How much does it really cost to buy a house?

Ad. When I was younger, I always thought you needed about £10000 to be able to buy a house. Back then you could get a flat or small house for around £100k where I lived in Leeds. This was around 2010 and things have changed a lot since then.

I aimed for that 10% figure and I was naive to the real costs of getting a mortgage.

Now I live in York, it’s 13 years later and house prices are much more expensive. We’re talking £300k for a small terraced house with a tiny garden. It’s insane. But house prices and the deposit you need aren’t my focus for this blog post.

It’s all the other costs of buying a house.

Let’s see how much it really costs.

The deposit

On average, this is 10% of the cost of the house. The average price of a house in the UK is £296k according to The Office of National Statistics (as of October 2022). Let’s round that up to £300k to make the maths easier.

So you need £30k for the deposit. You can get mortages with a 5% deposit, so 15% but they are often trickier to get and the interest rate can be higher. The more deposit you can get, the better the interest rate.

Stamp Duty Land Tax

Stamp duty makes me want to cry. Stamp duty is a lump sum tax you have to pay when you buy a property. You have to pay even more if it’s a second property.

Stamp duty only applies to properties over £250,000 and the amount you pay depends on:

• when you bought the property
• how much you paid for it
• whether you’re eligible for relief or an exemption

For first-time buyers, you are exempt from stamp duty on the first £425,000 of a property.

When we bought our current house, our stamp duty was £7500.

Check the government’s website for updated stamp duty relief information.

Mortgage adviser

You need a mortgage adviser and broker to advise you on your affordability, find you the best mortgage offers and increase your chances of your mortgage being accepted. But they can come with costs. Some do not charge any fee and take a commission from the lender. But they are worth paying as they can save you money on mortgage deals.

Mortgage booking fee

This can cost up to £2000 but varies from lender to lender. This can be added to your mortgage, but then you have to pay interest on it.

Mortgage account fee

This is the cost of setting up and closing your mortgage with can be around £100-£300

Mortgage transfer fee

This is the cost of transferring the money to the seller’s solicitor and can cost around £50

Valuation fee

When you buy a house, it needs a valuation to check that it is worth the amount you are paying for it before the mortgage can go ahead. This can cost between £150 – £1500 depending on the price of the property.

Higher lending charge

Some banks charge this when the loan is much higher than the deposit. The money is either to protect them from any losses if you can’t pay your mortgage or for them to buy a Mortgage Indemnity Guarantee.

Conveyancing and solicitor fees

Conveyancing fees cover the amount you must pay to make sure the legal transfer of a house sale is handled correctly. You will have to pay a conveyancer or solicitor for this.

This can cost around £800-£2000.

Insurance

You have to take out house insurance before banks will lend you money to cover the cost of your home in the event of an accident, fire or any other way it might get destroyed.

Contents insurance is also a good idea to keep yourself protected. Insurance can cost around £100- £250 a year.

Now we’ve got the legal stuff out of the way, what other costs are associated with buying a house?

Moving costs

This can vary depending on how much stuff you already have and if you do it yourself. You can pay someone to move all your things, dismantle and re-assemble furniture and do all the heavy lifting for you. This is the easier option but also the most expensive.

You can hire a van and do it yourself, or of you’re really lucky, you may have a friend with a van who is willing to help.

New furniture

You may need new furniture if you move into a bigger house or you’ve been renting a furnished property or living with family. We had to buy a dining table when we moved, as we didn’t have the space for one in the old house. We also bought some sideboards and a new sofa, but these weren’t essential.

Decorating and home improvements.

It’s natural to want to put your own mark on your house, so decorating, adding home furnishing and upgrading bathrooms and kitchens all come with a cost.

So after writing this blog post, I can now see how naive I was for thinking I could buy a house with just £10000!

Did you know about all the costs associated with getting a mortgage?