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10 home buying costs you hadn't bargained for

By: bythesea

Buying a property is an expensive business and saving for a deposit can be the biggest hurdle. But there are many other home buying costs to consider, some obvious and some hidden. The charges below may not be in your budget, but you might need to pay them if you want to move house.

1. Getting a full structural survey: This gives you total peace of mind that the property you are buying is sound and it could set you back £300-£600. But first check whether your lender will accept the valuation given by your surveyor, as many won't. And that could mean you are forced to pay the lender's standard valuation fee on top of your survey, which could be an extra £200-£300 - just what you don't need.

2. Be vigilant when looking at lenders' mortgage arrangement fees: They come under different guises from booking to application to completion fees. Some lenders split the cost in two, so what looks like a £500 arrangement fee is just part of what you need to pay. There may also be an upfront £100 booking fee hidden in the small print.

3. A higher lending charge is an insurance policy that benefits the lender: If you default on your mortgage you will have to fork out for this. It's paid by those borrowing a high percentage of their property's value - typically 90 per cent or more. And it can be costly at up to around 9 per cent of everything you borrow over the lender's threshold. Many lenders have scrapped this charge but some remain, so be sure to double check.

4. You may have to pay exit fees: If you are moving house and changing your mortgage you will probably have to pay your existing lender an exit fee just for changing your deal. This one-off sting will be around £250.

5. Your quote for legal fees might sound pretty reasonable, but does it include everything? As well as your solicitor's time there are set fees called disbursements that all buyers have to pay, and they are often charged on top of the quote. They can be costly, for example the Land Registry fee is £200 and the Land Transaction Form £50.

6. You need buildings insurance to protect your property: Namely this insurance is to cover fire, flooding, subsidence and other dangers. But did you know that you should have the cover in place from exchange of contracts not the day of completion?

7. If you want out of your mortgage early you could face a huge penalty: To get out of your current mortgage deal and move onto a new one, you might find you have to pay a large penalty. If you are partway through a deal, like a two-year fix or discount, your lender will probably apply Early Repayment Charges until the rate runs out. And they can be anything up to 4 per cent of your outstanding balance!

8. If you're a leaseholder you may have to pay ground rent: Leaseholders don't usually have to take out buildings cover but you may need to pay ground rent to your freeholder. This can range from a nominal sum to a substantial cost for the upkeep of shared areas, such as stairwells. Always factor in the ground rent when you are looking at leasehold properties or you could get a nasty surprise.

9. Sellers need to provide every interested buyer with a Home Information Pack: These packs detail the energy efficiency rating of your property, proof of ownership and other required searches. Some estate agents will prepare a pack for free (but it will be built into their other charges) or you can pay anything from £100 to £500 for a pack.

10. Stamp Duty is a tax you have to pay when you buy a property: This usually kicks in for properties worth more than £125,000. But the chancellor announced in last month's Budget that first-time buyers don't have to pay the tax on purchases up to £250,000 for the next two years, but home movers and second-time buyers don't benefit from the increased threshold. Stamp Duty can cost tens of thousands of pounds so, once you know your property price range, add it to your budget.
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