Buying A Home Is About More Than Just A Mortgage!

When it comes to the finances involved in buying a house, most people are pretty familiar with the basic idea of taking out a mortgage so they can afford it. Unless you're incredibly lucky, you're probably not going to be in a position where you can buy a home outright, so a mortgage is something you need to be fully aware of as soon as possible. That being said, the reality of buying a house is that there are a lot of different financial elements that you need to consider. If you don't, then you're likely to end up in a position where there are fees and financial obligations appearing that you weren't prepared for and that's a recipe for financial disaster. With that in mind, here is a list of just a few of the other kinds of financial commitments that you should be aware of when the time comes to buy a house.

Arrangement fee
This is one thing that catches a lot of people off guard. The arrangement fee is something that many lenders place on top of the mortgage as their fee for... well... arranging it! This is different from a booking fee which many mortgage lenders will also use a lot of the time. When you own a lot of properties that you rent out, you will usually need to pay someone to manage them. This is kind of the equivalent when it comes to buying, you're paying someone to take things out of your hands and make the process smoother. These fees can sometimes be refundable in the event that the mortgage application falls through, but it's incredibly important that you double check this with your lender in advance so that you're not left out of pocket in the event that things don't work out.

Stamp duty
Most people will have heard the phrase stamp duty thrown around but may not have much of an idea of what it actually means. Stamp duty is essentially an added tax if the value of your property exceeds a certain amount. How much extra you pay, if any, is going to depend on the value of the property that you're buying so checking out an SDLT calculator can make the whole process much smoother. If the value of the home that you're buying is under £125,000, then you won't have to worry about this at all.

Solicitors fees
People tend to forget just how important it is to hire a solicitor when buying a house. A mortgage is likely to be the most significant financial agreement that you ever become a part of, and it's crucial that you work alongside someone who fully understands the ins and outs of the entire process. Sine property solicitors will deal with things like evictions and criminal damage against property, so when you're buying a home you will need to find one experienced in mortgages. How much a solicitor is going to cost you will depend heavily on who you hire and what they actually do. However, it's always a good idea to err on the side of caution when calculating possible solicitors fees since, if it's less than that then you're in a better financial position, but if worst comes to worst, at least you won't be surprised. 

This is one thing that many first-time buyers simply don't know about at all. Just because you've found a property that you love and the sellers are happy with your offer, that doesn't mean that it's a done deal. Before anything else can happen, a surveyor needs to make sure that the value of the property matches what it's being sold for as well as checking for any serious problems. As the buyer, you're likely to end up paying for this, and while it's not the most significant fee there is, the last thing you want is to get caught off guard by it.

Actually moving house
Far too many people end up assuming that they will no longer have to worry about costs and fees once the mortgage agreements are signed, and the keys are handed over. However, actually trying to move into your new home can be incredibly expensive. Whether you do it yourself or you hire a team of movers, then you're almost certainly going to end up having to pay at least some money in order to get everything sorted. Generally, the less you want to spend, the more actual work you're going to have to put in.

A lot of first-time buyers find themselves incredibly shocked at just how many fees there are do deal with when they're buying a home. Considering how many people end up feeling as though they could never afford a home in the first place, those added fees can make the entire experience very anxious for them. However, as long as you're prepared and you take all of the extra fees into account during the planning stages then you're going to be able to fully decide whether or not you're really ready to buy a home.

1 comment

  1. Great post about the unexpected costs of moving. Another one we found a surprise was stocking the kitchen for the first time...all the store cupboard essentials add up!