What to budget beyond the mortgage…
Buying a home is an exciting milestone, but it’s more than just securing a mortgage—there’s a whole range of hidden costs that many buyers overlook.
From upfront deposits and legal fees to ongoing maintenance, understanding these additional costs is essential for a smooth home-buying journey.
The first major cost to budget for is your deposit. Generally, a deposit of at least 10% of the home’s value is required, though the higher your deposit, the better your mortgage rate is likely to be. For example, if you're looking at a property worth £250,000, a 10% deposit would mean saving £25,000. Saving for a deposit may seem overwhelming, but starting with a Lifetime ISA can help you build up funds and even earn bonuses if you’re a first-time buyer.
LBTT is often an unexpected cost for buyers. This tax is calculated as a percentage of the property’s purchase price, and is paid before you get the keys to your new home, separate from your mortgage. Here’s a quick look at LBTT rates:
- Up to £145,000: 0%
- £145,001 - £250,000: 2%
- £250,001 - £325,000: 5%
- £325,001 - £750,000: 10%
To find out the exact cost for your purchase price, try out our LBTT calculator
Legal costs cover everything from solicitor fees to conveyancing—the process of legally transferring property ownership. These services are essential, as your solicitor will conduct searches, prepare contracts, and handle other legal aspects of the purchase. Legal fees can vary depending on property value and complexity, so shop around and budget for at least £1,000-£2,000.
Moving all your belongings to your new home might require a professional moving service, especially if you're relocating far or have a lot of furniture. Removal costs can vary based on distance and volume but plan for an expense of a few hundred pounds for a standard move.
Beyond the upfront expenses, there are ongoing costs that every homeowner needs to consider:
- Council Tax: The amount varies by property and location, so check rates in your area to estimate this expense.
- Home Insurance: Essential for protecting your property and belongings, home insurance will become a regular monthly or annual cost.
- Maintenance and Repairs: Homeownership involves regular maintenance, from small repairs to major updates. Setting aside funds for unexpected repairs is wise.
- Furniture and White Goods: Moving into a new home often means purchasing or replacing furniture, kitchen appliances, and other essentials.
- Re-decorating: Many new homeowners want to personalise their space, so budget for decorating expenses to make your home feel truly yours.
Understanding the full cost of buying a home, from deposits to ongoing bills, helps avoid stress and ensures you’re financially prepared. Start planning early, save consistently, and budget for each step to make your home-buying journey as smooth as possible.
