Buying a house in Bromley and the surrounding areas is a great choice. It’s a wonderful place to raise a family while it offers easy commutes into central London while still boasting plenty of green space. Before making a purchase, though, you must understand the full financial situation.
The price that you agree to pay on a property is only a part of the equation. Our estate agents in Bromley can talk you through some of the anticipated costs once you start looking at the market. In the meantime, though, this guide should open your eyes to the hidden costs.
1. Stamp Duty
The stamp duty holiday offered at the start of the pandemic is long gone and is now one of the biggest expenses you’ll encounter once more. When buying a house in Bromley, it’s likely to cost you a few grand.
Stamp duty rates are tiered, meaning you pay nothing for the first £125,000 but then pay a minimum of 2% after that. The rates are even higher when moving home or purchasing an additional property. As a first-time buyer, though, a £500,000 home will incur a stamp duty fee of £10,000.
2. Deposit
While it is possible to buy a house or flat for sale in Bromley without a deposit, it isn’t advised. Even a low 5% deposit is often a poor choice. This is because paying a larger deposit will make your mortgage smaller, meaning you’ll lose less money to interest payments. A lower loan-to-value (LTV) ratio can also unlock lower interest rates.
The UK government does offer a range of schemes including the Lifetime ISA, which lets you gain a 25% annual bonus of up to £1,000 on your savings, to help boost your deposit and strengthen your position before visiting an estate agent in Bromley.
3. Valuation Fees
Lenders need to know that your property is worth whatever price you have agreed to buy it for. In most cases, estate agents in Bromley will have advised sellers to choose a fair price. Nonetheless, it is likely that the lender will still want to complete an assessment of the property, especially if you are using schemes like the Help to Buy Equity Loan.
Some lenders will charge for the valuation, especially when using a RICS surveyor. The costs can vary depending on property prices. When living in Bromley, you should set aside £500-£1,000 for this additional fee.
4. Surveyors Fees
In addition to a valuation, you will be required to get the property surveyed. This is an important step as it will highlight issues with the property and provide you with peace of mind. Any faults could help you negotiate the purchase price too.
Surveyors can offer three types of survey. Level 1 surveys are a Condition Report suited to new builds. Level 2 surveys are the middle option that offers a HomeBuyer Report while Level 3 surveys are in-depth Building Surveys that provide added peace of mind. Prices in London are higher than the UK average. Expect to pay £500-£1,500 depending on the type.
5. Legal Fees
Legal fees can cover a range of issues like searches, surveys, and indemnities. From a homebuyer's perspective, though, you simply need to know that solicitors or conveyancers are needed to ensure that the transaction runs smoothly and the house purchase is completed on the intended date of execution.
There’s a lot of paperwork to consider as several transactions are running simultaneously, especially if your seller is in a chain. Conveyancers may charge a flat fee or a figure based on the property value. Either way, you can expect to pay around £1,500-£2,000.
6. Electronic Transfer Fee
Even when making a 10% down payment, Bromley house prices mean that you will be required to transfer a significant five-figure payment. In many cases, the bank will charge a one-off transfer fee to facilitate the transaction.
Different lenders set different charges but the fee is usually in the ballpark of £50 and covers the transaction from your bank to the solicitors. While it isn’t a major cost, it is one that needs to be factored in when calculating the true costs of moving home in Bromley. Otherwise, you may inadvertently put yourself in a tough position from day one.
7. Mortgage Fees
When taking out a mortgage to buy a house in Bromley, your lender may also charge you a product fee. Not all lenders will require it but most do. You should be prepared to pay up to £2,500 for this service, which is also known as an arrangement fee. It can be paid right away or added to the mortgage itself, although this does mean you’ll pay interest on it.
In some cases, the cost of the arrangement fee could potentially influence which lender provides the best overall mortgage product for your home purchase in Bromley. Generally speaking, the cost will be highest on low-interest mortgage deals.
8. Building and Contents Insurance
While you may have paid contents insurance when renting, it isn’t a legal requirement. In truth, it isn’t a legal requirement for homeowners either. It is advised, though, as it protects you from theft as well as home disasters. Moreover, it won’t increase your building insurance coverage by that much. The two combined will cost around £300 per year.
The building insurance part of the process is a legal requirement for owning most properties in the UK and your Bromley house or flat needs to be covered by a package that starts on the day of completion. Besides, it’s better to be safe than sorry.
9. Leaseholders' Costs
If buying a house in Bromley that is a freehold, you won’t need to worry about this aspect. When purchasing a leasehold property, though, an annual fee will be required to cover the ground rent. It can be as low as £25 while the Leasehold Reform Act 2022 provides further protection to ensure that you won’t be charged an excessive fee.
You may also need to pay your building insurance fee to the leaseholder, although this isn’t always the case. This would be a few hundred pounds per year, although the exact fee will depend on a range of factors including the property type.
10. Estate Agents Fees
When working with estate agents in Bromley as a buyer, the great news is that you won’t have to pay a penny as it is the responsibility of the seller. If you are selling a property too, though, you will need to consider the costs for the home you’re selling.
The figure is usually set as a percentage of the property (usually set at 1-2%), which means the monetary cost will be hugely influenced by the value of the flat or house in question. It is a fee that will usually be paid on the date of completion and taken directly from the funds generated by the sale.
11. Removal Costs
Finally, you need to consider the removal costs. While it is tempting to take the DIY approach, the experience and insurance coverage of a removal company means that it’s usually better to call a professional. Besides, it will allow you to focus on collecting the keys and completing other key tasks on moving day.
The costs will depend on the complexity of the job, with prices starting at around £300 but going up to £2,000. Most homeowners can expect to pay around £500 unless they have particularly complex requirements.
The Final Word
Buying a home in Bromley will be worthwhile and allow you to enjoy a brilliant quality of life. Nevertheless, you will encounter several additional costs. While stamp duty and conveyancer fees are the biggest issues to consider, you must not overlook the smaller fees that soon add up.
Get in touch for further information so that you can make a calculated decision today.