When Do You Pay the Costs of Buying a House?

When Do You Pay the Costs of Buying a House?

Home-buying costs are not paid at one single stage. Some fees are payable when you apply for a mortgage, others become due after your offer is accepted, and the largest payments are normally required around exchange and completion.

Simple answer: Buyers usually start paying fees after an offer is accepted. Searches, surveys and some mortgage charges are paid before exchange. The exchange deposit is paid at exchange, while the remaining purchase money, legal bill and property tax are normally collected before completion.

Understanding the payment timeline helps you keep enough accessible money available and reduces the risk of a property purchase being delayed by missing funds.

Home-Buying Payment Timeline at a Glance

Stage 1: Costs Before Making an Offer

Many buyers do not pay a fee simply to view a property or make a normal offer through an estate agent. The seller usually pays the selling estate agent’s commission.

However, you may have some early preparation costs.

Mortgage Adviser or Broker Fee

Some mortgage brokers do not charge the buyer and instead receive commission from the mortgage lender. Others charge a fixed fee, percentage fee or a combination of both.

A broker fee might be payable:

• when the broker begins work;
• when the mortgage application is submitted;
• when the mortgage offer is issued; or
• when the property purchase completes.

The broker should explain the amount and payment stage before you agree to use the service.

Mortgage Agreement in Principle

Many lenders provide an Agreement in Principle without charging a fee. However, an Agreement in Principle is not a formal mortgage offer and does not guarantee that the full application will be approved.

Property Search or Buying Services

If you appoint a buying agent or property-search service, an initial registration or engagement fee may be payable before the search begins. Any success or acquisition fee may become payable later under the separate service agreement.

Stage 2: Reservation Fees

A reservation fee is different from a mortgage deposit or exchange deposit. It may be required when buying certain new-build, shared ownership or auction properties.

New-Build Reservation Fee

A developer may request a reservation fee to hold a particular plot for a limited period. The reservation agreement should explain:

• how much must be paid;
• how long the property will be reserved;
• whether the fee forms part of the purchase price;
• what amount is refundable;
• what happens if the mortgage is refused; and
• the deadline for exchanging contracts.

Shared Ownership Reservation Fee

Under the shared ownership scheme in England, a provider may charge a reservation fee of up to £500. GOV.UK states that this is normally deducted from the final amount paid on completion, but it may not be refundable if the purchase does not proceed.

Auction Reservation Fee

Modern Method of Auction transactions may require a reservation fee soon after the bid is accepted. It can be a substantial amount and may be separate from the purchase price.

Before paying: Check whether a reservation fee is refundable, whether it counts towards the purchase price and whether Stamp Duty may be affected by the payment arrangement.

Stage 3: Mortgage Application Costs

Mortgage fees can become payable at different points depending on the lender and product.

Adding a mortgage fee to the loan can reduce the cash needed immediately, but the fee becomes part of the mortgage balance and may attract interest.

A mortgage fee paid upfront may not always be refunded if the purchase or application does not proceed. Check the lender’s fee terms before payment.

Stage 4: Solicitor and Conveyancing Payments

After your offer is accepted, you normally instruct a solicitor or licensed conveyancer. The conveyancer may ask for an initial payment on account before starting work.

This early payment can be used for:

• identity checks;
• anti-money-laundering checks;
• Land Registry title documents;
• property searches; and
• other third-party costs called disbursements.

The legal fee itself may be divided into stages. Some firms request:

1. an initial amount when instructed;
2. further money when additional searches or specialist work are needed; and
3. the remaining legal balance shortly before completion.

What Is a Disbursement?

A disbursement is money your conveyancer pays to another organisation while handling your purchase.

Examples include:

• search providers;
• HM Land Registry;
• bank transfer providers;
• managing agents or freeholders;
• indemnity insurance providers; and
• property-tax authorities.

Ask whether your conveyancing quotation includes VAT and all likely disbursements. Leasehold, new-build, shared ownership, gifted-deposit and Help to Buy ISA work may create additional charges.

Stage 5: When Do You Pay for Property Searches?

Property searches are normally ordered after the conveyancer receives the draft contract papers and confirms the property details.

GOV.UK states that buyers usually pay for searches upfront. The conveyancer may not order them until the money has cleared.

A normal search package may include:

• local authority search;
• water and drainage search;
• environmental search; and
• location-specific searches for mining, flooding or other risks.

Should Searches Be Ordered Immediately?

Ordering searches early may reduce delays. However, some buyers wait until the mortgage application has progressed or the lender’s valuation has been completed because search fees may not be recoverable if the mortgage is declined.

Waiting can reduce immediate financial exposure but may extend the transaction. The timing should be discussed with the conveyancer based on the property and mortgage position.

Stage 6: When Do You Pay for a House Survey?

An independent home survey is normally paid for when the survey is booked. Most surveyors will not inspect the property until their fee has been paid or payment arrangements have been confirmed.

The survey is usually arranged after:

• the seller accepts your offer;
• the property is taken off the market or marked sold subject to contract;
• the mortgage application has been submitted; and
• you have considered whether to wait for the lender’s valuation.

A specialist inspection for drainage, roofing, damp, electrics, gas, timber or structural movement will normally require a separate payment to the relevant specialist.

