Budget for these 20 hidden costs when buying your first home

Hidden homeowner fees to watch out for

Buying a home? Congratulations – there’s nothing quite like the satisfaction of owning your own place! But amidst all the paint and Pinterest-related excitement, remember to pay attention to your wallet, too.

Whether it's your first house or dream home, purchasing a property involves a myriad of fees, both small and large, so it's important to budget accordingly to avoid any nasty surprises down the line.

Read on as we break down the essential costs you need to budget for when getting your foot on the property ladder.

Stamp Duty Land Tax

Frustratingly, we pay tax on just about everything we buy and that includes homes. The stamp duty rate ranges from 5% to 12% of the purchase price, depending upon the value of the property bought, the purchase date and whether you are a first-time buyer or own multiple homes.

Luckily, those buying their first home can claim a discount, which differs depending on when you purchase the property. From 1st April 2025, first-time buyers won't pay Stamp Duty Land Tax (SDLT) on homes up to £300,000 and will pay 5% SDLT on the portion from £300,001 to £500,000. You can use the UK government's Stamp Duty Land Tax calculator to work out how much you might need to fork out.

Deposits

When it comes to buying a house, the deposit amount will differ depending on where you choose to buy and the size of the property. In the UK, the minimum deposit amount is 5% of the home's value, but 15% to 20% is more widely accepted.

So, if you want to buy a property valued at £200,000, your lender may require a deposit of £30,000. If you're able to put down a larger deposit, even better, as you'll be able to get a lower interest rate on your mortgage.

Mortgage advisor services

When it comes to securing funds for a new home, many buyers opt to use a mortgage advisor, as they’re able to scour the whole marketplace for the best deals and generally simplify the process.

According to The Mortgage Genie, they typically charge an upfront fee of between £300 and £600 for their assistance. However, some brokers charge 0.3% to 1% of your total mortgage value, so make sure you're clear on what your advisor charges and factor in this extra cost.

Mortgage arrangement fees

Most UK lenders will charge a fee to set up your mortgage. Also called a product fee, this arrangement charge can usually either be paid upfront or added to your mortgage.

The downside of adding it to the mortgage is you’ll pay interest on it for the duration of the loan. Given many first-time buyers in Britain opt for terms of 30 years or more, that could rack up quite a bit of interest. These fees can set you back more than £1,000, so ensure you know what's what before doing anything.

Mortgage booking fees

Although rare these days, some lenders will also charge an upfront booking fee, which covers the cost of processing your mortgage application. It can also be known as an application or reservation fee and is non-refundable.

According to Money Saving Expert, it can range between £100 and £300. Some lenders don’t charge anything, so make sure you compare mortgages to see who charges what before you sign up. 

Valuation fees

Your mortgage provider will want to make sure the property you are purchasing is worth the amount you are paying for it to minimise the lending risk. This is a simple valuation survey and won’t highlight issues, such as structural problems.

The amount varies considerably depending on the lender and the purchase price, and some mortgages even come with free valuations, so it's always worth doing your homework.

Featured room divider available from Umbra.

Property surveys

It might sound like an unnecessary expense, but property surveys are extremely important – not least because they will help you to establish whether the building is structurally sound. Home surveys vary in cost and there are different options available, depending on how extensive you want it to be.

Buyers can opt for a basic Condition Report, a HomeBuyer Survey or a Building Survey, which is far more thorough. According to property website Compare My Move, a UK house survey costs, on average, £461. However, an extensive survey, recommended for larger or older buildings, could set you back as much as £1,200.

Hiring a solicitor

To guide you through the legalities of purchasing a property, you’ll need to hire a solicitor. They’ll be on hand to do everything from drawing up contracts to local searches and liaising with your sellers’ solicitors to agree on a date for exchanging documents, money and finally, the keys.

Fees will vary from firm to firm, but Zoopla recommends that you should allow up to £2,000 for this.

Conveyancing disbursements

In the UK, conveyancing disbursements are extra legal fees that are charged by third parties. Your solicitor will collect these charges from you and pay on your behalf.

Additional fees can include processes such as local authority searches and Land Registry checks. 

