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. 

Learning Car Insurance Terms

Car insurance can sometimes be difficult to understand. If you find terms that you do not understand, you could find yourself making purchasing mistakes that could cost you a significant amount of money. In order to understand car insurance, here are some terms that will be beneficial for you to know in order to make an informed decision regarding car insurance. 

• Liability: Liability insurance is required in most states. This type of insurance provides coverage to someone else if you caused an accident. Bodily liability covers injuries to the driver or passenger of another vehicle. Property damages cover damages to the property. The insurance will cover the cost to repair or replace the other vehicle involved. It is important to have liability insurance to protect yourself from huge financial losses.

• Assigned Risk: When purchasing car insurance, the company must decide if you are at risk to be involved in an accident. If you have had too many accidents or violations, it might be difficult for you to obtain car insurance through the traditional way. If you are assigned a risk pool, you are assigned to a certain insurance company. Because car insurance is required, this company is legally obligated to provide insurance. This type of car insurance is more expensive.

• Comprehensive Coverage: There are times when your vehicle is damaged as a result of something other than a collision. Comprehensive coverage covers the cost if your vehicle is damaged from a fire, theft, hail storm, flood or vandalism. Comprehensive coverage covers just about everything except a vehicle accident. Comprehensive coverage is beneficial because it protects you from unforeseen events that are beyond your control. You will need to decide on a deductible for comprehensive coverage. The average deductible is $500. Make sure you read the terms and conditions, so you will know exactly what is covered under your policy.

• Accident Forgiveness: Many car insurance companies offer accident forgiveness programs. With accident forgiveness, your car insurance premiums will not increase if you have an accident. Basically, the insurance company will “forgive” the accident, so you will not be penalized. With accident forgiveness, most insurance companies will forgive one accident every five years. Accident forgiveness can give you peace of mind knowing that if you are involved in an accident, your premiums will not sky rocket.

Negligence: When you are at fault in an accident and property damage or bodily injury occurs, you are considered to be negligent. Negligence takes place when you fail to act in accordance with the law and damage has occurred. If you are involved in an accident and are negligent, your car insurance premiums could increase.

• Exclusion: If there is a certain driver who cannot be covered under your policy, he will be excluded. The policy will name the driver that is not permitted to obtain coverage under the policy. Drivers can be excluded from coverage for having too many accidents or violation; therefore, the company considers him to be at high risk for having an accident.

• Deductible: A deductible is the amount of money that you are required to pay before the insurance company pays the rest. If you have a high deductible, your car insurance premiums will be lower. However, before deciding on a deductible, you want to make sure that you can cover the cost. Most deductibles are between $100 and $1000.

• Uninsured/Underinsured Coverage: Unfortunately, many people fail to purchase car insurance. If you have an accident with someone who does not have insurance or does not have enough insurance, you could be in trouble if you do not have this type of coverage. Uninsured/underinsured coverage protects you from paying out of pocket expenses if you are involved in a car accident with someone who does not have enough car insurance.

• Gap Insurance: If your vehicle is totaled in an accident, gap insurance will pay the difference between the actual cash value of your vehicle and the amount that you still owe. If your vehicle is totaled, you will still need to pay the lender what is owed them for the loan. Gap insurance will prevent you from having to come up with a huge amount of money to pay the difference.

• No-Fault Insurance: Some states have no-fault insurance laws in order to decrease the number of lawsuits that are filed as a result of car accidents. In these states, you cannot sue another driver unless you are seriously hurt in the accident. If you are involved in an accident, your insurance company pays the claim, not the insurance company of the other driver. 

Author bio: Chris is experienced internet marketer interested in key technologies to make your online business perform. During his career he worked for some of biggest Australian brands. Currently employed as marketing consultant for AU based insurance company, RealInsurance Car Insurance.

