UK Property Advice: The Hidden Costs of Buying Your First Home
Most first time buyers enter the market with starry eyed enthusiasm - they have seen their dream home and are already mentally living in it- choosing the furniture, the decor - they have no experience of how to buy a home.
They have chosen the property and know the price - or do they? The cost of a buying a house is more than just the Purchase Price and many first time buyers get a rude awakening: How much money can you afford to spend on your new home? It is important to think about affordability before thinking about the type of Property you would like.
With the average house price being around £161,000, your choice may be limited.
Many first time home buyers start with buying a flat, which is usually the most affordable choice.
Where will you get the money to buy a property from? Most first time home buyers finance their purchase by obtaining a mortgage from a bank or building society.
Most lenders will only lend 75-80% of the value of the Property and a maximum of 3 times your salary.
In order to obtain a mortgage you will have to demonstrate not only that you are in steady employment but also that you have a good credit record.
You will also have to raise 20- 25% of the purchase price by way of deposit.
Additional fees are: · Mortgage administration or application fee - can be in the region of £1300 · Valuation fee (payable to your lender)- £200.
00 -£250.
00 (if your lender's valuer rejects the property, you may have to find another property and pay another valuation fee).
· Basic survey fee- £250.
00-£450 or if having a full structural survey (recommended for older properties) - £800.
00 · Mortgage Indemnity Fee ( if you are borrowing a high percentage of the value of the Property) -£1500 per £100,000 being borrowed.
· Conveyancing fees- £500.
00 · Stamp Duty -due to the current exemption for first time buyers this is only payable if the property is over £250.
00.
(from 24th March 2012 this exemption will cease and Stamp Duty will be payable on properties over £125,000) Stamp Duty rates start at 1% of the value of the Property.
Land Registry fees- £280.
00 (for properties under £500.
00).
Removals- £400 + - unless of course, you are able to hire a van and move your furniture yourselves.
Cost of furnishing.
If you have been living at home - you will not have furniture of your own.
When buying your first home, financial margins are tight - it is particularly important to keep costs down to get the most for your money.
The most important consideration is to get the right conveyancer to act for you.
An inexperienced and inefficient conveyancer can cost you money especially if the transaction is delayed and either the transaction falls through, or your mortgage offer expires and you have to start again.
Further, if your conveyancer does not spot an issue with the Property, for example, a planning or buildings regulations issue or a restrictive covenant that has been breached you, as the new owner of the Property may face enforcement action.
They have chosen the property and know the price - or do they? The cost of a buying a house is more than just the Purchase Price and many first time buyers get a rude awakening: How much money can you afford to spend on your new home? It is important to think about affordability before thinking about the type of Property you would like.
With the average house price being around £161,000, your choice may be limited.
Many first time home buyers start with buying a flat, which is usually the most affordable choice.
Where will you get the money to buy a property from? Most first time home buyers finance their purchase by obtaining a mortgage from a bank or building society.
Most lenders will only lend 75-80% of the value of the Property and a maximum of 3 times your salary.
In order to obtain a mortgage you will have to demonstrate not only that you are in steady employment but also that you have a good credit record.
You will also have to raise 20- 25% of the purchase price by way of deposit.
Additional fees are: · Mortgage administration or application fee - can be in the region of £1300 · Valuation fee (payable to your lender)- £200.
00 -£250.
00 (if your lender's valuer rejects the property, you may have to find another property and pay another valuation fee).
· Basic survey fee- £250.
00-£450 or if having a full structural survey (recommended for older properties) - £800.
00 · Mortgage Indemnity Fee ( if you are borrowing a high percentage of the value of the Property) -£1500 per £100,000 being borrowed.
· Conveyancing fees- £500.
00 · Stamp Duty -due to the current exemption for first time buyers this is only payable if the property is over £250.
00.
(from 24th March 2012 this exemption will cease and Stamp Duty will be payable on properties over £125,000) Stamp Duty rates start at 1% of the value of the Property.
Land Registry fees- £280.
00 (for properties under £500.
00).
Removals- £400 + - unless of course, you are able to hire a van and move your furniture yourselves.
Cost of furnishing.
If you have been living at home - you will not have furniture of your own.
When buying your first home, financial margins are tight - it is particularly important to keep costs down to get the most for your money.
The most important consideration is to get the right conveyancer to act for you.
An inexperienced and inefficient conveyancer can cost you money especially if the transaction is delayed and either the transaction falls through, or your mortgage offer expires and you have to start again.
Further, if your conveyancer does not spot an issue with the Property, for example, a planning or buildings regulations issue or a restrictive covenant that has been breached you, as the new owner of the Property may face enforcement action.
Source...