Buying a home is an exciting time for anyone and its very easy to get overwhelmed with all of the information you have to learn in a short time frame. We have put together a guide of all of the costs you should consider when purchasing a property to help you consider everything and buy a property within your over-all budget.
Naturally, this is the biggest factor you probably consider when you start your search but the over-all budget needs to factor in some of the other costs associated with buying a property.
Perhaps you’ve found the dream home but it needs a bit of TLC before it can really feel like home. Be realistic about these costs; fitting a new kitchen may need some budget, not just for the kitchen itself but for labour, installation or any building amendments. Many estate agents will factor in the cost of home improvements to the asking price so make sure you do too.
Before you buy, its best to get some estimates in for the work and budget for a little extra. It’s definitely better to factor in any unforeseen costs which could leave you struggling to keep up your payments down the line.
Broadband connections and speeds really vary across the country and this can make a difference to the package you are able to buy. Most modern homes are able to get fibre optic technology now, but some can’t so its worth checking it out before you get tied into a contract. Get a good deal that is fixed for a decent length of time, checking carefully for an escape route in case the provider isn’t able to provide a good service to your address.
Gas, electricity and water can really add up depending on the size of your property. It recently became mandatory for a water meter to be installed in homes (where it is possible to do so), billing customers for every drop that they use, which in some cases doubled water bills!
Everyday commodities change in price all the time depending on the market so its important to get a good deal which you can fix for some time in the event of prices increasing.
This is an often forgotten cost and requires an upfront cash payment which will not be included as part of your investment. You are unable to include this fee in a mortgage loan so make sure you consider the stamp duty prices of any priced property you put an offer on. Remember that stamp duty tax has increased for buy-to-let mortgages as of April 2016 so it’s worth making sure you know the tax bands before you get an offer accepted.
Furniture & fittings
Upsizing your home is a very exciting time – more space, more room to move around and usually more furniture! If you are moving, consider what furniture will go in each space as replacing or buying extra could cost a bit on top of your purchase price.
Unfortunately most people need a solicitor to help with conveyancing when it comes to moving home and they all come with their own price tags. Ranging from online-only companies, to meeting with a real person in a solicitors firm and getting a personal service – the prices will differ! The key message is not to sacrifice quality for the sake of price but make sure you get a deal which is affordable for you, even in the eventuality of the sale not going through. Do your shopping, meet with a few people first and make your decision carefully. Ask each professional to provide transparent price information for each stage of the sale.
This is a simple check and most property adverts will include which council tax band the property falls into. Council tax doesn’t depend on the number of residents or bedrooms so you will have to pay the full tax bill no matter how many people live there, after any concessions if applicable.
Most leasehold properties will have a management fund for ongoing service charges. These cover expenses such as insurance, maintenance and repairs of any shared common areas in the building such as the roof, heating and lighting. Buying a freehold property may be shared with other freeholders in which case a maintenance fund may not be in place, but it is good practice to put some money aside every month in the unfortunate event of any building repairs.
Moving home is a fun and exciting time but it can be hard work! Whether you decide to go it alone, hire a van or pay for a full removal service, you should factor in these costs as part of your over-all budget. Don’t forget to consider any time delays which may require you to use a storage lockup for your furniture on a short-term basis.
If you are getting a mortgage on a property, the lender will usually require that a survey is done on the property to assure them it is worth the value of the loan. Their minimum requirement is usually a valuation survey which can be done for £200-300. However, these surveys do not get released to anyone except the lender and so won’t prepare you any warning signs found.
It is usually recommended that you carry out a full RICS homebuyers survey at £400-600 which gives you access to the findings and gives you pre-warning of any urgent work needed on the property. Many buyers have found the findings of a homebuyers report to be a good negotiation tool on the asking price, not to mention the trouble it could save if very big pieces of structural work is needed.
Buying a new home requires lots of budgeting and thought but you can lower the risk of any nasty surprises with good planning. This list is by no means exhaustive, but should give the average home buyer a list of factors to consider when putting their property budget together.