Do you know the true costs of buying a house?

So you have decided to move homes have you?

You have set the budget, know exactly what deposit you have and how much of a mortgage you can afford. Perhaps it is your first time to actually move, first property or perhaps you haven’t moved for a while. When visiting a previous client of ours we were struck by how much they had forgotten when coming to move. Granted they had only moved once as first time buyers in the 1970’s and their most recent move was one that has come over 45 years of living in the same property. The amount they had forgotten about moving, and indeed the process of moving was unbelievable. Perhaps it was things were done much differently back then and now they were moving in the modern era they had come across processes that didn’t exist in the 70’s. Either way they felt out of their depth and needed our help.

So with this in mind, as a first time buyer or you have done it before – have you considered the additional costs of moving. The ones you may not know are going to crop up, maybe you know about them but haven’t a clue how much they are going to be? Perhaps they are costs that you wish to consider as you are going along and use pay check to pay check to cover the additionals. We would highly discourage this and make a plan with an additional contingency amount left to one side for any surprises.

So what are these additional costs we speak of?

• Estate Agency Fees: These are usually set before you sell the property so they should be known to you to be able to plan a way of covering them. These are obviously only applicable if you have a property to sell. However, if you don’t have a property to sell but have used a property consultant to source you a property rather than doing to work yourself you may have those fees to pay instead.

• Stamp Duty:  If the property is over £125,000 then you will have a minimum of 2% to pay for stamp duty but this will depend on the value of the property itself.

• Deposit: You will have to put down a deposit on the property, usually paid to the Conveyancer or solicitor that you are using and goes towards the mortgage you have arranged. Some first time buyers maybe able to get a mortgage with a 0% deposit (February 2019) but this is only with the help of a close family relative. Most property buyers will have to put down a minimum of 5% deposit, more than likely a 10% deposit will be required. However, the more of a deposit you can put down the better rate mortgage you will be able to get.

• Conveyancing fees: These are fees paid to your legal representative for the work they do on your contracts, land searches, land registry, the time it takes to deal with the seller’s legal team and sorting out the deposits with Mortgage Company as well as the stamp duty if this is required. Usually you instruct your legal team after you have had an offer accepted so you may not know exactly what the fee is going to be whilst in the early stages of looking for a suitable property. Fees can range from a few hundred pounds to a few thousand depending on the level of service you require.

• Surveys: As part of the mortgage process it is usually a condition of someone lending you the money to buy the property to seek assurance that the property is sound enough to lend against. A survey is required for this purpose. However, even if you were a cash buyer we would most certainly recommend getting a thorough survey to give you peace of mind that the property is of good standing and there are no underlying problems. If you can afford it, the standard search survey is a basic one so we would recommend going for a more detailed search.

• Insurances: These insurances vary but in certain cases a mortgage lender will require you to have anyone or more of the following. Even if they don’t request for you to take out them, we would implore you to look into the following:

-          Home insurance – protecting the bricks and mortar of the property (including roof and structure of the building)

-          Contents insurance -  exactly what it says on the tin, your personal valuables and contents in the house

-          Life insurance – if the worst was to happen, could your family cope without you being there financially?

-          Critical illness insurance – if you had to go off work, with some illnesses and diseases the insurance will pay out so you can concentrate on the treatment ad getting better and not have to worry about the financials

-          Income protection Insurance – SSP might be paid out for you if you are off but what if that doesn’t cover even just your basics, how would you live on a reduced amount of income?

• Renovation of the property: Before you move in or shortly afterwards you might want to modernise the property, it may need a new kitchen or bathroom, new carpets throughout or perhaps some redecoration. Whatever the level of work to be done it will all cost money that you will need to budget for.

• Moving Costs: Are you moving yourself, hiring a van and physically doing the work yourself, or are you hiring removal firm to take the stress and hard work out of moving? Either way will cost money even if you are doing it yourself (unless you already have the van, boxes, packaging etc.)

• General Costs: These are the ones that you will incur on a month to month basis and will need to ensure you have the mortgage payments but you will also need to budget for the following:

-          Council Tax

-          Furniture/ white goods (they don’t last as long as they used to)

-          Utilities

-          Maintenance of the property

-          Food

-          Transport

-          Everyday costs – lunch @ work, clothing, petrol, socialising, hobbies, phone bills etc

So as you can see it is not just about whether you can afford the mortgage payment you worked out on the online mortgage calculator. There are so many additional costs that can push the fees in total, depending upon property value, up to £10k or more.  These are costing that we can go through with you or any mortgage advisor worth their qualification will be able to advise on. The main point is to not stretch yourself. It is about getting the best house for you but not being in a situation in a few years of having the property taken off you as you haven’t been able to afford the upkeep of it.

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