If you’re thinking of selling your home or even buying your first home, you may have already been considering what the change in monthly cost might mean for your finances. Quite often, moving from rented to mortgage accommodation offers a significant monthly saving on rent vs mortgage payments. That is of course if you already have a fair amount of deposit in place. And even if you’re thinking of moving up the property ladder from your first purchased home, the difference in mortgage costs can be surprisingly small, sometimes just £100 or so extra per month depending on how much you’d need to borrow, current interest rates and how much equity you have as a deposit.
However, it isn’t just the monthly mortgage costs that need to be considered when you move house. There are some large one-off costs to think about, plus a few extra monthly considerations to calculate to decide if moving home will truly be affordable and worthwhile.
One-off costs of moving house
If you’ll be moving from a small studio or 1 bed flat it is of course, possible that you could save money on removal costs by using friends and family to help box and carry things, and hire a van for a day. This is entirely down to personal preference, however, some moves can be very physically wearing and take much longer than anticipated. If you’ve ever experienced moving from a second floor flat with no stairs and several trips in a transit van vs moving with a team of professionals with a large truck, you’ll know which choice is more relaxing! A professional moving company can cost anything from about £175 for a “man with a van” for a day up to £900 for a team with their own packaging service where you need not lift a finger – although the team might appreciate a cup of tea!
Stamp Duty (SDLT) is reviewed each year in the annual budget so is subject to change, however, the current thresholds for Stamp Duty are £125,000 for non-first-time-buyers and £500,000 for First Time Buyers. The calculation is not particularly straight forward. For example, if you buy a property worth more than either threshold, you will need to pay a percentage of the purchase price as Stamp Duty and the % charged will depend on a calculation of the overall purchase price. The percentage payable increases between 2% and 12% at different thresholds too. For example, to someone moving to another mortgage home the Stamp Duty on a property at £275,000 would be £3750 which is the total of 2% of the amount between £125,001 and £250,000 and 5% of the amount between £250,001 and £275,000. For a thorough explanation of the thresholds and to quickly calculate how much stamp duty you will pay this tool from the Money Advice Service has everything you need.
You will need a solicitor to support you with your sale and purchase. If you are buying and selling, you will need to pay usually twice as much as you would if you were simply purchasing. Fees will vary depending on the type of property you’d like the solicitor to help you with. Shop around for a few quotes first, and don’t forget to ask if searches are included or are charged as an extra fee. Expect to pay a minimum of £1500 on legal fees per transaction.
Leasehold or shared ownership costs
If you currently live in a leasehold property, or a shared ownership scheme, there may well be costs payable to the Freeholder or Housing Association. Usually, there are a few forms, for example, an LPE1 form that is needed by your solicitor, and the cost of getting this completed can vary from £75 to £500 depending on your Freeholder’s terms. Some Housing Associations also take a percentage of any sale of a share in addition to the share they own. For example, someone owning a 50% share that they choose to sell at £100,000 may be liable to pay 1% off this (£1,000) to the housing association. It’s worth investigating what you’re contracted to in the terms of your lease before you decide to sell.
Valuation and survey costs
You’ll need to have a valuation report and survey cost carried out on the home you wish to purchase, to make sure you’re happy that you’re purchasing it for a fair price and also to check for any potential remedial works to the property in the near future but also bring up any potential issues with nearby trees, buildings, commercial units etc. You may receive a mortgage valuation for free from the mortgage lender you choose, but this is not designed to be a true reflection of the condition of value of the property. Surveys cost from around £300 upwards depending on property size and type and can be arranged through your estate agent.
Additional monthly costs
As well as the mortgage costs, you may also want to consider the following costs in your calculations when you’re deciding where to move to and when:
- Commuting – will you spend more or less money on petrol and public transport for trips to work and school?
- Utility bills – if you’re moving to an older home, expect a small increase or if you're moving to a new build home that will usually be more energy efficient. Check the property’s EPC for guidance.
- General cost of living – this only really applies if you are moving from one county to another, but think about things like supermarket and takeaway costs and even barbers and hairdressers. The cost of a coffee in the city centre is always going to be more; and if you will rely on convenience and express supermarkets instead of superstores for your food shopping this could work out more too.
- Repairs and maintenance – if you’re moving to a new build home then you probably won’t need to budget for repairs for quite a few years. For older homes, think about whether you’ll need to save a little back in case the boiler needs replacing or if you’re moving to a larger home, you may require a gardener or cleaner to help manage the upkeep.
- Service charges – if you are buying a leasehold property, you’ll be asked to contribute either quarterly, annually, or monthly to the upkeep of the grounds and common areas.
If you are interested in any of the properties we have listed for sale and would like some help in understanding the costs associated with purchasing it, our team is very happy to help and invite you to call or email us to start a conversation.
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