Remember: A mortgage valuation is for the lender. Paying for the lender’s valuation does not normally provide the same inspection or protection as an independent buyer’s survey.

Stage 7: Costs Payable Before Exchange

Exchange of contracts is a major legal milestone in England and Wales. Before exchange, your conveyancer will normally confirm that the deposit and other required funds are available.

Exchange Deposit

The contractual exchange deposit is traditionally 10% of the purchase price, although a smaller amount may be agreed.

The money normally needs to be cleared in your conveyancer’s client account before exchange. Buyers relying on a gifted deposit, Lifetime ISA or money from an overseas account should allow additional processing time.

Buildings Insurance

In many England and Wales transactions, the buyer becomes responsible for the property from exchange. Buildings insurance may therefore need to begin on the exchange date rather than completion day.

The contract and mortgage conditions should be checked because responsibility can differ, particularly for leasehold properties, new builds and other specialist transactions.

Removal Company Deposit

A removal company may request a booking deposit once the completion date is known. The remaining removal charge may be payable before moving day.

Check the cancellation terms before booking removals because completion dates can change until contracts have been exchanged.

Stage 8: Costs Payable Before Completion

Before completion, your conveyancer sends a completion statement showing the money received, money due and payments that will be made for you.

The statement may include:

• purchase price;
• exchange deposit already paid;
• mortgage advance;
• remaining buyer contribution;
• legal fees and VAT;
• search costs;
• property tax;
• Land Registry fee;
• bank transfer fee;
• leasehold notice or compliance fees;
• service charge adjustments; and
• other agreed completion costs.

Your remaining money is usually requested several working days before completion. This allows time for bank security checks and gives the conveyancer an opportunity to confirm that cleared funds are available.

Payment security: Independently verify your conveyancer’s bank details before transferring your deposit or completion funds. Do not rely only on an email containing new or amended account details.

Stage 9: What Is Paid on Completion Day?

On completion day, the buyer’s conveyancer combines:

• the buyer’s remaining funds;
• the mortgage money received from the lender; and
• any deposit already held or paid.

The conveyancer transfers the required completion money to the seller’s conveyancer.

Once the seller’s conveyancer confirms receipt:

1. the purchase legally completes;
2. the seller must release the property as agreed;
3. the estate agent or seller can release the keys; and
4. the buyer becomes the legal owner.

Buyers do not normally transfer money directly to the seller on completion. The payment is handled through the conveyancers.

Exchange and Completion on the Same Day

If exchange and completion happen on the same day, the exchange deposit may not be transferred as a separate payment. The conveyancers may proceed using the complete purchase funds, but all money must still be available before the transaction becomes binding and completes.

When Is Property Tax Paid?

The applicable property tax depends on where the home is located.

The conveyancer normally collects the tax from the buyer before completion and submits the return and payment afterwards. This is why property tax usually appears on the completion statement even though the official deadline is after completion.

The buyer remains responsible for ensuring that the correct return and payment are made. After completion, keep a copy of the tax return or submission certificate with the purchase documents.

Stage 10: Costs After Completion

Some of the most easily missed home-buying costs begin after the keys are collected.

First Mortgage Payment

The lender will confirm the date and amount of the first mortgage payment. It may not be collected exactly one month after completion, so buyers should check the lender’s completion letter or payment schedule.

Council Tax or Domestic Rates

The buyer becomes responsible for Council Tax from completion in England, Scotland and Wales. Northern Ireland uses domestic rates. The relevant authority should be informed of the ownership and moving date.

Utilities and Services

Buyers may need to pay for:

• gas and electricity used from completion;
• water and wastewater charges;
• broadband installation;
• TV Licence;
• home insurance;
• mail redirection; and
• security or alarm services.

Leasehold and Estate Charges

Leasehold buyers may receive requests for notice fees, certificates, service charges or ground rent where payable. Freehold homes on managed estates may also have estate maintenance charges.

Repairs and Moving-In Costs

Changing locks, boiler servicing, cleaning, decorating, furniture and urgent repairs can create immediate costs that were not included in the purchase price.

Which Costs May Be Lost If the Purchase Falls Through?

A “no completion, no fee” conveyancing arrangement may cover part of the firm’s legal fee but not necessarily searches, identity checks or other third-party expenses. The written terms should explain what remains payable.

England, Wales, Scotland and Northern Ireland

The exact legal milestones differ across the UK.

• England and Wales: The transaction normally becomes legally binding at exchange of contracts.
• Scotland: The binding stage is normally linked to conclusion of missives rather than an England-style exchange.
• Northern Ireland: The conveyancing and contract process differs from England and Wales, although SDLT still applies.

The timing of deposits, insurance and completion funds should be confirmed with the legal professional handling the transaction in the relevant UK jurisdiction.

Practical Payment Checklist

Frequently Asked Questions

Official UK Sources

• GOV.UK: How to Buy a Home
• GOV.UK: Offers, Searches and Surveys
• MoneyHelper: Home-Buying Money Timeline
• HMRC: When to Pay Stamp Duty Land Tax
• Welsh Government: Paying Land Transaction Tax
• Revenue Scotland: LBTT Return and Payment Deadline