The Costs Involved in Moving to a First Home

The recession is squeezing first-time buyers tighter than ever before. Lenders are requesting substantial deposits from first-time buyers, meaning less people are thinking about home ownership.

Financial Help

Recent research by the UK Finance shows 35% of people buying their first property would not be able to do so if they did not receive some form of financial help, from either a relative or friend. Out of those that are already homeowners, 23% received help from their parents, however as the recession starts to bite this figure is set to increase.

One of the biggest costs for a first-time buyer is the deposit for the property. It used to be that lenders did not request a deposit but nowadays if you do not have a deposit it is unlikely they will lend to you.

Figures from the UK Finance shows the average deposit a first-time buyer needs has reached its highest level for 35 years, with the number of mortgages being taken out also at a record low.

The average deposit a first-time buyer is now expected to pay is around 18%. If you are thinking about buying a property for £120,000, an 18% deposit can mean you having to save around £20,000.

First-Time Buyer Cost Calculator

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Legal Costs

After a deposit, the next big cost involved in moving will be your solicitor fees. Once you have found your property and mortgage you will then have to go through the mortgage process and your bill will soon add up.

The first cost you are likely to stumble on is your advisor fee; this is how much you get charged for receiving the mortgage advice. A lot of adviseors do not charge anything but if you do find one that charges you could pay into the thousands for advice, depending on how much your property is worth.

You could also be charged an arrangement fee by your chosen mortgage lender. This is the fee they charge for setting up the mortgage. The fee can range between a couple of hundred pounds to 1% of your overall mortgage. Some lenders will ask you to pay the fee when you take out the mortgage while others will charge it to the overall cost of your mortgage.

You will also be charged your legal costs which will include a fee for a valuer and a land registry search to be carried out on the property, these costs will normally be between £200 and £1,000.

Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.

Stamp Duty

Another big cost that impacts on a lot of first-time buyers is the Stamp Duty tax. First-time buyers pay no stamp duty on homes up to £300,000 and 5% on the portion between £300,001 and £500,000. For standard buyers, stamp duty starts at properties over £125,000.

For properties between £175,000 and £250,000 you will have to pay 1% of the property’s value in Stamp Duty. It is then 3% between £250,000 and £500,000 and 4% for over £500,000.

Moving Costs

Once you have got your mortgage costs sorted you will then need to think about costs associated with the house such as furniture, council tax and electricity bills.

These costs will differ depending where you live and your personal circumstances. One of your biggest costs as a first-time buyer will be furnishing your new home. It is best to do this in stages if you are a bit stuck for cash, you should get the essentials first, such as a bed and kitchen appliances.

Moving into your first home is never going to be a cheap affair, you are starting from scratch and often don’t have a lot of money to play with.

Buying a home in the middle of a recession is going to be costly because you will need to supply a big deposit, but if you do have a deposit it is a buyer’s market as houses will start to plummet in price.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our First-Time Buyer Cost Calculator lets you work out the full upfront cost of buying your first home: deposit, stamp duty, solicitor, survey and mortgage fees, all in one place so there are no surprises. Try it now →