Cost of a new home

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Buying a new home can be quite exciting, but it's likely to be the most expensive thing you'll ever purchase, and the costs can soon mount up.

Here are some of the things you'll need to consider, and budget for:

A deposit: this will usually need to be at least five per cent of the value of the home you'd like to buy. You may need a higher deposit to be eligible for some financial products.

Stamp duty: this is a tax levied by the government on property purchases. Stamp duty applies to homes costing more than £125,000 and is tiered depending on the value of the property. For a home costing £125,001, the stamp duty charge is £3,500.*

Valuation fees: before you can buy your home, it'll need a valuation survey first to make sure it's worth the amount you want to borrow. This is for loan security purposes. The average cost of a valuation fee is £250.

Solicitors fees: you'll need to pay an expert to cover the cost of all the legal paperwork associated with buying a home. We suggest you allow £1,000 for this.

Mortgage arrangement fees: the financial institution which agrees to loan you the money to buy a home will usually charge to set up the mortgage. This could be an upfront charge, but in many cases, the fee is added to the overall mortgage. The average arrangement fee in the UK is £2,500.

Other fees: you'll need to be prepared for a number of other small fees that might pop up along the way. For example, notice of mortgage fees, mortgage approval fees or a mortgage reservation fee. We suggest putting aside £250 for this.

Being a homeowner is great fun and having your own space is very liberating.

However, a new home comes with new responsibilities. From the moment you turn the keys in the door for the first time, you'll have to keep up with a number of monthly payments.

Those charges (based on UK averages) will include:

  • mortgage repayments: £660
  • buildings and contents insurance: £25
  • gas and electricity: £95
  • TV, broadband and phone: £50
  • water: £35
  • maintenance and building work: £50
  • council Tax: £120

*Until 1 April 2021, the lower limit for stamp duty has been increased to £500,000 as a result of the government's response to the coronavirus.