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Finance - Costs of buying
When you buy, your biggest expense is the financial commitment of repaying your mortgage. However, there are other costs that you will need to consider when deciding what you can afford. Here is an overview of the costs involved.
Equity
This is the difference between the purchase price and the amount of the mortgage you are taking out. If you are also selling, your equity will probably be included in the value of your existing home. First time buyers will usually need a minimum of 8% of the purchase price.
Mortgage
Most people have to borrow to buy their home, and unless you are seriously wealthy you will need a mortgage. See mortgages for more information.
Stamp duty
This is calculated as a percentage of the purchase price, and depends on the type of purchaser and the price range. See stamp duty for full details.
Legal fee
The solicitor will normally charge 1% of the purchase price, plus 21% VAT, for the legal work. See legal to find out what is involved.
Survey fee
You and your mortgage lender will require a valuation report. You may wish to have a more detailed report prepared, particularly if you are buying an older property. See survey for more information.
Building insurance
You and your lender will want to protect your home against any damage.
Removal costs
The cost of transporting your belongings from where you currently live to your new home will depend on the distance and the quantity.
Life assurance
Your lender will insist on life cover to ensure the mortgage would be repaid if you died.
The following additional costs should also be considered.
- Furniture and equipment - Identify the essentials you need.
- Contents insurance - Insures the contents of your home against loss or damage.
- Mortgage payment protection plan - Your mortgage repayments will be covered for an agreed period if you lose your job, or are unable to work due to illness.
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