Hidden costs of buying a house

There's unexpected costs lurking everywhere when buying a house. Here they all are.

"Mwhahaha," said the estate agent....probably

Only got a 10% deposit?

If you can only manage to put down the minimum 10% deposit this puts you into a ‘higher risk’ borrowing category in the eyes of the lender, so they whack on a ‘higher lending charge’ to safeguard themselves against you defaulting on any payments. This can run into thousands of pounds. However, not all lenders charge this, so shop around and ask questions.

Arrangement fee

A mortgage arrangement fee will also be charged – although a handful of variable rate mortgages, such as lifetime trackers, may be fee-free. An arrangement fee will usually be in the region of £1000 and can be added onto the mortgage.

Solicitor’s fees

You’ll need to pay a solicitor to handle the legal side of things, which includes checking title deeds, notifying Land Registry, carrying out a local search to find out more about the property, and drawing up contracts. You can agree a fixed price upfront, though be prepared for this to change if the solicitor encounters some unforeseen complexities.

Surveys

Like most things, with surveys you basically get what you pay for.

All mortgage lenders will require a valuation survey to make sure the property is worth the money. This will set you back around £150-250, but it’s basic and won’t highlight any potential hidden nasties that may lurk behind that shiny new front door.

However, if you want to know if there’s anything more sinister you’ll need to pay for either a:

Home condition survey: This checks out the overall condition of the property and highlights any potential problems you should investigate. It’s the cheapest independent survey and costs between £100 and £250.

A Homebuyer’s report: This is a more detailed survey and will check for anything that may affect the value of the property along with recommendations for repairs or maintenance, which is good for haggling if, say, the roof needs major repair work. It can be carried out at the same time as the valuation survey and costs from £300-600.

Full Structural survey (building survey): This is useful if you want to know whether the place is likely to fall down any time soon. But at prices starting around £800 it’s more of a necessity for older (and much grander) properties.

New-build snagging survey: Picking up on any mistakes, such as plumbing the hot and cold taps the wrong way round or peeling paintwork, it’s useful if you want things sorted by the developer before you move in. This will set you back around £300, so it’s better to check the hot and cold taps yourself.

Stamp duty land tax (SDLT)

This is a government tax on properties that cost over £125,000. It starts at 1% of the purchase price for homes costing between £125,000 and £250,000. If you’re going for something that’s worth £250,000 to £500,000 (we wish) you’ll get stung for 3%.

Land registry fee

The land registry fee literally pays for changing the name on the ownership of the land. Expect to pay from £40 to £270 depending on what the property’s worth.

Buildings insurance

This offers protection against fire, floods, storms and anything else that might wreck your home. It must be in place by the time you exchange contracts. It can be expensive if you buy it from your mortgage provider, so it’s best to shop around.

Contents insurance

Contents insurance offers cover for everything inside your home. It’s not compulsory, but worth it if you have a house full of gadgets. Costs vary according to area, security and what you’re ensuring.

Mortgage Payment Protection Insurance (MPPI)

MPPI covers mortgage repayments should you fall ill or lose your job — but usually only pays out for a period of 12 months and sometimes doesn’t kick in until after a ‘deferment period’. A cheaper alternative is to save up a contingency fund for unforeseen eventualities yourself.

Hidden estate agents’ fees

In places like London where the property market is overheating, you could get stung for an introductory fee from your charming estate agent. If your bid is accepted and the sale goes through, you can expect this to be around £2000 or a percentage of the price of the house. Ouch.

Photo of estate agent by Shutterstock