What buying your first home actually costs
Before you start scrolling property portals, it is worth understanding exactly what buying a home involves financially. It is not just the price on the listing. There are costs before you view a single property, and costs that only appear once you have had an offer accepted.
Your deposit
This is usually the biggest lump sum you will need to find. Most lenders ask for at least 5% of the purchase price, though a larger deposit, 10% or more, will usually get you access to better mortgage rates. If you are still saving, it is worth speaking to a mortgage adviser early so you understand roughly what you are aiming for.
What you can borrow
Lenders generally base what they will lend on a multiple of your income, often around four to four and a half times your salary, though this varies between lenders and depends on your outgoings, credit history and any existing debt. Getting a mortgage agreement in principle before you start viewing gives you a realistic figure to search with, and it shows sellers you are a serious buyer.
Stamp Duty Land Tax
As a first-time buyer in England, you currently pay no Stamp Duty on the first £300,000 of a property's purchase price, and 5% on the portion between £300,001 and £500,000. If the property costs more than £500,000, first-time buyer relief no longer applies and standard rates are charged instead. These thresholds can change, so it is always worth checking the current rates with your solicitor before you make an offer.
Solicitor and conveyancing fees
You will need a solicitor or licensed conveyancer to handle the legal side of the purchase. Fees vary, so it is worth getting a few quotes and checking exactly what is included: searches, land registry fees and any other disbursements can add to the headline figure.
Survey costs
A mortgage valuation, which your lender arranges, only confirms the property is worth what you are paying for it. It is not a survey of the property's condition. Most buyers choose to pay separately for a more thorough survey, and the cost depends on the level of detail you choose, more on this in part four of this series.
Other costs to budget for
Mortgage arrangement fees, buildings insurance from the point of exchange, removal costs and a bit of contingency for anything the survey turns up are all worth factoring in early, rather than discovering them halfway through the process.
None of this is meant to put you off. It is simply easier to enjoy the search once you know your numbers properly. If you would like to talk through what you can realistically afford, your local Campbells associate is happy to have that conversation honestly, with no pressure either way.
