Costs involved in buying a house

The main costs of buying a house in the UK

Before you start your property search and apply for a mortgage, it’s important to factor in all the fees involved in buying a home. These fees can add up and will vary depending on the property's value, your mortgage deal, and your personal circumstances.

The expenses are typically split into two main categories:

• Upfront costs: One-off payments you make during the buying process.

• Ongoing costs: Regular expenses you'll need to budget for once you own the home.

Upfront costs when buying a home

Deposit

This is the lump sum of cash you put towards the cost of the property.

To be eligible for a mortgage, lenders normally need at least 5% of the property's purchase price. For example, if you're looking to buy a home valued at £200,000, you'd need a upfront deposit of at least £10,000. But the bigger the deposit, the better the rates, with the best rates reserved for those with a 40% deposit or more.

Stamp duty land tax (SDLT)

This is a tax you usually have to pay in England and Northern Ireland if you buy a home. In Scotland, stamp duty is called Land and Building Transaction Tax (LBTT) and in Wales it's called the Land Transaction Tax (LTT).

If you're a first-time buyer, you don't have to pay stamp duty in England and Northern Ireland on properties costing up to £300,000. If you're buying a second home in England or Northern Ireland, there is a surcharge of 5% of the property price.

The amount of stamp duty you need to pay for in Scotland and Wales varies, as different UK nations have different rates. Find out more using our stamp duty calculator.

Conveyancing fees

You'll need to pay for a conveyancer to sort out the legal side of buying a property. These fees cover their professional services and the administrative costs, known as 'disbursements'.

According to Property Solvers' the average conveyancing fees in 2023 for a freehold property was around £1,184.21, but the final costs depends on the property's value and whether it is freehold or leasehold.

Valuation fees

When buying a new home, your mortgage lender will want to conduct a house valuation to confirm the property is worth the amount you are planning to pay for it. This is a check for their security, not a detailed survey for you.

Some lenders include this fee as part of their mortgage deal, but if not, you can expect to pay upwards of £300.

Arrangement fee

Also known as a 'product' or 'completion' fee, this is an administrative charge from some lenders for setting up your mortgage.

The cost varies depending on the type of mortgage, loan amount and rate of interest you'll pay, but you can expect to pay on around £1,000 on average.

An arrangement fee can be paid upfront, or added onto your mortgage. Choosing to add the arrangement fee to your mortgage can be useful if you don't have much cash left during the home buying process. But remember that you'll then have to pay interest on top of it.

Ongoing costs of homeownership

Once you have the keys, you'll be responsible for the regular running costs of your new home. It's important to keep on top of these ongoing expenses.

Monthly mortgage repayments

This will likely be your largest monthly outgoing. The amount you pay is determined by:

• The total amount you borrowed

• The size of your deposit

• The mortgage interest rate

• The length of the mortgage term (e.g., 25 years)

If you choose a variable rate mortgage, be aware that your monthly payments could rise if UK interest rates go up.

Council tax

The cost of your council tax, which pays for local services, varies depending on:

• The valuation band for your property

• The rate set by your local council for your band

• Whether you're eligible for a discount (such as single-person occupancy)

You can check online to see how much council tax you have to pay.

Service charges and ground rend

If you live in a flat, you might face maintenance and services charges which are usually paid to the building's freeholder or management company. These can run into thousands of pounds a year.

Home maintenance and repairs

From fixing a leaky tap to replacing an old boiler, general home upkeep costs money. Your home buyer's survey should have highlighted any immediate repairs needed, helping you to budget for them from the start.

Running costs

The day-to-day costs of living in your home include your utilities, as well as your phone, TV subscriptions and broadband. You can compare internet providers with our broadband postcode checker.

Don't forget to also consider buying home insurance to protect your building and contents should the worst happen.

What affects how large these costs will be?

To summarise, the total cost of buying and owning a home is primarily affected by:

• The value of the home you're looking to buy. Higher-value homes often have higher bills, such as a larger amount of stamp duty due.

• The location. Property prices and council tax rates vary significantly across the UK.

• The property type. Whether the property is freehold or leasehold will impact things like legal fees and ongoing service charges.

• Your interest rates. For your monthly mortgage repayments, interest rates affect how much you'll pay. A period of high-interest rates increases the cost of mortgage payments if you're on a variable rate mortgage.