15 May 2020
Are you interested in purchasing a new build property and want to understand more about the costs involved? Buying a home is a long-term commitment and before you get started you need to understand what you can afford to fit in with your lifestyle. Our Sales & Marketing Director Tim Bishop explains all you need to know to help you plan your budget.
Costs when buying a new build
Reservation Fee
When purchasing a new build property, you will have to pay a reservation fee to reserve a plot for a specific period. It is a good idea to secure a ‘mortgage in principle' offer with a lender before you start your new home search as you will need this before you can reserve a property. Once the fee is paid, the property is then taken off the market and reserved for 28 days, in this time exchange of contracts should take place.
This fee will be deducted from the purchase price if you then go on to complete the purchase.
Deposit
Your deposit amount will depend on the property price, your mortgage offer and if you are using the Help to Buy equity loan scheme, although on average you will need between 5-20% of the purchase price. As mentioned above, it is a good idea to get a ‘mortgage in principle' and work with your lender or a financial advisor to calculate your affordability, making sure you understand exactly how much you can borrow.
If you aren't sure where to start, we can help by recommending lenders or financial advisors.
Stamp Duty
You must ensure you have enough savings to cover the Stamp Duty, a government tax paid on homes costing £125,000 or more in England and Northern Ireland.
How much Stamp Duty you must pay will depend on the property price and whether you're a first time buyer; you can use the HM Revenue and Customs' Stamp Duty Land Tax calculator here to work out how much tax you'll pay.
Legal Fees
You will need to instruct a solicitor or licensed conveyancer to co-ordinate the legal process on your behalf. Again, the fees will vary depending on the purchase price and the solicitor will provide you with a detailed breakdown of all the charges. These charges will include:
- Purchase charge
- Admin fees
- Electronic transfer fee
- Any fees relating to paperwork such as Help to Buy
- Search fees
- Land Registry fees
It's a good idea to get a few quotes before making your decision.
Removal Costs
If you are moving home and will need to transport furniture and belongings, you may want to invest in hiring a removal company to help you - although lots of people rent a van and do it themselves.
If you have any questions regarding any of the above fees and are looking at purchasing a new build property, we would be more than happy to help! You can get in touch by calling us on 01202 623420.
