Initial Costs to Plan for when Buying a New Home?
If you’re about to make one of the biggest investments of your life – buying a home – it is crucial that you have looked into every possible cost that you could be presented with. You may feel as though you can comfortably afford your mortgage, but have you taken into account all of those additional costs, such as stamp duty, solicitor fees and on-going monthly payments of various insurances?
There are many costs involved in buying a house, and initial ones may be obvious to you and budgeted for, however, other small costs can soon creep up and long-term planning is essential. Here are some costs that you might need to look out for:
Deposit
This sum of money probably won’t have slipped under your radar, but is going to take a significant wedge out of your savings. Lenders will generally lend you an amount of money that is calculated based on your wages, and they will advise you about how much you can afford to pay in the future. Even if they offer to lend you a lot of money, be aware that this will need to be paid back in larger chunks in the future, so be realistic when it comes to borrowing.
Stamp Duty
This is a type of tax that is paid on the overall value of the property; which is normally between 1 to 4%. However, if the purchase price is lower than £125,000 you won’t have to pay this Stamp Duty Land Tax; equally, some first-time buyers do not have to pay for this, which is the same if the property is deemed to be in a ‘disadvantaged’ area. If you are buying a newly built property, check to see if the developer has paid this for you, as many have started to include this in the price.
Solicitor Fees
A solicitor will need employing throughout the buying and selling of your property, and these fees will vary with each property and solicitors; but they will include things such as, local authority searches, legal fees, administration costs, land registry fees and drainage/environmental searches.
Removal Services
If you are moving quite a distance or you can’t carry out the moving yourself, you will need to look at using a removal service to help you with the move. Again, these prices will vary depending entirely upon what size of property you have, whereabouts you live, how far you’ll be moving, how much of the packing will be carried out by yourselves and how much furniture you have.
What are the ongoing costs when buying a house?
When it comes to planning budgets below are some of the key monthly costs you will have to take into consideration.
Mortgage Repayments
When you speak to your lender you will be able to calculate how much this will cost, and you should have included these in your budget. Always remember to account for any future inflation’s of interest rates that could arise. Furthermore, if you are only paying the interest on your mortgage, you should have a monthly budget in place so you are able to pay off your mortgage loan by the end of it’s term.
Insurances
These are other essential costs that will need budgeting for as long as you have your property.
Life insurance/mortgage protection is something that is vital for you whilst you have a mortgage as it ensures that payments are reduced or the insurance company pays off what is owed should you die before you have repaid it. Always check the full terms and conditions with your insurance provider.
Another type of insurance that you will require is building and contents insurance, which can be provided by your lender or another provider – but many lenders will insist on you having this type of insurance before they lend you the money.
As you can see, there are several costs that need taking into equation before buying a house – but always try and save that little bit of leftover cash in case bills increase or you need some emergency repair work carrying out on the house.
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