First-time buyers face over £3,000 in extra fees

First-time buyers face over £3,000 in extra fees
Samantha Partington
Written By:
Samantha Partington

First-time buyers may be unprepared for hidden costs of the homebuying journey, with extra fees coming to over £3,000, a survey has found.

According to Aldermore’s first-time buyer index, which surveyed 500 first-time buyers, most people getting onto the property ladder are focused on saving for a deposit at an average of £47,067, but spend an average of £3,701 on additional costs.

Within those extra expenses, the most expensive is solicitor fees at £654, mortgage fees at £515 and conveyancing fees at £496.

Other costs include estate agent fees at £439, extra rent due to delays with moving at £433, other house purchase related fees at £421, moving fees at £409 and other house purchase falling through at £335.

The lender said that first-time buyers were not liable for stamp duty but if their property was over “£425,000 then buyers should incorporate extra stamp duty into their savings plans”.

It said first-time buyers should set aside money to ensure they have an emergency fund to cover unexpected expenses. This is advised to cover three to six months of living expenses.

Aldermore added that the volatile housing market had meant many first-time buyers were faced with delays or false starts and spent an additional £2,260 as a result.

Over a third of first-time buyers surveyed said they used a broker, mortgage adviser or independent financial adviser to assist them, while 91% said they had a good experience.

Brokers can help first-time buyers navigate additional costs and calculate realistic savings, and identify lenders with free valuations, cashback incentives and the ability to switch to a better rate.

First-time buyers need emergency fund

Jon Cooper, head of mortgages at Aldermore, said: “A deposit is often the biggest expense in the home buying journey, taking years for first-time buyers to raise a sufficient amount. However, with buyers laser-focused on saving a sizable deposit, they often overlook the significant additional costs that come with buying their first home.

“As a lender, we’ve attempted to help with this where we can. Earlier this year, for instance, we began offering free valuations on all applications for residential mortgages.”

He added: “In the current economic environment, it’s also vitally important new buyers set aside a robust emergency fund, to ensure they are able to weather any financial setbacks or additional expenses they may face once they’re a homeowner.

“New buyers shouldn’t be expected to be experts on the property market – that’s why it’s important to seek advice from a broker who can help guide them on their road to homeownership.”