Phil Spencer claimed first-time buyers tended to be so focused on getting together a mortgage deposit they forgot to factor in other costs associated with getting on the property ladder.
Spencer, co-presenter of Channel 4’s Location Location Location with Kirstie Allsopp, warned buyers these extra costs could add up to another £5,000.
In his newly-launched YouTube channel First Home Focus, the property expert shares his top tips for first-time buyers, including how to get a mortgage and how to negotiate the best deal on the home you want.
In one of the latest episodes, Spencer warns next year’s Stamp Duty changes could catch out many first-time buyers.
He said: “Many first-time buyers are unaware of Stamp Duty costs before they apply for a mortgage – I’ve seen it happen so many times.”
At present, first-time buyers pay no Stamp Duty on homes costing up to £425,000.
From April 1, 2025, the tax-free threshold will be slashed to £300,000 – meaning thousands more first-time buyers will have to pay the tax.
Spencer said: “It’s crucial to factor this into your budget if you believe you’ll be buying over the threshold, because Stamp Duty can be a significant expense.”
April’s tax increase has already got lots of buyers worked up, and it’s pouring petrol on property price rises as people race to complete their purchases before the changes take effect.
Spencer also warned of the £5,000 plus hidden costs which catch out many first time buyers.
He warns: “First-time buyers naturally tend to be very focused on mortgages and deposits, but you also need to factor in all the other costs associated with buying.”
Spencer says there are five things first-time buyers need to look out for and the costs can add to over £5,000:
- Mortgage fees. The fee charged by your lender for setting up your mortgage, these are typically between £1000 and £2000, though you might be able to add it to your mortgage balance.
- The valuation fee which enables your lender to value your home and confirm its mortgage offer to you. This is around £300
- Homebuyer’s report or survey, which is for your benefit and vital if you’re buying anything other than a new build property, and is around £1,500
- Conveyancing, the cost of your solictor and legal fees can be around £1,000, plus VAT
- Removals, if you have a lot of furniture to transport this could cost you another to £1,000 plus VAT
Don’t also forget buildings insurance, which you will need if you are buying your home with a mortgage.
