Finding a home and moving is a major upheaval involving long-term financial commitment. However, while it’s never going to be cheap, there are many ways to keep the costs to a minimum.
Most important is to work out your budget for the whole process. What can you afford to buy? Consider your savings as well as your income, and use budget and mortgage calculators — such as those at rightmove.co.uk — to work out how much you could manage on monthly mortgage payments, and how much you could borrow.
Budget for all the one-off costs of moving, including removal, conveyancing and surveys, and fixed charges such as the Land Registry fee and stamp duty. The latter kicks in at one per cent of the purchase value on properties worth over £125,000 and the rate increases at a series of price thresholds. Go to direct.gov.uk for full stamp duty details.
Small print matters
Legal fees paid to a solicitor or specialist licenced conveyancer for the transfer of property ownership can be another significant expense, but here you have a little more control. It is possible, if you have the time, and you are good on detail, to do your own conveyancing. However, most buyers prefer to instruct a conveyancer.
This can typically cost anything between £250 and £1,300, depending on the type of service and the property value, according to reallymoving.com, but it’s not difficult to find fixed-fee services. Get several quotes. It’s important that quotes include an itemised list of the disbursements (standard additional expenses) and that you check all the small print before going ahead. A search engine such asmoneysupermarket.com lets you compare on the basis of cost, locality and user ratings.
You need a mortgage, and to buy quickly you should have it in place before you start house hunting. Here, too, some homework can help cut both upfront and monthly costs. “The range of deals has improved, but you have to look across the market,” says David Hollingworth of London & Country Mortgages. “Most buyers are going for fixed-rate deals because they’re so competitive and provide security against the increasingly likelihood of rate rises.”
The size of deposit you can raise makes a big difference to the rates available. Hollingworth says that although there’s now “a reasonable choice” for buyers with 10 per cent deposits, they are looking at a lowest interest rate of around 3.5 per cent for a two-year fix, compared with less than two per cent for those with a 25 per cent deposit.
“You’ve also got to watch set-up costs, as many lenders are offsetting low headline rates by hiking the arrangement fees,” adds Hollingworth. “Some are charging £1,500 or even £2,000-plus for the cheapest deals — equivalent to a significant increase in monthly costs if spread over the term of the deal. But many offer various combinations of rate against set-up fee.”
Get ready to haggle
Look out also for perks such as free legal fees or valuations, or cashback offers for first-time buyers. If you find a deal with a free lender’s valuation included, Hollingworth suggests it’s worth asking if you can pay the cost difference and get a homebuyer report that provides more in-depth information on the state of the property.
Cut removal costs by having a ruthless clear-out and doing your own packing and disassembling. A midweek move is almost always cheaper as weekends are most popular. Cheap local “man with a van” services are easy to find, but reputable removals firms may also offer a budget option. Again, it’s important to compare at least three quotes from different firms. And be prepared to negotiate.
Sort out buildings and contents insurance before you move, but don’t go through your mortgage broker as it’s unlikely to be keenly priced. It’s easiest to use price comparison websites, and you may get a better deal if you buy both insurances together. Remember you can opt to pay a higher “excess” in the event of an insurance claim, to reduce your annual premium.
Finally, word of mouth is a great thing. Ask friends who have recently moved house for their recommendations and tips — and try to learn from their mistakes.
MAKE A PLAN
Apart from mortgage or rent, you’ll probably have several more bills to pay regularly as a priority, including council tax, water, gas and electricity. If you’re paid at the end of each month, set up direct debits for a few days later, so the money automatically leaves your account before you can spend it.
- Council tax is set by the local authority depending on the value of your home. It’s not negotiable, but people who live alone (or only with people who are exempt from council tax altogether) get a 25 per cent discount. Exemptions include full-time students, those on apprentice schemes and live-in carers. See gov.uk/council-tax.
- The estate agent dealing with your purchase will usually have details of the companies supplying your utility services. You will need to contact those suppliers to register with them and get the meters read.
- Switching energy supplier could save you a lot of money. There’s currently over £250 a year difference between the cheapest and most expensive suppliers on the market, according to uSwitch. Fixed-rate deals make it easier to budget, and are being recommended in the face of price rises from the Big Six suppliers.
- Make sure you are on a dual fuel tariff (buying both gas and electricity from one supplier), paying by direct debit, and signed up to online account management, as all will earn you discounts on your bill, advises uSwitch.
- Getting a water meter saves an average £54 a year. If there are more bedrooms than people in a household, metering is often cheapest. See ccwater.org.uk for water-saving tips.