Liking this? Click on the Follow button above for more great stories from loveMONEY

Ground rent

There's often confusion over the difference between freehold and leasehold, with some homeowners complaining of being mis-sold the latter, leading to unexpected costs further down the line.

If you purchase a property as a leasehold, you'll usually be required to pay annual ground rent, which, on average, costs between £200 and £500 per year. How much you pay will depend on the property you’re purchasing, so it’s worth finding out before signing on any dotted lines.

It's also worth noting that ground rent was banned in England and Wales on new leases on homes purchased after 30 June 2022.

Annual service fees

Those buying in apartment buildings may find themselves paying annual service fees for the upkeep of any communal spaces, such as corridors, lifts and gardens.

Of course, these fees differ greatly depending on where you buy. For example, a luxurious new apartment with a pool and gym will likely have higher service fees than a converted house with a shared entrance. So, inquire about hidden extras in advance of buying.

Electronic transfer fees

CHAPS fees, or electronic transfer fees, can sometimes be charged to cover the cost of the mortgage lender sending the agreed funds to your solicitor.

The financial advice service Money Helper recommends you budget between £25 and £50 for this, but the price could be higher depending on your solicitor and where you're sending the money. International transfers, for example, will carry much higher fees.

Early repayment charges

Most mortgages tend to be offered for a limited time, after which prices may go up and you might want to consider shopping around for a new deal.

But be aware that if you leave your current deal before the fixed-term, you’ll be responsible for paying an Early Repayment Charge, usually calculated as a percentage of the loan. These fees can vary from hundreds to thousands, so ensure you know what you're getting yourself into before making the switch.

Removal costs

Don't forget to factor in the cost of moving your belongings. You could hire a van and do it yourself or pay a team of professional movers. Van hire will be cheaper, but if you’ve got a lot of stuff it can be pretty exhausting work.

Professional movers will charge depending on the number of items you’re taking and the relocation area, as well as things like how many flights of stairs the building has. Search site Compare My Move estimates that moving the contents of a three-bed property in the UK costs, on average, £1,304.

Building and contents insurance

Most lenders are quite strict about having buildings insurance in place on the day you exchange contracts, as you are then legally responsible for the property. It's a good idea to get contents insurance at the same time, ready for when you move your belongings in.

With that in mind, you’ll need to factor it into your moving budget. The average price for combined buildings and contents insurance in the UK, according to MoneySuperMarket, is around £275.95 a year, though most providers will allow you to pay in monthly instalments.

Mail redirection and forwarding

Even if you’ve notified all relevant parties of your change of address, it’s worth setting up a mail redirection service for the first few months for peace of mind.

In the UK, you can set this up directly with Royal Mail from £39.50 for three, six or 12 months. Check with your post office for more details.

Household bills

If you’re moving to a larger home, or historically have always split household costs with a roommate, then you might be in for a shock when you receive the first bill through the door.

Annual utility costs can vary significantly, depending on the location of your home, its age and size, as well as the type of heating system you have. Remember, it costs more to cool and heat a larger space, so your energy bills will inevitably go up.

Featured radiator available from UKRadiators.com.

Additional moving costs

Make sure you budget for any additional services you’ll need on the day of your move. Depending on your circumstances, this could be anything from childcare to pet sitting, or even storage units.

If you're moving out of a rental property, you may even be required to pay for an exit inventory, a professional deep cleaning service and any damage caused to the property during your tenancy. These costs can soon add up, so ensure you keep a contingency budget to one side, just in case.

Maintenance and repairs

If you've factored in a survey, you’ll know of any repairs that need attention. Likewise, if there are any cosmetic changes you want to make it's worth budgeting for them, so you can get cracking right away.

Roll up your sleeves and attempt some DIY or hire a professional to help. In the UK, the average hourly rate of a handyman is around £30, however in London, the rates are higher.

New furnishings

And finally, the fun bit – decking out your new place! If this is your first home, there's a good chance you’ll need to factor in a few big purchases like a sofa and white goods.

If you're on a budget, local neighbourhood recycling sites can provide you with low-cost furnishings to tide you over. While some things can wait, there are a few essentials you’ll require straight away – including a refrigerator and a bed! 

Featured sofa available from ScS.

Liked this? Click on the Follow button above for more great stories from loveMONEY