Certus Mortgage Solutions: What will your house really cost you?

SO, YOU CAN PAY YOUR MORTGAGE. BUT HAVE YOU BUDGETED FOR THE COST OF ACTUALLY BUYING YOUR HOME?

When you buy your first home, you'll not only need your deposit saved up - you'll also need an extra £3,000, more or less. This will cover everything from the fee for arranging your mortgage to the legal costs, searches, stamp duty, survey fees and even a removal firm to pack up your worldly goods. And if you want to do some decorating, you'd better add a bit more...

Lenders’ fees

A `mortgage arrangement' or `application' fee is often charged to set up your mortgage. The average cost is between £300 and £500, depending on your lender and the mortgage package. These fees are usually payable on fixed or discounted deals and can often be added to your mortgage loan.

Solicitor fees

Some solicitors charge a fixed fee for house purchase. Others may charge a percentage of the property price. Average fixed costs are from around £500, plus VAT.

If you've got time on your hands, you can apply for the searches and do the donkey work yourself - but most of us don't have spare time (or, frankly, the inclination). Anyway, having a solicitor is necessary in more ways than one: they'll check the person selling the house really is the owner, show you where your property boundaries are and check you're not buying a house close to a proposed motorway.

Survey fees

Once your offer has been accepted, your lender will want to do a valuation survey to check the property is in good condition, and worth the money they're lending. For a property worth between £100,000 and £150,000, this costs around £300 but, depending on the age of the property, you may want a more detailed survey to check for structural defects. The next step up is a `House Buyer's report', which will cost around £450, or a full structural survey for older properties, from around £850.

Local Authority searches

Another job for your solicitor. They'll check for any planning proposals in the pipeline - for example, if your next door neighbour is planning a large extension or if there are plans to build a huge superstore outside your front door. The average cost is £150.

Land Registry

This is a Government department that keeps details of who owns all the properties across England and Wales. You'll need to pay to have your name put on and your solicitor will usually handle this. The typical cost is £150 for a £170,000 property.

Stamp duty

The oddly-named `stamp duty' - stamps aren't actually involved - is a Government tax that's charged when you buy a house over £120,000. The tax is charged on a tiered rate, so the higher the purchase price, the more tax you pay. Currently, a 1 per cent charge is paid on properties between £120,000 and £250,000, 3 per cent from £250,000 to £500,000 and 4 per cent on properties worth more than £500,000.

Removals

It's worth getting at least three quotes and checking that the firm is a member of the British Association of Removers (www.removers.org.uk) before you commit to a moving company. The average cost of moving the contents of a three-bedroom family home locally is between £400 and £800. You can save on cost here: most people move on a Friday, so go for a midweek move to negotiate a cheaper rate. Or, for a first move, you could hire a van and do the job yourself.

Getting utilities hooked up

It's your responsibility to tell energy and water suppliers that you're moving in. If you're not sure who the gas and electricity suppliers are, check with the National Grid for gas and the local distribution company for your electricity. Contact numbers are on the Energywatch website www.energywatch.org.uk

If you're moving into a new house, you may need to pay for a phone line to be installed.

Why bother with a survey?

A `valuation survey' is only for your lender's benefit - it won't cover you as the buyer. Unless the property is fairly new, you may want to consider paying for a House Buyer's Report, or even a full structural survey, to check for structural defects.

When making your initial offer, you should always say it's `subject to survey'. This gives you the option of withdrawing your offer or renegotiating the price if the survey uncovers major problems. To successfully agree a discount it's best to get several quotes for the repair work, rather than trying to knock, say, £5,000 off the bill, which could leave you out of pocket if there's a lot of work to be done.

Costs*

Lender's fee: £300-£500
Legal costs: £500 (plus VAT)
Surveys: £245 (starting from)
Searches: £150
Land Registry: £150
Stamp duty: £1,500
Removals: £400

*Based on a property value of £150,000.