Welcome to Your New Homeownership Journey: Understanding Costs and Planning for Your Bright Future!
Saving for that all-important deposit is often the biggest challenge for first time buyers. But it’s not the only cost you need to budget for when buying your first home.
Becoming a homeowner is a milestone filled with excitement, but it’s also a journey that demands careful financial planning. If you’re a first-time buyer or homeowner there are lots of things to consider. In this blog, we’ll explore the costs associated with homeownership, buying your first home, including solicitors, stamp duty, valuations, and different types of surveys.
We’ll also guide you on budget planning post-move because we understand that your journey doesn’t end with the keys to your new home. Let’s get started on this empowering path to homeownership.
The Cost of Your Dreams: Preparing for Purchase
Budgeting for Solicitors and Conveyancing Fees
Solicitors’ fees can add up. First, you’ll need to budget for solicitors and conveyancing fees. These legal professionals will help you navigate the complex process of purchasing your first home. Understanding these costs upfront is vital. The fees can vary, so it’s crucial to obtain quotes and select a solicitor who meets your budget and requirements. Your choice of solicitor can impact the length of time it takes for your mortgage to complete, and if you make the wrong choice can make buying that bit more difficult and stressful.
Generally, their fees are paid in 2 parts. An upfront cost for your searches on the specific property you want to buy, including searches on any upcoming planning permissions in the area local to your new home, flood risks, environmental searches, depending on your area you could have coal mining searches or other more specific searches run. Generally these initial searches cost between £300 – £500 and form part of the solicitors costs. They request payment of these searches upfront and they will form the downpayment on instruction of your solicitors to work for you. This initial payment is often non-refundable as it pays for the costs of the searches. The second part is the larger part of the conveyancing costs. These are harder to estimate as they are specific to the work required but could be an additional £1000 – £1500 paid on completion of your home purchase.
We can provide you with a no obligation quotation for a solicitor, and we will make sure they are able to work with the lender you are taking your new mortgage with.
Stamp Duty: Taxing but Necessary
One of the potentially significant costs when purchasing a property is Stamp Duty Land Tax (SDLT). The amount you pay depends on the property’s purchase price. While it may seem intimidating, there are often various relief schemes for first-time buyers. Make sure you explore these opportunities and include the cost in your budget.
Your solicitor will guide you on the exact amount you will need to pay as the fees vary based on if you are considered a first time buyer, next time buyer or if you own any other property. The charges also vary if you are buying using one of the government schemes. If you are looking for a guide on what you may need to pay, we can put you in touch with a solicitor who can help, or for a rough estimate, this link will take you to a simple online stamp duty calculator: Stamp Duty Calculator – Latest Updated Stamp Duty Calculations.
Valuations and Surveys: Protecting Your Investment
Valuations and surveys are essential to ensure you’re investing in a sound property. A valuation confirms the property’s value, while surveys uncover any hidden issues. Different types of surveys are available, ranging from basic to comprehensive. Choosing the right one is crucial for peace of mind and cost-effectiveness in the long run.
The mortgage lender does complete a mortgage valuation for themselves, as they need to check the property is good security for the loan, but the lenders valuation is to ensure the home is built from common building materials and in reasonable condition. It provides the lender with a market valuation, a reinstatement cost for insurance purposes and it describes the construction and general condition of the property on the date of inspection. Some lenders complete the valuation free of charge, but you might not always be able to get a copy of the valuation that the lenders instruct.
A private survey gives you 3 options, Basic, Homebuyers survey or Full structural or building survey. As the name suggests, like the lender valuation above, the basic survey gives little information. Many people buying a second hand property will opt instead for a more detailed home buyer report which additionally provides a detailed report often in a traffic light style report to make it easy to read. Here is an example of what it may include:
Aims to identify any problems that need urgent attention or are serious or that may be dangerous.
Aims to identify things that need to be investigated further to prevent serious damage.
Aims to advise on the amount of ongoing maintenance that may be required in the future and gives advice on the steps needed to investigate and/or repair/resolve any defects identified.
A full buildings survey is generally the most expensive type of survey so is often only instructed when buying a listed building or a property that you expect to require extensive work.
We can help you to get costings on any of these types of survey once you have the property address, so get in touch for a quote.
Moving Day
Removal costs also add up quickly. Whether you DIY or use a removal firm, factor transport, boxes, tape, bubble wrap and rental vans etc into your budget.
Your Budget Beyond the Purchase: Planning for Life as a Homeowner
Contingency Funds: Be Prepared for the Unexpected
Once you’ve moved into your new home, it’s essential to maintain financial stability. Unexpected expenses may arise, such as emergency repairs or sudden changes in your financial situation. Having a contingency fund can save you from stress and financial strain during these times.
Making your space your own.
Once you’ve moved in, budget for initial repair and decoration costs. New homes often need some cosmetic improvements to make them feel like home. A well-maintained home is a happy home. Create a monthly budget for maintenance and repairs, so you’re prepared for the upkeep of your property. Regular maintenance will keep your new home in excellent condition and prevent small issues from becoming significant headaches.
Utilities and Bills: A New Chapter Begins
With homeownership comes the responsibility of managing utility bills and other household expenses. Budget for your monthly utility costs, council tax, and insurance payments to ensure a smooth transition into your new life as a homeowner. We can help you run through the budget moving forward to help you ensure you are well prepared for this next step.
Buying your first home is a big commitment but worth the effort. Properly budgeting for all the associated costs, not just your deposit, lets you plan ahead. The path to homeownership is an exciting journey that involves understanding the costs associated with your first home and effective budget planning. The expenses may seem daunting, but with the right knowledge and preparation, you can navigate them successfully.
Remember, your homeownership journey doesn’t end with the purchase; it’s the start of a new chapter in your life.
Be prepared for the adventures of homeownership. Your bright future begins now. Speak to our advisers today to discuss your budget and mortgage options.
