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How to cut the cost of moving home

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Last updated on

31 January 2012

With moving expenses rising faster than house prices over the last decade, can you cut costs without cutting corners?

The nitty-gritty

The table below shows what Lloyds TSB included in its calculations, and the average costs in 2001 and 2011:

 Fees

Estimated costs 2001

Estimated costs 2011

10 year £ change

10 year % change

Estate agency

£2,059

£3,377

£1,318

64%

Mortgage arrangement

£306

£1,076

£770

252%

Stamp Duty

£1,144

£1,876

£732

64%

Conveyancing

£572

£938

£366

64%

Home removal

£805

£1,110

£305

38%

Surveyors

£405

£545

£140

35%

Total cost of moving home

£5,290

£8,922

£3,632

69%

Sources: Lloyds TSB, Halifax, Moneyfacts, Which?, Pickfords

As you can see mortgage fees, estate agency fees and Stamp Duty account for more than three-quarters of the total expense, and they have also risen by the greatest amount over the last decade. So they are the best starting point on your quest to cut costs.

Cut back on estate agent fees

Estate agency fees remain the largest single component of the cost of moving home, accounting for 38% of total expenses.

Many agents will charge you around 1-2% of the sale price of your home, which totals around £3,000 on an average priced house, or much more if you are selling an expensive property.

Either way, it isn’t pocket change, which is why an increasing number of sellers are looking for online ways to sell their home and save money.

Online estate agents are cheaper because they don’t have to fork out for a branch network. They simply need a website and maybe a call centre.

They offer a range of different price structures from flat fees (starting at less than £400) to a percentage of the property's value (or a combination of the two). You can find online estate agents charging just 0.5% of your property’s sale price for example, a fraction of what you would pay a traditional agent.

Some online estate agents offer a menu approach to their pricing, so you can choose as much or as little help as you need. They may offer advertising and marketing of your property for example, a ‘for sale’ sign outside your house, a floorplan or video tour, or somebody to conduct viewings. You are able to pick and choose each service so you can tailor the costs to your exact needs.

One thing to check is where the online agent will market your property. With so many people househunting online, it is very important to be listed on the major property portals like rightmove.

Save on Stamp Duty?

The second biggest moving cost is Stamp Duty, accounting for a fifth of average moving expenses. Unfortunately it’s a compulsory tax that is unavoidable.

If you are a first-time buyer you still have just enough time to buy a property up to £250,000 and pay no Stamp Duty. But this temporary concession only lasts until 24th March.

Some sellers will offer to ‘pay’ your Stamp Duty for you, but of course it’s just a sales gimmick, and the property price they will accept has been adjusted to take it into account.

Most importantly, beware of Stamp Duty avoidance techniques, involving cash in brown envelopes between vendors and buyers. It might seem like a clever loophole but it is fraud, and is punishable as such.

Go fee-free on your mortgage

Mortgage arrangement fees have more than trebled over the past decade, according to Lloyds TSB. Moneyfacts recently reported that they have rocketed by 69% in the last 12 months alone to an average of over £1,300.

Of course, you can choose to add your mortgage fee onto your loan rather than pay it upfront, but then you will be charged interest on it for the duration of your mortgage term, meaning it will cost you significantly more in total.

Alternatively, you could look at fee-free mortgage options, where there simply is no mortgage arrangement fee. Lenders usually offset this perk by adding a little onto your payrate, so you need to decide if saving on your immediate costs is worth it for higher ongoing monthly repayments.

As a rule of thumb the smaller your mortgage the more likely that a fee-free deal will suit you, even if you pay a little more on your interest rate. With a large loan you are often better off making a significant upfront payment in order to secure the lowest rate possible.

Similarly, if you have a high salary but a small savings pot a fee-free mortgage might suit your circumstances, regardless of the fact that the interest rate is a bit higher.

As always, the best deal for you depends on your individual circumstances, so be sure to do your sums. Below are some of the best fee-free mortgages on the market right now:

Variable rates

Lender

Type of deal

Rate

Max loan-to-value

HSBC

Two-year discount

2.49%

60%

HSBC

Term tracker

2.49%

65%

HSBC

Term tracker

2.59%

70%

Market Harborough BS

Three-year discount

2.65%

75%

First Direct

Two-year tracker

2.69%

65%

Principality BS

Two-year discount

2.74%

75%

Fixed rates

Lender

Type of deal

Rate

Max loan-to-value

Principality BS

Two-year fix

3.14%

75%

NatWest/RBS

Two-year fix

3.15%

60%

First Direct

Two-year fix

3.19%

65%

Principality BS

Four-year fix

3.54%

75%

HSBC

Five-year fix

4.09%

70%

Clydesdale/Yorkshire Bank

Five-year fix

5.89%

90%

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

More: How to stand the best chance of getting a mortgage | How to get a mortgage with a small deposit

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