Buying a home is exciting, but it’s also a big investment. The legal process of buying a house is known as conveyancing. Throughout this process, you’ll need to pay a few different types of costs and fees. It’s important to be informed so you know what to expect, and this article is here to help. We’ll take you through the typical costs involved when buying a house, explaining everything from conveyancing fees to disbursements and everything in between.
Solicitors fees for buying a house
Solicitors fees are what your chosen solicitor or conveyancer charges for their services. They take care of the legal work involved in transferring a property from one owner to another. The property solicitor costs will vary depending on their experience and how complex the transaction is. At Setfords, we charge a fixed fee based on the price of the property. We’re also upfront about any legal fees you will pay before we start working with you.
When choosing a conveyancer, it’s important to consider their costs carefully. Factors you may want to consider include their level of experience, the number of cases they take on at a time, and their reviews from others. Reviews are a great source of information to discern whether the house purchase solicitor fees you’ve been quoted are good value. After all, they will be taking care of one of the most important transactions of your life!
At Setfords, we have over 10,000 five star reviews on Trustpilot, so our clients know that they’re in safe hands.
Disbursements
Disbursements are fees incurred by the transaction aside from your chosen conveyancer’s fees. You’ll have to pay some in every transaction, but the exact ones you pay depends on your specific situation. Disbursements are paid to your conveyancer alongside the solicitors fees. the most common disbursements include:
Search fees
These fees cover various searches that your conveyancer will carry out on your behalf. These fees include local authority searches, environmental searches, and land registry checks. Searches are needed to gain information about the property and the land that surrounds it. These fees can vary based on location; your conveyancer will be able to let you know how much they will cost.
Bank transfer fees
Typically, these fees are charged by your conveyancer’s firm for handling the transfer of funds when you’re purchasing a property using a mortgage.
Gifted deposit fees
If you’re receiving a contribution towards your property purchase by way of a gift, typically from a family member, there may be an additional charge. This is for work carried out by your conveyancer to ensure the due diligence requirements are met. If you’re using a mortgage lender, they may also have requirements surrounding the gifted deposit that your conveyancer will address and keep you updated on.
Acting for lender fees
Typically, if you’re using a mortgage lender, your conveyancer will act for both you and the lender. This incurs an additional fee to carry out the work and legal formalities the lender requires relating to the mortgage.
Limited company purchase fees
If you are purchasing your property in the name of a limited company as opposed to your personal name, additional work by your conveyancer may be necessary which will come with an additional fee.
Source of funds check
Your conveyancer must assess the country of origin for foreign funds. This incurs an additional charge for the work carried out.
Expedited exchange and completion
You may be able to pay an extra fee for additional services to speed up the process, which can be useful if you have a tight deadline.
Lifetime ISA (LISA) fees
If you’re using a LISA to purchase your property, additional work from your conveyancer will be involved in order to deal with all requirements relating to any funds released from it. This will come with an additional fee.
Government fees
During the home buying process, there are certain fees that are paid to the government, namely stamp duty and Land Registry fees. Here is an overview of each one:
Stamp Duty
Stamp Duty is a tax imposed on property transactions by the government. The amount you pay depends on the property’s purchase price, whether you are purchasing the property in addition to already owning a property, and some other conditions. It’s important to stay up to date with the current
rates to correctly calculate the amount of stamp duty you will owe. Your conveyancer will be able to assist you with this.
Please note that Stamp Duty does not apply in Wales. Instead, Land Transaction tax is paid to the Welsh government when purchasing a property over a certain price threshold in Wales.
Stamp Duty for first time buyers
First time buyers pay different rates of stamp duty. As a first time buyer, you will pay no stamp duty if the purchase price is under £300,000, and will pay a reduced rate of 5% on any value between £300,000 and £500,000.
Land Registry fees
Land Registry fees are the fees associated with registering the property’s change of ownership with the land registry. They tend to be higher for properties with a higher purchase price.
Capital Gains Tax
Capital Gains Tax (CGT) may need to be paid on any profit you make if you’re selling a second property, such as a holiday home or a property you’ve inherited.
It’s typically not paid if you’re selling your main residence or a dependent, like an elderly relative, lived there, but you can check on the government website.
Other potential costs involved when buying a house
There are a few other fees to be aware of that you might come across depending on how you’re buying the property, if you’re buying and selling at the same time, and other decisions. Here is an overview of some you may encounter:
Mortgage arrangement fees
If you’re buying the property using a mortgage, this is a fee charged by the mortgage lender for setting up the loan. You may be able to pay it as a lump sum, or have it added to the amount you borrow.
Surveyor’s fees
If you choose to have the property surveyed, you will need to pay a fee to your chosen surveyor. The cost can vary depending on the level of survey carried out.
Home insurance
Your mortgage lender will make sure that you’ve got home insurance as part of the transaction. This will protect you if anything happens to the property, like a fire or flood. Most buyers also choose to get contents insurance, to protect their belongings.
Even if you’re not buying the property with a mortgage, it’s a good idea to take out these policies to make sure you’re covered if anything was to happen.
Life insurance
Your mortgage lender will also typically ask you to take out a life insurance policy that covers the mortgage if you were to die before it is paid off.
A guide to conveyancing for buyers
For more information about the whole conveyancing process, from timelines to FAQs and everything in between, download our free guide to conveyancing for buyers by clicking the button below:
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