Buying a Home – Have You Planned for the Extra Costs?

Buying your first home is an exciting prospect. The high deposits usually required today, however, mean that is likely that some, if not all, of your savings will be used to help purchase your dream property. Whilst you may have factored your mortgage repayments and bills into your budget it is important to ensure that you have also made provisions for a number of other costs.

Mortgage Fees

Your mortgage lender may charge an arrangement fee for putting the mortgage in place. Some lenders allow you to add this to the mortgage or you may prefer to pay it in advance rather than paying interest on it for the next 25 years.

If you are borrowing more than 75% of the value of the property then your lender may also require that you pay an insurance premium for mortgage indemnity protection. This protects them if you fall into financial difficulty and default on your repayments.

Mortgage providers also require a basic valuation of the property you are buying to be carried out. Whilst the lender will commission this you may well have to pay for it. Expect 125 or more, depending on the size of the property.

Survey

The lender’s valuation is only interested in price and not the condition of the property. It is, therefore, advisable to have your own independent condition survey carried out so that you are aware of any immediate issues as well as any longer term repairs that will be required. A home buyer’s report usually costs between 250 and 500 and a full structural survey around 1,000.

Legal Fees

You will also need to budget for legal fees. It is a good idea to shop around as some firms will charge an hourly rate and others a flat fee, depending on how complicated the transaction is likely to be. As well as the fee there are a number of other costs that you will need to pay via your solicitor such as local authority search fees and a land registry fee.

Stamp Duty

If the property that you are buying costs more than 125,000 you will also need to budget for stamp duty. This is payable at a rate of 1% on properties purchased between 125,000 and 250,000 and 3% on properties between 250,000 and 500,000.

Moving costs

If you are moving yourself then remember to factor in the cost of hiring a van. If you will be using the services of a removal agent then make sure to shop around as there can differences between companies.

Other costs

There are also a number of other costs that you should bear in mind. You will need to arrange buildings insurance from the point of exchange. It is a good idea to put contents insurance in place too if you do not already have it. You many also incur fees for disconnecting and reconnecting services such as gas, electricity and phone lines. It can also be advisable to budget for a contingency fund so that if an unexpected problem arises and you need to get help with your debts you already have something to fall back on.

Moving is an expensive business. As well as the obvious costs such as your mortgage repayments and bills it is important to factor in all the one-off costs associated with moving and setting yourself up in your new home. By organising your finances and budgeting carefully in advance, however, you will be able to relax and enjoy your new home with less chance of the unexpected.

 

This guest submission was contributed by Lloyd on behalf of IVA Expert.

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