With everything costing more and household budgets stretched by economic forces, planning your budget and finances before moving home has never been more important.
In this latest guide, we explain more about all the costs you’ll need to consider when planning a move and provide some great tips to get the most from your moving budget.
Costs you can expect when moving home
Moving home can be expensive – in fact, the average UK move now costs just under £10,000, according to data.
And with much of that payable up front, preparing and sticking to your budget is key:
Upfront costs when moving
1. Stamp duty
One of the biggest potential costs you face when moving is stamp duty.
If you’re not a first-time buyer and you’re purchasing a home for more than £250,000, you’ll need to pay it.
If you are a first timer, you’ll be exempt from property tax on the first £425,000 of the purchase price.
Stamp duty is actually payable when you complete your purchase and this will be arranged by your solicitor.
However, you should always factor the bill into your up-front budget.
2. Deposit
On top of stamp duty, your largest up-front cost is likely to be your deposit – particularly if you’re a first-time buyer.
By saving a larger deposit, you may be able to secure a more attractive mortgage and, in most cases, you’ll need at least 5% of your property’s purchase price as a down payment.
As well as acting as the portion of your property you’re buying outright, your deposit is also used as security when you exchange contracts.
If your deposit is coming from the proceeds of selling your existing home, your solicitor may be able to use your buyer’s deposit as security at exchange, meaning you don’t have to provide a separate security deposit away from your main deposit.
If you’re a first-time buyer, the deposit you save will be used as security and passed to your seller when you complete.
3. Valuation fee
Your mortgage lender will carry out their own valuation on the property you’re buying and you may have to pay an up-front fee for this.
The valuation helps your lender establish that the property is worth at least what they’re lending you.
Valuation fees are usually between £150 and £1,500 but you may sometimes find lenders that offer them free of charge.
4. Other mortgage fees
When you take out a mortgage, your lender may also charge you an arrangement fee for setting up the loan.
This could be as much as £2,000 but some mortgages are fee-free, too.
You can pay the arrangement fee up front or sometimes add it to your mortgage, although doing this means you’ll pay interest on it.
5. Survey fees
Property surveys are a great way to get full peace of mind that what you’re buying is in good condition and is structurally sound.
Survey fees can vary depending on the level of survey you choose and the size of the property you’re buying.
However, you can expect an up-front payment of between £200 and £700 in many cases.
6. Solicitor or conveyancing fees
Your solicitor or conveyancer may request part of their fee up front.
This is often to cover the cost of disbursements, which include things like local authority searches and money laundering checks.
The bulk of your conveyancing fee, however, will be settled when your solicitor settles all your financial commitments after you’ve completed your purchase.
7. Buildings insurance
You should always factor in the cost of a buildings insurance policy when considering your up-front budget.
This is because your mortgage lender will usually stipulate that you have an adequate policy in place when you exchange contracts.
The type of property you’re buying, its condition and where it’s located will affect the cost of your policy, so it’s always good to shop around and compare deals.
8. Removals costs
You should always seek out several quotes for removals before committing.
Some companies may request payment up front, while others may be happy to settle your bill after you’ve moved.
Either way, you should factor this cost into your up-front budget.
Costs payable after you’ve moved
1. Estate agent fees
If you’re selling your existing property before moving, your estate agent’s commission will need to be paid once you complete.
Your solicitor will normally settle this with your sale proceeds, but you can also choose to arrange payment yourself separately if you wish.
2. Ongoing running costs
The running costs for your new home will need to be considered as part of your ongoing household budget.
This means factoring in:
Gas and electricity
Sewerage
Water
Broadband, TV package and phone
Your council tax bill, meanwhile, will vary depending on which band your property sits in with the local authority.
3. Leasehold costs
When buying a leasehold property like a flat or apartment, you’ll need to think about some additional costs that come with these types of properties.
You may have to pay a ground rent charge to your freeholder, alongside a service charge for maintaining the common areas of the building and outside space.
4. Mail redirection
Setting up mail redirection can help ensure your post reaches your new property while you arrange for all your contacts to be informed of your new address.
Redirection costs start from around £34 and can be arranged for up to 12 months.
How to budget your move effectively
1. Secure the right mortgage
One of the most vital ways to navigate the cost-of-living crisis is ensuring you’re on the right mortgage for your circumstances.
With interest rates rising, having the right mortgage can give you security and the best place to start is an independent broker.
Brokers normally have access to more of the mortgage market, meaning you may be able to secure a deal not available directly through a lender.
Your broker can also assess your finances and help you to get your application in the best possible shape before you submit it – giving you the best chance of securing the mortgage you need.
2. Avoid big changes to your income and limit credit applications
When applying for a mortgage, it’s important to show your lender consistency in your income and a nice, healthy credit report.
So, in the months leading up to your mortgage application, try to avoid any major changes to your income and don’t apply for any other credit.
If you do have to apply for credit or change jobs, it may be worth waiting before you apply for a mortgage.
Also remember to check through your credit report and correct anything that doesn’t appear correctly, closing down any credit or store cards you no longer use.
3. Save enough to cover all up-front costs
Moving can be a stressful experience.
So, make sure you have enough cash saved up to pay for all the up-front costs you’ll face – meaning you’ll avoid any unwanted surprises.
Set yourself a maximum purchase price and ensure you have the deposit and stamp duty funds to sit alongside it.
Then draw up a list of all your other up-front costs and work out how you’ll fund them.
Having a small contingency amount can also help, just in case there are any unexpected costs along the way.
4. Factor in insurance
It’s easy to think you’ll only require insurance for your property once you’ve moved in.
But it’s highly likely your mortgage lender will insist you have a buildings policy in place when you exchange contracts.
So, you should always factor this into your up-front budget.
Always shop around for the best deal but remember to make sure you have adequate cover.
5. Understand your new property’s energy efficiency
With energy bills on the rise, property energy efficiency has been thrown into the spotlight.
And because every property that goes on the market must have a valid Energy Performance Certificate (EPC) for you to view, it’s possible for you to get a great idea how efficient a home is before you buy it.
The EPC will tell you:
How energy efficient the property is
What the projected annual running costs for the property will be
Some of the work you could do to make the property cheaper to run
The information on an EPC can help you to make an informed decision about how much the property you’re viewing will cost you to run – or how much it would cost you to bring it up to a more efficient standard.
6. Be prepared to switch suppliers
It’s likely the energy supplier at your new home will place you on a ‘deemed contract’ when you move in.
This means you could be paying more on their standard tariff.
When submitting your first meter reading, ask the supplier what deals they can offer you.
You can then weigh up their offering against that of other suppliers, before deciding whether or not to switch.
7. Cut back on spending while you settle in to your new budget
If you’re spending more on property running costs in your new home, take some time to adjust to your new budget.
During this time, cut back on more general spending while you adapt, giving you time to assess how much disposable income you have away from your most common bills like gas, electricity, and water.
8. Sell the things you no longer need
Take some time to look at the items you have in your existing property before you move and consider selling anything you no longer need.
Not only will this make the moving process easier, with fewer things to transport to your new home, but it can also help to boost your moving budget.
Consider selling items at car boot sales or list things online.
