Your home could be the most expensive purchase you ever make. Here is how much you might spend and how to make sure you can afford a mortgage and all of the other costs.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
The cost will depend on the price of your property, the fees you have to pay and the mortgage you get.
Here is how much it could cost to buy a £200,000 property:
|Broker or advisor's fees||£500|
With a £20,000 deposit, you would need to get a £180,000 mortgage. Paying this off could cost £288,054 with a 25 year mortgage at 4%.
Including paying off the mortgage, buying the property would cost you a total of £313,389 spread over 25 years.
This amount could be higher if your interest rate rises or you need to pay for maintenance and renovations.
Once you have bought a home, you have to start paying back your mortgage each month. Over its entire term, a typical mortgage could cost:
|Total amount repaid||£288,054|
Before you take out a mortgage, make sure you can afford it. Here is how to calculate your living costs and your budget.
The amount you pay for your home affects:
The deposit you need to save
How much your mortgage costs
How much stamp duty you pay
The fees you are charged
You can find the average in the area you want to buy a home using Zoopla's house price calculator.
When you buy a home you need to pay for a percentage of the price yourself either from your savings or your equity in your current home.
Most mortgages require a deposit of 5% or more before they pay for the rest of the purchase.
For example, a 10% deposit on a £150,000 home would be £15,000. Your mortgage would cover the remaining £135,000, which is 90% of the total price.
This means the mortgage's loan to value (LTV) would be 90%. Mortgages with a lower LTV usually come with lower interest rates and fees.
Mortgages can come with several fees, which lenders have to include when they show the cost of a mortgage. They include these in the Annual Percentage Rate of Charge (APRC) to show an interest rate that also includes the fees you have to pay. These can include:
Some lenders make you pay this just to apply for one of their mortgages. It is not usually refunded if you are not offered the mortgage.
Also known as...
Some mortgage deals come with a fee of up to £2,000 you pay if you are accepted. You can either
Pay it straight away
Add it to your mortgage balance
Some lenders charge a fee of around 1.5% of the mortgage amount if you have a deposit of less than 10%. Not every lender charges this as a separate fee.
Lenders need to check how much a property is worth before they can offer you a mortgage. They usually charge a fee of £150 or more to cover the costs of a company valuing your property.
Your lender may charge you a telegraphic transfer fee when they send the money for your purchase. This usually costs between £25 and £50.
You can pay for a qualified surveyor to check a property before you buy it. They will look at the condition of the property and let you know if there are any issues that could cost you money later.
You can pay more for a detailed survey, and it usually costs more for expensive properties. A basic survey could cost £250, but an extensive buildings survey on a £2 million home could cost £2,000.
When you buy a home a solicitor will:
Draw up contracts
Pay the stamp duty
Transfer funds for the purchase
Run searches to check for planning or environmental issues
Register your property with the Land Registry
They may charge a set fee, an hourly rate or a percentage of the purchase price, but it will usually cost between £500 and £1,500.
You can get advice from a broker or independent financial adviser (IFA) when you take out a mortgage. This could help you find a suitable deal and even save money if they get you a better mortgage than you could find yourself.
The average cost of a mortgage broker is £500 if you choose the deal they recommend. Some brokers are free because they are paid commission instead, but sometimes these brokers only offer mortgages from a limited range of lenders.
You have to pay stamp duty land tax (SDLT) when you buy property in England, Wales or Northern Ireland. In Scotland you pay Land and Buildings Transaction Tax instead.
You can work out the stamp duty you need to pay using GOV.UK's stamp duty calculator.
It can be cheaper to move your belongings to your new home yourself, especially if you have a large enough vehicle to move your largest items. However, you may need to pay to:
Hire a removals company
Hire a van
Take the day off work
Moving home usually costs between £300 and £600, but you could pay much more if you use a removals company and have lots of large possessions or move a long way.
Once you have bought a property you will need to pay for:
Council tax, which is based on where you live and how much your property is worth. Here is how to make sure you are paying the right amount of council tax.
Maintenance of your property like repairs, decorating, DIY and improving your home.
Insurance for your buildings, which lenders will make sure you take out as a condition of your mortgage. You may also need contents insurance to cover your possessions or mortgage protection insurance in case you lose your job.
Utility bills like gas, electricity, water, television, phone and broadband.
On a repayment mortgage you will pay off the full balance by the end of the term plus the interest on the loan.
Interest is charged as a percentage rate on your outstanding balance, so the higher the rate, the more you will pay.
You can work out how much your mortgage repayments will be by entering the property price into the calculator above our mortgage comparisons. It will then show you how much it will cost each month and overall so you can easily compare how much each deal costs.
You could also have to pay the following fees on your mortgage after you have taken it out:
Early repayment fees come with some mortgages if you make an overpayment, pay them off before an initial interest period ends or switch to another deal.
Exit fees of £75 or more are charged on some mortgages when you pay them off, even if you repay them at the end of the term.
Missed repayment fees are charged if you fail to pay your mortgage on time.
If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.