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Budgeting for buying your first home

Metta Stockman


Buying your first home is a significant financial commitment and one of the most important investments you’ll make. While mortgage payments are the major cost associated with purchasing a home, there are other expenses to consider when budgeting.

We spoke to Gair Couston, Head of Conveyancing at Shiells and Chairman of TSPC, to highlight some of these expenses.


Mortgage arrangement fees

Mortgage arrangement fees are charged by the lender to cover the costs of setting up and managing the mortgage. These fees can vary depending on the type of loan, the amount borrowed, and other factors. Your mortgage adviser or lender will inform you of these costs at the outset of the application process.

First-time buyers should understand these fees before committing to a mortgage agreement. Knowing what to expect can help you make an informed decision when choosing a mortgage lender and loan product.


Land and Buildings Transaction Tax (LBTT)

Land and Buildings Transaction Tax (LBTT) is a tax charged on certain property transactions in Scotland. The amount of LBTT payable is calculated according to the value of the transaction, with higher rates for more expensive properties.

Purchase Price Range LBTT Rate
£0 to £145,000 No tax
£145,001 to £250,000 2%
£250,001 to £325,000 5%
£325,001 to £750,000 10%
Over £750,000 12%


A relief for first-time buyers is available, increasing the residential nil rate band of LBTT to £175,000.

Your solicitor will collect this money from you in advance of your settlement date. You can find out more about how much tax you will pay on your property purchase here.


Solicitor or conveyancer fees

Solicitor or conveyancer fees ensure the legal side of a house purchase is handled correctly and professionally. The amount you pay will vary depending on factors such as the price, location, and type of property, as well as whether you’re using a government initiative to help fund the full price.

Your solicitor will provide you with an initial estimate of the likely costs involved in your purchase at the start of the process. In addition to their fees, your solicitor will collect from you in advance the charges made by the Land Registers of Scotland to register your title and any mortgage deed. These charges are on a sliding scale based on the value of the property.


Buildings insurance

Buildings insurance is crucial for protecting your home and its contents. It covers the cost of damage or destruction to your property, as well as any associated legal costs. Buildings insurance can also provide protection against theft, fire, flood, storm, and other natural disasters. With the right buildings insurance policy in place, you can recover from any losses quickly and easily.


Removal and moving costs

There are many costs associated with removal and moving into a new home, from hiring a removal company to paying for packing materials. It’s important to consider all these costs when planning your move to avoid overspending.


Initial furnishing and decorating costs

Furnishing and decorating a home can be expensive, especially if you’re starting from scratch. From furniture to paint and accessories, the cost can quickly add up. A fresh coat of paint is one of the best ways to give a new look. You can choose to get professionals for a perfect finish or try DIY to save some money.


Expert advice

Gair Couston from Shiells comments: “Owning a home costs more than you might expect. If you’re thinking of buying a property, it’s really important to make sure you have saved enough money to cover all the upfront costs. Remember not to only think about the purchase price but all the other associated costs as outlined above. Be sure to compare quotes for the services you need and avoid paying unnecessary fees wherever possible.”


Contact a TSPC solicitor estate agent today to start your property journey!