The real cost of buying your house


Many people are shocked by the fees involved in buying a home. You will not just pay for the bricks and mortar of your new house. You also get stung for a string of additional costs which can add up to thousands of pounds. Legal, valuation and arrangement fees alone can tally £1,000. Here This is Money runs through the extras you face when buying a £100,000 home.

Land registry: £80 - this will register your home with the government's land registry office.

Legal fees: £350 plus - this will cover your searches and any other costs associated with hiring a solicitor to draw up contracts and arrange exchanges.

Valuations and surveys: a typical lenders valuation will cost you £250. But this is the cheapest method of checking the property. Most people rely on their mortgage lender's valuation. But you would be wrong to think this is a proper survey. It does not guarantee structural soundness.

Banks and building societies commission these surveys to make sure the property provides adequate security for a loan.

The survey does not tell you everything you need to know. Some lenders obtain a valuation that does not include a survey at all.

The most popular type of survey is known as a homebuyer's report. This should pinpoint all significant problems, giving vital information about a home, and costs between £230 and £300.

You should get this type of survey done if the home is in reasonable condition. The surveyor will also tell you what other checks need to be done, for instance, on the roof.

Building surveys are more detailed than homebuyer reports and are suitable for larger or unusual buildings. They are also advisable if the building has been altered or is more than 100 years old. You will get details of major and minor defects. These surveys are a bit more expensive, costing between £350 and £600.

Arrangement fees: typically these cost about £150, though some lenders do not charge one and other charge up to £499.

Stamp duty: you have to pay 1% of the property's value if it is sold for more than £60,000; 3% for homes above £250,000; and 4% for those above £500,000. Worse still, however, the tax does not apply to the balance above the threshold, but to the entire purchase price. So if a house sells for £70,000, the stamp duty is £700, that's 1% of the price, not £100, which is 1% of the amount over £60,000.

Penalties: beware penalties you could face for repaying your existing loan early - called redemption penalties when you remortgage.

The real cost of buying your house

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