Hidden house costs

When budgeting to buy a house, saving for a deposit is your main focus by a long shot, but don’t forget to take into account all of the other costs involved with buying a home.

These include mortgage setup fees, legal fees and taxes like Stamp Duty, not to mention brokers and removal companies. But just how much do these additional costs add to the total amount that you’ll have to pay for a house?

If you’re buying your first-ever home, you may not be aware that there are so many extra costs to consider. With that in mind, it’s even more important to make sure that you compare mortgages to make sure you get the best deal.

How much does it really cost to buy a home in the UK?

Of course, house prices differ around the UK, but so do the additional costs you might have to pay.

England is the country with the highest average house price, at £314,278, or £321,680 once additional costs are taken into account.

It’s also the country where additional costs make up the greatest share of the final price, at 2.3%.

That’s just 0.01% more than in Scotland, where additional costs of £4,491 account for 2.29% of the total amount paid.

Home buyers in Northern Ireland pay the least in terms of additional costs, at £3,471, which makes up 1.93% of the total. Those in Wales pay an additional 1.63% on top of their home purchases.

House buying Stamp Duty (or equivalent)

Each of the UK’s countries has different rules when it comes to property taxes such as Stamp Duty.

The amount of Stamp Duty you pay is based on the value of the house you’re buying, so with England having higher average house prices, buyers are hit harder.

A house worth the average price of £314,278 in England would be subject to 5% Stamp Duty, which would equate to £3,213. Except in the case of first time buyers, who are entitled to Stamp Duty relief. This means that first time buyers will only pay stamp duty if they buy a home priced at £425,000 or more. 

For homes priced between £425,001 and £625,000 first time buyers in England will only pay Stamp Duty on the element of the purchase price that is over £425,000, however, if you purchase a property at £625,001 or more, you would no longer be entitled to any first time buyer Stamp Duty relief.

In Scotland, where a house has an average price of £191,941, a purchase is subject to a 2% Land and Buildings Transaction Tax (LBTT), which would equate to £938. Scotland has a similar scheme for first time buyers, however, their LBBT tax is not chargeable on the first £175,000 of the purchase price, meaning first time buyers would only pay tax on £16,941 of that purchase price.

In both Northern Ireland and Wales, the average house price isn’t above the threshold to pay any Stamp Duty or Land Transaction Tax.

House buying Legal fees

Buying a home involves a lot of paperwork, which is why you will need a specialist solicitor known as a conveyancer to make sure everything runs smoothly.

Including VAT, average mortgage fees in the UK are between £850 and £1,500, with the median of that range being £1,175.

As a separate charge, your solicitor will also arrange local searches for defects within the property, at an average cost of £250 to £300.

House buying Survey costs

All house purchases will involve a mortgage valuation fee, as this is carried out on behalf of the lender so that they can ensure that you are not paying over the odds for your property and that they are making a sound investment.

There are lots of different types of house surveys that you can have done, however, each with varying costs. These are not essential in most cases, as mortgage lenders will only insist upon the valuation, however, they are highly recommended, as they can save you a lot of money down the line if it is found out before the sale that there are issues with your new home.

The most basic type is a RICS Home Survey Level 1 which covers visible defects and a condition rating, highlighting issues in need of urgent investigation.

This type of property survey will suffice for newer properties and costs between £500 and £600 for a property worth between £250,000 and £349,000. These surveys cost the same across each country in the UK.

House buying Broker fees

Not everyone seeks professional mortgage advice, and not all brokers charge a fee, as some will be paid a commission by the mortgage lender instead. For example, Money.co.uk is partnered with Mojo who offers a fee-free mortgage broker service to help simplyifinyg the house-buying process. 

Those that do charge mortgage broker fees vary from around 0.3% to 1% of the value of the property. This means that a typical broker fee would be £1,634 in England, £1,164 in Wales, £998 in Scotland and £916 in Northern Ireland based on average house prices.

House buying Removal costs

Hiring a removal company may be one of the last steps in the process of buying a house, but don’t underestimate how expensive it can be.

For a three-bedroom house move in the UK, travelling around 25 miles you’d be looking to pay around £555 to removal companies.

However, this is assuming that you’re packing your items yourself. If you need the removal company to pack your belongings and furniture too, the cost of labour and around 30 boxes averages around £250.

They may also offer to dismantle larger items of furniture and reassemble them at your new house, which costs around £125 for three double beds.

How much does it really cost to buy a home in the USA?

In the US, there’s even greater variation. Each state has its own property taxes and house prices also vary by state.

The state with the highest estimated additional costs overall is Hawaii, at $26,403, although it should be noted that houses there are more expensive, at $1,055,488 on average. This means that extra costs in Hawaii only account for 3.17% of the total amount paid, less than any other state.

On the other hand, Illinois residents pay the most, with additional costs of $13,484 making up 5.47% of their total price tag.

House buying State property tax

Like the UK, the cost of property tax you’ll pay in the US depends on the value of your house. However, it also depends on the rate charged by the individual state you’re buying in. It’s important to remember that individual counties, municipalities and townships may also charge property taxes too.

New Jersey has the highest average property tax rate at 2.49%, whilst in Hawaii, the average rate is just 0.28%.

House buying Legal fees

Attorney fees in the US vary depending on location, as well as the complexity of the transaction.

Lawyers will usually charge a percentage of the value of the house you’re buying and this usually falls between 0.5% and 1%. For the average property in the USA, this would come to $3,698.

Others charge a fixed or hourly rate, and the selling party will have to cover their own legal costs on top of this.

House buying Title search & insurance

In the USA the title search is carried out separately, whereas, in the UK, this is done as part of the legal conveyancing process. Title insurance is only paid in the USA, however, and can only be obtained at the end of the buying process after the transaction is completed.

As with many of these costs, the exact amount you’ll pay will depend on your location and whether there are any complications with the purchase. However, as a general rule, you’ll pay between 0.5% and 1%.

House buying Survey cost

The necessary surveys to buy a new house can be expensive, with the average cost in the US at $525. However, this can range from anywhere between $375 and $745.

The most significant factor that will determine the specific cost is the size of the property that you’re buying.

However, other factors to take into consideration include the type of terrain the house is on, as well as the type of survey that you need.

House buying Broker fees

Like in the UK, a broker's arrangement fee in the USA can vary quite a bit and in some cases, they may be covered by the lender.

The fee will usually range from 0.5% to 2.7%, with the median falling at 1.63%. It’s also worth noting that brokers’ fees are capped by federal law at 3% and they can’t be linked to the interest rate.

House buying Removal costs

Given the size of the country and that some people move great distances across the US, house removal costs can understandably be a lot higher than in the UK.

Discounting those that move between different states, the average removal costs in the US for a local move are $1,250.

If you were to move further than this, then costs can be much higher, reaching $4,890 for a move of over 1,000 miles. Hourly rates for removal companies average between $25 and $30.