Becoming a homeowner is an exciting achievement, but it is also one of the biggest financial commitments you can make. While many buyers focus on saving for a deposit and securing a mortgage, there are several upfront and ongoing costs that can be easily overlooked without careful planning.
Understanding these costs early on will help you budget with confidence, potentially avoid unexpected costs and enable you to make informed decisions throughout the process.
In this article, we break down the common costs involved in homebuying from deposit sizes and mortgage fees to legal costs, surveys, moving expenses and the ongoing responsibilities of homeownership, helping you prepare with clarity and confidence.
The first major cost
For most buyers, the deposit is the largest upfront cost when purchasing a home. In the UK, most lenders require a minimum deposit of 5% of the property’s purchase price, though the exact amount will vary depending on the mortgage type, lender, your credit profile, and the type of mortgage you apply for:
- Repayment mortgages: These mortgages are the most common amongst homeowners in the UK and include tracker, variable-rate, 2-year fixed and 5-year fixed rate mortgages. These mortgages are standard products and generally have the lowest deposit requirements of 5%.
- Interest-only mortgages: Typically require larger deposits between 25% to 40%, due to the higher risk of repaying the full loan at the end of the term.
- Buy-to-let mortgages: A typical deposit of 25%, reflecting the perceived risk of rental income.
While 5% is often the entry point, saving a larger deposit (e.g. 10% or 15%) can be beneficial as a larger deposit will lower your Loan-to-Value by reducing the amount you need to borrow. This can lower monthly repayments and may help you secure more competitive rates and improve your chances of approval.
For example, on a £250,000 property, a 5% deposit (£12,500) leaves you borrowing £237,500. Whereas a 10% deposit (£25,000) reduces your mortgage to £225,000, making you a lower-risk borrower.
Ultimately, how much you need to save for a deposit will depend on your target property price and how much you can comfortably afford to borrow, not just what the lender offers you (you do not have to borrow the maximum amount offered to you).
Mortgage-related costs to budget for
When buying a home, there are several upfront costs aside from your deposit that are important to budget for to ensure you are financially prepared and avoid any surprises:
Mortgage arrangement/product fees
This fee is charged by lenders for setting up your mortgage, these fees can vary depending on the type of mortgage you select and the lender, however they typically range from £0 to over £2,000 for a residential property.
Valuation fees
Lenders often require a property valuation to confirm its market value before approving a mortgage. Some lenders may offer free valuations, while others may charge £350 to £1,500, depending on your property’s value and the type of survey required.
Broker or adviser fees
Some mortgage brokers or advisers charge a fixed fee or percentage-based charge for their services. Though some brokers, such as Cooper Associates Mortgages, are fee-free.
Solicitor fees
These fees cover the legal work involved in transferring property ownership into your name. They usually range from £800 to £1,500 for standard properties, though complex transactions (e.g. leaseholds, shared ownership or unusual property types) may cost more.
Property searches
Conveyancers carry out searches to check for local issues such as planning restrictions, flood risks, or environmental concerns. These services usually cost between £250 to £450, depending on the property’s location and search types required.
Land registry fees
This fee is paid to officially register the property in your name. Fees depend on the property price but typically range from £20 to £910 as standard.
Aiming to budget for these costs while saving for your deposit will help ensure the process runs smoothly, you are financially prepared and will help prevent last-minute surprises at completion.
Survey costs: Understanding the condition of the property
Purchasing a property is not only a personal milestone, but a financial commitment, making it essential to understand the condition of the property. Surveys help identify potential issues and can help provide confidence in your purchase.
The difference between a valuation and a survey
A property valuation is a typical lender requirement. The lender confirms the security of their loan by ensuring that the property is worth the loan amount and is suitable security. This is primarily conducted for the lender’s protection.
A survey provides a detailed assessment of the property’s condition, highlighting structural issues, damp, or other potential problems. This is for your benefit as the buyer and there are several surveys for you choose to from, with each one varying in the level of detail reflected in the price:
| Type of survey | Their purpose | Average cost | Benefits | Suitable for |
| Condition Report | A basic overview that highlights urgent problems. | £250 to £400. | Straightforward overview of property condition and highlights urgent defects. | Newer homes with no visible issues. |
| Homebuyer Report | A more detailed report, including valuation and visible defects. | £400 to £700. | Highlights visible issues such as damp, subsidence or roof issues. | Standard properties needing a balanced level of detail. |
| Building Survey | Comprehensive inspection. | £600 to £1,500. | Comprehensive inspection of the property’s structure and condition. | Older, unusual or renovation projects in need of in-depth reassurance. |
The right survey will depend on your property’s age and condition but are essential for ensuring any potential problems are identified early on, they help avoid unexpected costs and can give you confidence before you commit to buying.
Stamp Duty: What you may pay
As a first-time buyer you will likely not be required to pay any Stamp Duty due to Stamp Duty Relief, provided you are within the following criteria:
| Property Price | Stamp Duty Relief Charges |
| Up to £300,000 | 0% |
| £300,001 to £500,000 | 5% |
As a first-time buyer, if you purchase a property over £500,000, your Stamp Duty Relief will be lost and you will be subject to standard Stamp Duty charges, as specified below.
Standard stamp duty charges:
For individuals who are not purchasing their first home, the following charges will apply:
| Property Price | Standard Stamp Duty Charges |
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| £1.5 million or above | 12% |
For example:
For first-time buyers, if you purchased a property for £350,000, the Stamp Duty you owe will be calculated as follows:
- 0% on the first £300,000 = £0.
- 5% on the final £50,000 = £2,500.
Total Stamp Duty Due = £2,500.
For individuals who are not first-time buyers, if you purchased a property for £500,000, your Stamp Duty you owe will be calculated as follows:
- 0% on the first £125,000 = £0.
- 2% on the second £125,000 = £2,500.
- 5% on final £250,000 = £12,500.
Total Stamp Duty Due = £15,000.
Therefore, the amount you need to save to cover Stamp Duty charges will depend on whether you are a first-time buyer or not, and the purchase price of your property.
Personal protection policies to consider
Taking on a mortgage is a long-term financial commitment that will continue regardless of changes to your income or health. Without adequate protection, unexpected events such as illness, injury or death can quickly affect your ability to cover your mortgage repayments and household bills.
Appropriate forms of cover
Protection policies are most effective when used together to provide holistic cover, as each one addresses a different risk. The most common and essential forms of cover for homeowners are as follows:
Life insurance
Life insurance is a protection policy that provides a financial payout if you pass away during the policy term. Depending on the type of cover chosen, this may be paid as a lump sum or as regular payments.
For homeowners, life insurance is often used to help protect those left behind by ensuring key financial commitments, such as a mortgage and household bills, can continue to be met.
Life insurance is particularly well suited to individuals with dependants or shared financial responsibilities and can be especially valuable for households that rely on a single income.
Income protection
This type of cover can be especially valuable for households that rely on a single income, as it helps reduce the risk of dependants facing financial pressure or being forced to make difficult decisions about their home and lifestyle.
Income protection can be suitable for anyone who depends on their income to meet ongoing financial commitments. It is particularly beneficial for self-employed individuals, those with limited employer sick pay, homeowners with mortgages, and people with regular outgoings such as loans or family expenses.
Critical illness cover
Critical illness cover is an insurance policy designed to provide financial support if you are diagnosed with a serious, specified medical condition, such as cancer, a heart attack or a stroke. The illnesses covered and the criteria that must be met for a successful claim are clearly set out in the policy wording, so it’s important to understand how each condition is defined.
If you are diagnosed with a condition that meets the insurer’s definition during the policy term, the policy typically pays out a single, tax-free lump sum. Most policies also include a survival period, commonly between 10 and 28 days, which means you must live beyond this period following diagnosis for the claim to be paid.
Buildings Insurance
Buildings insurance is a fundamental protection policy for homeowners, designed to safeguard the structure of your property against unexpected events such as fire, flooding, storm damage or subsidence. Without adequate cover in place, the cost of repairing or rebuilding your home could be significant and financially challenging.
A standard buildings insurance policy typically covers the main structure of the property, including the walls, roof and floors, as well as permanent fixtures such as kitchens, bathrooms and fitted wardrobes. For homeowners with a mortgage, buildings insurance is usually a mandatory requirement set by lenders, as it protects both your home and their financial interest in the property.
Together, these policies can help reduce financial stress and provide flexibility in managing household finances in unexpected situations when finances are strained and loved ones may be impacted. This provides peace of mind and is sensible for homeowners to consider to ensure they are protected.
Saving a contingency fund
When moving into a new home, unexpected costs can arise, so it’s wise to set aside a contingency fund to cover any surprises.
Ongoing household costs: Once you have moved in, regular expenses such as council tax (£1,500 to £3,000 per year depending on property and location), energy and water bills (£100 to £200 per month), and contents insurance (£200 to £500 per year).
Maintenance and repairs: Unexpected repairs, such as plumbing, heating, or minor DIY, could cost between £200 to £1,000 per year.
For leaseholders it may be beneficial to save a contingency fund to cover costs such as ground rent and service charges (exact amount will be set by the building manager or freeholder).
If you are looking to purchase a new build property, you may be subject to estate charges to cover the cost of maintaining communal areas such as parks and shared roads.
Having a contingency fund in place prior to moving in will help you manage these potential costs without disrupting your monthly budget or personal savings.
How can Cooper Associates Mortgages help?
Preparing to buy your first home or move to a new one can be an exciting but daunting prospect. Our advisers can advise you throughout the mortgage process and are able to answer any questions you may have regarding the charges that may affect you.
Our expert advice is fee-free and is tailored to your personal circumstances to ensure we provide you with the most suitable advice. This helps you feel confident when navigating the mortgage market and planning to purchase your next home.
Get in touch today to book a no-obligation meeting and find out how we can help you secure your new home.
