The Financial Eye-Opener For First-Time Buyers

The UK’s property market has been topic of discussion for some time, especially in light of our current economic situation – the fall of house prices, the hesitant lenders, and the overall difficulty of achieving a place on the first step of the property ladder. There have been some developments over the years to help battle this factor such as the growing popularity of online estate agents and the options of undertaking a private house sale, and whilst some still believe that the costs involved in buying a house just relate to a mortgage and a deposit, the truth can be a little bit startling, especially for first time buyers. 

Here is a simple breakdown of costs that you can expect to pay when buying a home:

Deposit
It’s the big one, the one that everyone struggles to save up and the one that can stand in the way of getting on the ladder. A deposit is easily the largest financial blow related to buying property and now that lenders are more hesitant to give out 100% loan to value mortgages, this leaves a rather large gap to be filled. For an average mortgage you might expect to save 15-20% deposit, so for a property worth £150,000 you are looking at around £23k. It’s no easy task, but some effective ways of generating this money include asking for investment from parents and other family members, or even clubbing together with friends to purchase a property and therefore split the deposit amount.

Mortgage Arrangement Fees
Finding the right mortgage can be a little frustrating as these days there are just so many options; from interest-only, offset and flexible mortgages to cash-back schemes, but one thing to always be aware of before committing to a mortgage is the arrangement fee. Generally speaking, the lower interest deals have higher arrangement fees and whilst you may be given the option to add this amount onto the mortgage it may not always be efficient to do so. Arrangement fees can be anywhere between £100-£1000, so if you have the cash to spare it is always recommended that you pay these upfront and avoid incurring interest on the balance over the term of the mortgage.

Valuation
When you purchase a property, even a private house sale, your mortgage lender will require a valuation to confirm that the property is worth what you intend to pay for it. Some mortgages offer a free valuation with some deals, but others that do not will generally charge around £250.

Professional Conveyancing
Buying a house is a legal matter and you should always consult a professional solicitor to act on your behalf in such circumstances, but of course these services are not free. Conveyancing services should offer an upfront itemised bill on what to expect and most solicitors will charge a one-off fee for their services depending on the details of the house, and this can cost from £400 upwards. Again, this fee can sometimes be included onto the mortgage, but think carefully before doing so.

Survey
Some make the mistake of thinking that the mortgage valuation is an ample survey of their new property. This is not correct. With every purchase a buyer should always instruct a professional surveyor to comprehensively check the building for any structural defects or any issues that could potentially cost you a lot of money in the future. There are three types of surveys available – a condition report, a HomeBuyers Report and a building survey – and with each survey comes more detail and cost, but for older properties a full building survey is always recommended. The cost of a survey is dependent on the property price and size, but you can expect to pay £200-£500.

Searches
As part of the conveyancing process, local searches are required to complete the purchase of a property, and this involves raising environmental, water and drainage searches from the local authority. Some conveyancers will have this element inclusive of their standard service fee, if not these additional costs will be added on, so you can expect £100-£200 more on the bill.

Land Registry Fee
Again, this is sometimes included into the conveyancing fees, but with every property purchase the new owners need to be legally registered. This fee will be based upon the property sale price and can be anywhere between £50-£200.

Whilst this is the end of the official financial fee list of purchasing property, there will also be a number of extras you will need to be aware of, including moving costs, mail redirection, disconnection and reconnection of services and any further costs involved in decorating your new property.

Buying a home is not a project that should be taken on lightly, and in an effort to try and cut some of these costs you can look for a private house sale as these vendors generally save money on fees and can therefore be a little more flexible on their negotiations.

About the Author:Peter Joseph has had a wealth of entrepreneurial experience under his belt and landed in the Estate Agency industry with the intention of blending a top class service, powerful property portal, Private House Sale options and affordable prices – and iThink Property was born. 

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