Mortgage blog: Three costs to look out for when you buy your new home


Tuesday 12th June 2012

Remember to budget for all costs when you move to a new home

When buying a new home, what would you expect the costs to be? Well, the answer is often: "higher than you think". A 2010 report found that a quarter of first-time buyers had no idea what fees they would incur when buying a property. And, one in ten thought the costs would total no more than £1,000 which can be the cost of legal fees alone.

So, if you're thinking of buying a new home, it's vital that you budget for all the extras and fees. Our guide explains three of the main fees to consider.

Stamp duty

The most common large bill that you'll face when you buy a new home is stamp duty. Stamp duty is charged on the purchase of all homes values at over £125,000 and the more expensive the property, the higher rate of tax you'll pay. The current stamp duty rates are:

  • Purchase price £0 to £125,000 - 0%
  • Purchase price £125,001 to £250,000 - 1%
  • Purchase price £250,001 to £500,000 - 3%
  • Purchase price £500,001 to £1 million - 4%
  • Purchase price over £1 million to £2 million - 5%
  • Purchase price over £2 million - 7%

The stamp duty is based on the full purchase price of the property. So, if you buy for £275,000, you'll pay 3% of the purchase price (£8,250).

Mortgage arrangement fee

If you're taking out a mortgage to buy your new home then you are likely to pay a mortgage arrangement fee. Most mortgage products - fixed, tracker and discounted rates - come with fees. These can vary from £299 to over 1% of the mortgage amount. Typically, mortgage product fees are between £500 and £1,000 and most lenders allow you to add them to your mortgage.

When taking out a new mortgage it is important that you take into account both the interest rate on offer and any associated fees. For example, it may be better for you to pay a higher interest rate and a lower fee. Taking advice from a mortgage broker in this situation can be useful as they can work out what deal is best for you.

Property valuation

When you buy a new property you will need to pay for a valuation. This serves two purposes. Firstly, the valuation will establish that the property is worth what you are paying for it - essential for both you and your lender. Secondly, a valuation will establish whether there are any structural defects with the property such as damp, dry rot or subsidence.

The cost of a valuation typically depends on the purchase price of the property and the type of survey that you want. A basic valuation can cost as little as £100 but a more thorough ‘homebuyers report' may set you back several hundred pounds. You can also obtain a full structural survey on your new home, although this is likely to be more expensive again.

Click here to find out more about how can help you find the right mortgage.

New Homes by Banner Homes

Part-Exchange Available
Aubin Wood
Aubin Wood, Oak Tree Drive, Emsworth, Hampshire, PO10 7UJ
NOW AVAILABLE from £150,000
Aubin Wood is a wonderful collection of 48 fabulous new homes nestled on the fringes of beautiful Emsworth. Aubin Wood includes a high quality, well...
Bentley Priory
Bentley Priory, The Common, Stanmore, Middlesex, HA7 3HH
NOW AVAILABLE from £5,250,000
Welcome to Bentley Priory, an exceptional collection of seven individually designed detached family homes in an exclusive gated development located...
Borne Valley
Borne Valley, Ravenhurst Road, Harborne, West Midlands, B17 9JJ
NOW AVAILABLE from £539,950
Banner's stylish collection of fifteen four and five bedroom terraced and semi-detached family homes spread over two storeys with an integral/...
Burntwood Drive
Burntwood Drive, Oxted, Surrey, RH8 9HD
NOW AVAILABLE from £1,900,000
Welcome to Burntwood Drive. This sensational development hosts three outstanding, luxury, five/six bedroom detached family homes in the much sought...
Greenways, Clifton Road, Chesham Bois, Buckinghamshire, HP6 5PE
NOW AVAILABLE from £1,695,000
Located in the beautiful village of Chesham Bois, Buckinghamshire. Plot 3 is a stunning five bedroom family home offering three floors of fabulous...
Hartsbourne Court
Hartsbourne Court, Hartsbourne Road, Bushey Heath, Hertfordshire, WD23 1JF
NOW AVAILABLE from £895,000
Introducing Hartsbourne Court. Discover the ultimate balance of relaxed country style and urban convenience at our stunning new development of twelve...
Part-Exchange Available
Imperial Grove
Imperial Grove, Camlet Way, Hadley Wood, Greater London, EN4 0NX
NOW AVAILABLE from £1,525,000
Come and visit our stunning show home at The Penthouse, our final home available at Imperial Grove. As well as two terraces with panoramic views, it...
Part-Exchange Available
Jayswood, Nyetimber Lane, West Chiltington, West Sussex, RH20 2ND
NOW AVAILABLE from £695,000
A delightful collection of homes comprising of four semi-detached three bedroom homes and three detached four bedroom homes. Just one wonderful home...
Petersgate, Warren Road, Kingston, Greater London, KT2 7HY
NOW AVAILABLE from £2,950,000
Four detached five/six bedroom family homes all arranged over three floors. Our stunning homes form part of the exclusive Coombe Estate in...
Part-Exchange Available
Promenade De Verdun
Promenade De Verdun, Webb Estate, Purley, CR8 3HB
NOW AVAILABLE from £4,000,000
Developed to meet the aesthetics of the residential conservation area of the Webb Estate, it is easy to see why many are drawn to the superb...
The Meadows
The Meadows, Banbury Lane, King's Sutton, Oxfordshire, OX17 3RX
NOW AVAILABLE from £199,950
5% DEPOSIT PAID ON ALL REMAINING HOMES - LIMITED TIME ONLY. A wonderful collection of new homes consisting of apartments, semi detached and detached...
The Regency Apartments
The Regency Apartments, Manor Road, Chigwell, Essex, IG7 5PW
NOW AVAILABLE from £995,000
OUR BRAND NEW PENTHOUSE SHOW HOME IS NOW OPEN FOR VIEWING. This exclusive development of ten stylish two and three bedroom apartments combine comfort...