Essential Costs for First-Time Buyers

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Are you considering purchasing your first home? As an aspiring homeowner, it’s crucial to be aware of the various costs associated with the home-buying process. Today, we’ll break down the essential expenses you should anticipate to ensure you’re financially prepared for this significant milestone.

1. Legal Fees

One of the primary costs you’ll encounter when buying your first home is legal fees. These fees cover the services of a legal advisor who handles the necessary paperwork and ensures a smooth transaction. While costs may vary among firms, you can typically expect to pay around £1.5k to £2.5k for legal fees.

2. Stamp Duty Tax

Stamp duty tax is another expense to consider, and it varies based on the property’s purchase price. Fortunately, first-time buyers currently enjoy a zero-stamp duty rate for purchases up to £425k. However, it’s essential to note that the stamp duty rate increases to 5% for properties valued between £425k and £625k, with further increments thereafter.

3. Mortgage-Related Costs

When obtaining a mortgage, you may encounter several associated costs. It’s not unusual for lenders to charge a product fee, typically around £999, though this varies depending on the mortgage product. Additionally, you may incur a mortgage advice fee, which can range from zero to 1% of the borrowed amount. It’s crucial to clarify these fees with your advisor upfront to avoid any surprises.

4. Surveys

While some mainstream lenders offer free basic mortgage valuation, they are only for the benefit of the lender and are required for mortgage purposes only. It’s worth noting that some lenders charge a fee for the mortgage valuation. It is advisable to arrange an independent survey to assess the property’s condition thoroughly. These comprehensive surveys typically cost between £500 to £1000 but provide valuable insights into any underlying issues or structural concerns.

Conclusion

As a first-time home buyer, understanding the associated costs is essential for effective financial planning. From legal fees to stamp duty tax and mortgage-related expenses, being prepared can help you navigate the home-buying journey with confidence. By considering these essential costs, you’ll be better equipped to budget accordingly before you embark on the exciting path to homeownership.

 

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £499.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Thomas Honour

Thomas Honour

Business Owner & Principal Mortgage Advisor

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