Well, there’s no set answer to this. All of the potential costs are on a sliding scale that will depend on your particular circumstances. 

Before you start looking for a new house, though, be clear on how much you can afford to spend and stick to a strict budget. You don’t want to buy a property only to discover that you can’t afford to cover all the costs involved! If you’re worried about how to cover the costs of moving home, always get financial advice in the first instance. 

5 ‘must-see’ mortgage tips to help save money…

The mortgage application process can seem overwhelming, and down-right unaffordable at times. So where do you start if you’re looking to save money on your mortgage?

We’ve created this free report, “5 must-see tips to save money on a mortgage” to help you learn where the money-saving opportunities may be…

Just enter your email below for instant access to your free copy.

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