Shopping for Health Insurance? 5 Tips on How to Get It Right

Shopping for health insurance is all about comparing the benefits of the various cover plans available vis-à-vis their cost and then selecting a plan which best suits your needs and budget. The variations in health insurance plans are quite puzzling and, therefore, few individuals bother to understand or even go through the terms of contract till they run into trouble. Moreover, the vast variations between states only add to the complexity of this matter. For instance, some states authorize medical underwriting, thereby giving your insurer permission to raise your premium or even totally reject you from a policy based on your heath history. Those which don’t permit underwriting are no better as the premiums will usually be higher overall.

In deciding which plan is best for you, you will need a clear understanding of how your personal medical spending patterns relate to the fine prints of the different medical plans you qualify. Whatever plan you choose, if you have been previously entitled to a medical cover by your employer, prepare for sticker shock.

To get you through this mind boggling process, below are 5 tips on how to go about it:

1. Understand the Different Alternatives Available
If you were recently laid off or left your job, COBRA is the simplest option as it let you stay on your employer’s medical plan. However, you will need to pay the full cost, therefore may not utterly be the cheapest option. That is because, more than often, employers subsidize their employees’ premiums letting them only pay a fraction f the full bill. If you are in good health and rarely need to see the doctor, you may find a low cost high-deductible medical plan with a lesser amount of coverage.

Conversely, if you have issues with your health, COBRA may be superior deal overall. The major advantage of the COBRA plan is that you qualify for it irrespective of your pre-existing condition.

In deciding the best plan, you need to consider what you need, its cost, and how it weighs against other option. Paying highly for a coverage you are not going to use is like, as Martin Rosen (Heath Advocate co-founder) put it, “throwing your money down the fireplace.” If you are between jobs, and therefore having some financial constraints, you better go for the state-run programs that often discounted. For example, the state of New York provides cheaper health insurance cover for low income groups courtesy of its “Healthy New York” program.

2. Shop Around
Due to the complexity of insurance, the cost implication of being in a wrong plan may be great. Therefore, it is necessary to shop around and ensure you understand what you are buying before signing that contract. Here, the online heath insurance brokerages will give you a starting point. They automatically give you the quote of whatever plan you opt for. Just enter your information and get the quote.

Alternatively, you can hire a health insurance broker to guide you through. The brokers are listed in the National-Health-Underwriters, NAHU’s database. However, not all brokers are qualified therefore getting a referral from a family member or a friend will be advisable.

Either way, you will need to get different quotes for the different plans and then compare the details and monthly premium costs.

3. Affiliation with Groups
All factors constant, group insurance will be cheaper than getting a health insurance yourself. When you are a staff member, your company automatically qualifies for group rates. When you are going it solo, one good way to go would be to create or find a group. Alumni associations, trade groups and other organizations sometimes offer association insurance to their members. Nonetheless, you will still need to compare the coverage against the rates for a good choice as association insurance may not always be the cheapest option.

4. Consider Tax Deductions
Self employed persons can always deduct their insurance premiums prior to taxation. The premiums are “above-the-line” deduction which will reduce your gross income irrespective of whether or not you itemize them. On the other hand, medical expenses are a schedule-A deduction that can only be taken when itemized and has exceeded 7.5 percent of your gross income. In the end, the net cost of every dollar you spend on your health insurance cover will generally be less that spent on medical care.

5. Calculate the Long-run Cost of Different Plans
Cheaper insurance plan may not necessarily prove to be cheaper in the long-run. The long-term cost will depend on the cover exclusions, your heath spending, your in-network as well as out-of-network usage and several other factors. Consider your entire family’s health spending and patterns – the doctors you visit, your past medical services as well as a need to travel. You may find that you’re not covered by some plan.

Having a fully understood your heath issues, you may also want to consider the financial ones. Even though premiums are important, they are accompanied by some extra fees like co-insurance for seeing the doctor. Check for exclusions and benefit limits of your intended plan. A full understanding of your health issues and financial limits of the plan will help you know whether that particular cover will be cheaper or expensive in the long run.