My First Property

What Fees Are Involved In Buying A House?

Are you wondering how much it costs to buy property? There are a handful of fees to think about across the process of buying, including legal fees and the cost of physically moving home. We have put together this guide to talk you through each potential fee, along with the amount you can expect to pay.

Fee 1 - Mortgage Deposit

Who pays this? - The buyer

Who is it paid to? - Initially the solicitor, and then on to the lender

How much? - typically between 5% and 20% of the purchase price

The first thing to think about when looking to buy property is the deposit. This is the amount of money that you put towards the total cost. For example, a house costing £160K may require a deposit of £16K to secure a mortgage for the rest. Typically, you can expect to need between 5% and 20% of the total property price.

The deposit is often one of the hardest obstacles for new buyers, as it requires saving up a large amount of money. The size of your deposit will likely also dictate the average budget you have.

Fee 2 - Valuation Fee

Who pays this? - The buyer

Who is it paid to? - The lender

How much? - Between £150 and £1,500, depending on the property price

Once you have begun your mortgage application, the lender will need to carry out a valuation on the property. This ensures that you are paying an appropriate price for the purchase, and determines how much the lender is willing to offer you to buy the property.

Not all valuations are charged to the buyer. For instance some lenders will waive this fee for first time buyers, or as an additional incentive to take out a mortgage with them.

Fee 3 - Homebuyer Survey

Who pays this? - The buyer

Who is it paid to? - The property surveyor

How much? - Depends on price, size and location of property

A homebuyer survey is an inspection of the property to understand the full structural condition of the property. It is conducted by a property survey, and provides the new owner with a full detailed report of the property. Depending on how detailed you want the survey to be, this can cost from £250 upwards, depending on the size of the property.

Fee 4 - Mortgage Broker Fee

Who pays this? - The buyer (Occasionally the lender)

Who is it paid to? - The mortgage broker

How much? - Between £300 and 1% of the mortgage amount

Mortgage brokers and advisors earn their money through individual payments each time they set up a buyer with a mortgage. Sometimes this is done through a set payment from the buyer or the lender, or it may be valued at a percentage of the purchase price.

Some brokers, as an incentive to first time buyers, will encourage lenders to pay them a finders fee to help them get new buyers to lend from them. In short, you will not always have to pay this fee.

Fee 5 - Legal Fees

Who pays this? - The buyer

Who is it paid to? - The solicitor

How much? - Typically between £850 and £2,000

The actual process of purchasing the property is always done through solicitors. These fees cover all legal costs, along with local searches to ensure if there are any plans or problems with the area.

These costs include dealing with the transfer of ownership, all the necessary paperwork, permission issues or hidden issues that need resolving. There can also be additional costs for leasehold properties. Basically, this fee covers all the legal nitty gritty that is best handled by the professionals.

Fee 6 - Electronic transfer fee

Who pays this? - The buyer

Who is it paid to? - The lender

How much? - Between £40 and £50

Because the amount of money being handled has to be done so in a secure way, there is a fee that needs to be paid to cover this. This is the electronic transfer fee, and covers the cost of the lender sending over the money to the solicitor.

Fee 7 - Stamp Duty Land Tax

Who pays this? - The buyer

Who is it paid to? - The Government

How much? - Calculate your stamp duty here

Stamp Duty Land Tax, otherwise known as stamp duty, is a lump sum fee that you may have to pay to the Government. Many purchases are exempt from this, such as first time buyers, or purchases under £125,000. Stamp duty rises and falls with the cost of the property, and only applies to the amount that falls above certain bands.

From Summer 2020 to March 2021, Stamp Duty Land Tax is waived on property purchases costing up the £500,000.

For more information, see our full Stamp Duty Guide.

Fee 8 - Estate Agent Commission

Who pays this? - The seller

Who is it paid to? - The estate agent

How much? - Typically 1% to 3% of the sale price plus VAT

This is not a fee that buyers have to worry about, but comes from the seller instead. When you sell your house through an estate agent, you typically have to pay to them 1% to 3% of the sale price. This is usually agreed before the property goes onto the market.

Fee 9 - Moving Fees

Who pays this? - The buyer

Who is it paid to? - The moving company

How much? - Dependant on amount of furniture and distance travelled

Once the sale has been completed, now you have to think about physically moving to your new home. Depending on the amount of furniture and belongings you have to move, removal costs can go up or down. Of course, this can always be done by yourself if you would prefer not to shell out any more.

We hope this has given you a good idea of how to plan your budget when purchasing property. Ideally, you should aim to save the vast majority of these costs before you initiate the process. This will help the sale go smoothly and avoid money related issues cropping up.

More first-time house buying articles:

  1. How To Save Money for a Mortgage Deposit
  2. How to Get on the Housing Register
  3. What is Building & Contents Insurance?
  4. Why You Should Visit a House at Different Times of Day
  5. What to Look For When Viewing a House

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