First-time buyers: what are your upfront costs and how much do you need to be paying?

News at Townends | 10/03/2017

On Tuesday 7th March, The Telegraph published an article mapping average costs for first-time buyers.

The total sum saw first-time buyers having to save a total of approximately £22,689 in order to pay upfront costs. This figure includes conveyancing, valuation, survey and stamp duty fees as well as a 10% deposit.


So what exactly are these upfront costs?

Naturally you will require a mortgage deposit. This is typically the largest outgoing in the entire process and is usually between 10-20% of the individual property value. According to the Land Registry, as of December 2016, the average purchase price amongst first-time buyers in England was £198, 325 making a 10% deposit £19,833.

Subsequent to a getting a mortgage is lending fees. These will vary depending on which mortgage provider you chose. Your mortgage provider will charge for undertaking a valuation and a survey of the building – average costs for this process are within and around £500.

Stamp duty, is the tax owed on all property purchases exceeding £125,000. Stamp duty rates do vary depending on the overall value of the property.

Finally, there are legal fees. This is the fee associated with buying a house, otherwise known as conveyancing. This process involves the preparation for and exchange of contracts and includes the cost of alerting the Land Registry of these changes. For a property valued within the range typically affordable for a first-time buyer, legal fees are estimated to be around £900.

The importance of location-

Obviously, house prices vary depending on their location in Britain and this has a subsequent effect on the upfront costs needed for purchase.

Another influencing factor, is that the bigger your deposit the better deal you can secure on your mortgage –  although recent research undertaken by Which?, suggests that securing a 10% deposit and a 90% mortgage could save first-time buyers up to £2,500 if on a two-year fixed rate.

Further research by Which? using data supported by Moneyfacts found that on average the rate for a two-year fixed-rate mortgage with a 90% loan-to-value and a 10% deposit was 2.64%, whereas if you used the same deal but with a 95% loan-to-value and a 5% deposit, the average interest rate increased to 3.96%. For someone buying an average priced property (approximately £219,544 depending on where in the UK) the difference between monthly mortgage repayments could be more than over £140.

At Townends Estate Agents we are committed to providing market leading property solutions with excellent customer care at the core. If you are thinking of buying your first home, get in touch to see how we can help you get on the property ladder. Give us a call today on: 0800 074 0095 or email us at: