Buying costs

Buying a home is probably the most expensive purchase you will ever make. It's a long-term financial commitment and you will need a regular income. You will have to pay a number of fees and other expenses before the sale is final, and will have to make regular payments after you move in.

Before buying the property
Valuation and survey fees
Legal costs
Mortgage fees and insurance
Moving expenses
Maintenance, repairs and improvements
Household bills and rates
Regular living expenses
Leaseholder's expenses

Before buying the property

Before you decide whether to buy a property, you should consider carefully:

how much you can afford to repay each month,
your plans for the future,
how much you want to borrow.

It may be a good idea to be cautious about borrowing a high percentage of the property's value, even if a lender says you can. The more you borrow, the higher the risks involved, because:

it will be more difficult to afford your repayments if your income falls,
your monthly payments will increase if interest rates rise,
you run a greater risk of falling into negative equity if property prices fal,
you may have to pay higher interest rates.

Valuation and survey fees

Your lender will probably insist that you pay for a valuation to check that the property is suitable for a mortgage and that the price is reasonable. A valuation is not a detailed inspection. It may not detect structural problems.

Legal costs

You have to pay the legal costs when you buy a home. It's possible to reduce your legal expenses by doing the legal work yourself, but most people hire a solicitor. Solicitors fees vary, so ask how they are calculated before you hire someone. It may be a percentage of the sale price (such as ½ to 1%) or a fixed amount.

Mortgage fees and insurance

When you take out a mortgage, some lenders will charge an arrangement fee for organising your mortgage. You may also have to pay a separate fee if you get a financial adviser to arrange your mortgage. Most lenders will ask you to pay for a mortgage indemnity guarantee if you need to borrow a large percentage of the value of your home.

You may also have to take out insurance, for example:

buildings insurance
contents insurance
life insurance
mortgage protection payment insurance

Moving expenses

Even if you have friends or family to help, you may need to hire a van or a removal company to move your possessions into your new home. Hiring a van and dealing with the move yourself may cost as little as £100 but, on average, you can expect to pay at least £600 if you need to hire a removal company.

Maintenance, repairs and improvements

As a home owner, you have to pay for repairs and maintenance to keep your home in good condition. Minor repairs can be relatively cheap and you may be able to do some of the work yourself, but some problems (such as repairs to a roof or a heating system) can be very expensive. Some repairs may be covered by buildings insurance but most will not.

You may be able to get a grant from the Housing Executive to help you carry out some repairs.

Household bills and rates

You may need to set aside money for final bills at your old address and/or connection charges in your new home. Your household bills (gas, electricity, water) may be more than you are used to paying if the property you buy is larger than your previous home, or is not well insulated. Some bills are quarterly, and others are paid once a year. You can usually arrange to pay bills monthly and it may work out cheaper if you pay by direct debit.

You will also have to pay rates. You will get a bill once a year, but can arrange to pay it monthly if you prefer. If you are on benefits, you can apply for housing benefit rate rebate to pay for it.

Regular living expenses

You will also have to pay for all your regular living expenses. These can have a big impact on your finances, and may include:

food, clothing and household items,
furniture carpets and appliances,
entertainment and leisure,
travel expenses (which could go up if you move to a new area),
credit cards, loans, hire purchase payments and other financial commitments.

Leaseholders' expenses

If you buy a leasehold property, you will have to pay ground rent to the freeholder. Ground rents are usually quite low, but it's still important to pay. You may also have to pay: