There are range of fees you pay when buying a house. As first time buyers, my husband and I, never realised how many there were or how much they would cost. With all the focus on saving for the deposit and finding the right home, it’s easy to forget these fees. To avoid any surprises, here’s a guide to all the fees you’ll encounter, when to pay them, and who you’ll be paying.
Our Story
In 2019 my now husband, Matt, and I decided it was the right time to buy our first house together. Before 2019 there was never the right opportunity; I’d been a Uni student and moved away for my first job, whilst Matt was studying for his accounting qualifications. Finally, we were living and working in the same place, so we went for it! Neither of us had any experience with buying a house, which made the process feel even more daunting. I don’t think we ever realised we were about to embark on an almost year long journey! But we finally made it and we couldn’t be happier with our little home.
Summary of fees
- Arrangement fee
- Booking fee
- Valuation fee
- Survey fee
- Mortgage advisor/ broker fee
- Conveyancing fee
- Land registry fee
- Stamp duty
Arrangement Fee
- How much: £0-£2500
- Who to pay? Your lender
- When to pay? Mortgage application or integrated into repayments
An arrangement fee is (in other words) the mortgage lenders admin cost. There are two options when paying this; upfront payment or include it in the mortgage loan you repay.
Some lenders disguise high arrangement fees by enticing you with low interest rates. The disadvantage of paying upfront is that you can lose your money should the sale fall through. Ouch! It’s best to discuss this with someone aware of your financial situation, such as a mortgage advisor.
On the other hand, you can avoid paying an upfront cost by integrating the arrangement fee into the mortgage loan. The disadvantage to paying it this way is you will end up paying interest on it. MoneySavingExpert share their advice on how to avoid paying interest if you add the arrangement fee onto the loan.
Sometimes you can avoid paying an arrangement fee all together. When Matt and I were buying a house we used a mortgage advisor who did us a great deal! We didn’t have to pay an arrangement fee at all; no upfront fee and nothing added onto the loan! Not sure if all mortgage advisors can work this level of magic but might be worth a try?!
Booking fee
- How much: £100-£200 (Not always required to pay!)
- Who to pay? Your lender
- When to pay? Mortgage application
Some lenders may require you to pay a booking fee to secure a discount or fixed rate mortgage. If the sale falls through then this won’t be refunded!
Both the booking fee and arrangement fee are types of mortgage fees. Depending on what type of deal you get then you could avoid paying either. My advice would be to get in touch with a good mortgage advisor– they’re your best shot at getting a good deal!
Valuation fee
- How much: Around £200
- Who to pay? Your lender
- When to pay? Mortgage application
A valuation fee is done in the mortgage lenders best interest. The lender will send a surveyor to inspect the property; which is a condition of a mortgage loan. They want to gage the value of the property.
A valuation can be as little as a ‘drive-by’- in other words they’re checking the property exists. If you fail to meet your mortgage repayments and the lender has to repossess the property then the lender needs to be able to sell the property for at least the mortgage loan value! This is why it’s done in their best interest, they’re not bothered if you lose your deposit money!
The survey is conducted in your best interest!
Survey fee
- How much: £400-£700
- Who to pay? Your surveyor
- When to pay? Usually after you’ve applied for your mortgage and decided if you want a survey
A survey is a more thorough inspection of the house. Either you can instruct your lenders’ surveyor to perform a survey (in addition to the valuation) or find your own surveyor. If you instruct your lender’s surveyor then you will need to pay extra- you can’t get away with just paying for the valuation.
A survey is optional. But remember it’s done in your best interest. One of my top tips would be always pay for a survey. Although it’s an extra couple of hundred pounds it could save you thousands if it picks up any problems you didn’t notice on your viewings. You are well within your rights to try negotiate the property price if your survey picks up problems.
Similar to all the other fees mentioned so far, if the sale falls through you aren’t refunded this!
Mortgage advisor/broker fee
- How much: £0-1% of the mortgage loan
- Who to pay? Your mortgage advisor
- When to pay? Varies on the advisor- sometimes on mortgage application or at completion
A mortgage advisor/broker is optional. The other option is to arrange your mortgage loan independently. A mortgage advisor will discuss your finances, help set a property budget, arrange a mortgage in principle, research mortgages on your behalf and find the best deal for you. They will help you through your mortgage application and make recommendations on home insurance and life insurance.
Conveyancing fee
- How much: £500-£1750
- Who to pay? Your solicitor/ conveyancer
- When to pay? Portion to pay as soon as your instruct your solicitor and the remaining due on completion
Sadly the conveyancing fees aren’t optional, like some of the others. These fees cover all the legal work required when buying a house. This includes transfer of ownership, the searches, collecting the monies (mortgage loan and deposit) and paperwork.
The estate agents may recommend their own solicitors to conduct the conveyancing for the sale. Alternatively you can use your own solicitor. From our experience the estate agents’ solicitor cost a little more- so might be worth ringing round to compare prices.
Land registry fee
- How much: £200+
- Who to pay? Your solicitor who forwards payment on to Land Registry
- When to pay? Around completion
This fee is another couple hundred you can’t avoid! The Land Registry will register the property under the new owners’ name. The amount you pay will vary depending on the price of the property. The GOV.UK website runs through the costs.
Stamp duty
- How much: Dependent if a first time buyer and on the cost of the property
- Who to pay? Your solicitor who forwards payment on to the government
- When to pay? Completion
If you have to pay stamp duty then this is easily going to be the most expensive fee you pay!
First time buyers are exempt from paying stamp duty (on properties up to £500,000). You are also exempt on paying stamp duty up to £125,000. Use the MoneySavingExpert stamp duty calculator to figure out how much you could pay (all you need to know is the property price).
Final thoughts..
In summary, buying a home involves several key fees that you need to plan for to ensure a smooth transaction. The total costs can range from a few hundred to several thousand pounds, depending on your location and the property’s price. By knowing who to pay, when to pay them, and the expected amounts, you can navigate the home-buying journey confidently and avoid any financial surprises. Happy house hunting!
