The cost of buying a property

Buying a property can be an exciting time. But unless you take the time to list all the likely costs involved, you could run into some financial difficulty along the way. This post seeks to help you avoid miserable penury, giving you clear guidance on all the obvious and hidden costs involved when buying a property.

How to calculate your budget when buying a property

Before you search for your next home, you need to calculate your overall budget. Here’s a simple calculation to point you in the right direction.

1. Establish how much cash you have for the purchase

This is the net proceeds from any property you are selling, plus your savings combined with the amount your mortgage provider is willing to lend.

2. Subtract the agreed purchase price on your new property

By subtracting the agreed cost of your new property from your total net profits, you’ll arrive at a ‘cash remaining’ figure which ideally covers the costs for other expenses in the buying process.

3. Estimate urgent repair costs

Make a list of any urgent repairs and get estimates to complete the work. Once you have a figure, deduct the total costs from your post-purchase balance.

4. Calculate all other costs

As well as repair costs, you’ll also need to incorporate the following expenses:

  • Stamp duty which for first time buyers is 0% on the first £425k, and 5% on the portion from £425k to £625k (different rules may apply to new leasehold properties). For all others, 0% on the first £250k, 5% on the next £675k, 10% on the next £575k and 12% on anything above (figures accurate for June 2024).
  • Legal fees – which cover various searches for potential problems and to register the sale.
  • Mortgage arrangement and survey fees levied by your lender (these are sometimes added to the loan rather than paid up front).
  • Property survey which might be a HomeBuyer Survey (Level 2) or a Full Building Survey (Level 3) depending on the property condition.
  • Removal costs which will vary depending on the amount of contents and distance travelled between properties. 
  • Essential purchases of appliances and furnishings (fridge, washing machine, curtains, carpet etc) to make your new home liveable.

Provided you still have budget left over after these costs, you’re in a stronger financial position to commit to a purchase. But before you do, there’s one more aspect to consider…

Monthly costs for your new property

You will presumably have a good idea of what you spend in an average month, and how much spare cash you have. But is it enough to cover the upkeep of your new property. Here are some additional costs to consider:

  • If moving into a larger home, have you properly accounted for an increase in monthly mortgage payments, higher council tax and utility bills?
  • If moving into an apartment, what about monthly service costs for maintenance, gardening and repairs?
  • If on a variable rate mortgage, how would you cope if the interest rate went up?

In short, it’s always best to have a cash reserve. If the upfront costs of buying your new property exhausts your entire budget, you might want to consider viewing other properties within your price range. The choice is yours.

If you have any questions about buying a property, or would like to book a survey, get in touch by calling 01273 031646. We’d be glad to help.