House Buying Expenses that you need to know

With the ‘new 5% deposit’ scheme, I felt it important to share the house buying expenses that you need to know about before you jump into the buying process. Although the deposit you will need as a first time buyer is only 5% (and some 9%), there is a lot of associated costs that are often not advertised when buying a house. When I bought my home last year, I put down 30% deposit on my house then paid over £10k in fees (stamp duty) and other associated costs which I will breakdown in this post. Buying a house is one of the biggest financial decisions you will ever make and I think its important to sit down, analyse everything before you jump in.

March 2020 will always be a special month for me even though its when we went it lockdown, it is also when I bought and moved into my first property. I have talked about budgeting for new homeowners and even shared some of the numbers I will discuss in this post. I learned first hand how expensive buying a home can be and how thorough these mortgage lenders are when choosing whom to lend too so its in your best interest to ensure that you repair your credit report and in turn improve your score. Lenders first look at that report to determine whether they can lend you the money for a whole 25+ years and that you can afford to repay them. For all first time buyers, today I share all the costs associated with buying a house that I paid that you need to budget for.

Disclaimer: I am NOT a financial advisor, all opinions shared are based on my own experience.

House Buying Expenses that you need to know

Buying and owning your own property is one of the most exciting journeys one can ever take, the freedom that comes with being the homeowner is unparalleled but, you should only debt on this mountain of debt if you can afford it for the next 20+ years. Whilst I wouldn’t encourage anyone to jump head in to get debt, mortgages are necessary evils so you need to ensure its something you can afford and will work for you in the long run. This is why I think before you jump into home buying there are several house buying expenses that you need to know and should budget for.

Even though I only bought my current home a year ago, my house buying journey actually started 5-years earlier. I had estimated on my then current salary that it would take me about 5 years of savings to raise 10% deposit for the property I wanted. In those five years, I weighed the pros and cons of renting vs buying and I knew buying was for me. If, after weighing your pros and cons and realise buying a house is for you, then there are certain house buying expenses that you need to know about other than you deposit. In this post I will highlight these associated fees to ensure you budget for them before you embark on this incredible journey.

Mortgage Advisors

I recently shared a post on why mortgage advisors are so important especially for first time buyers but even experienced buyers can use the advise of a professional mortgage broker. When I started my search on mortgages, I had no idea what I was doing until a friend recommended an independent mortgage broker. I am so happy that I got recommended this mortgage advisor and now I recommend him to everyone. What I did not know with house buying expenses is that you do need to pay for that advise and this was not totally unexpected once I was told about mortgage brokers and how they can help me with my mortgage application. The added cost was around £500 to use a mortgage advisor but what’s good about this is they become your lifetime financial advisors.

Lawyers

When it comes to lawyers, I knew I would need one because there is a lot of legal work involved and you need a good lawyer to help you sort through it all. I was happy to use my new lawyer who was also recommended to me and though as times it felt like I was pulling teeth, it was worth it. Lawyers do so much, check that everything is in your favour and inform you of areas of concern that you should address before exchanging contracts with the sellers. The added cost for getting a lawyer was just over £2000 (includes miscellaneous admin costs). The lawyer fees vary from £1200 thru to £2000 so make sure you save up for this expense too.

Stamp Duty

Everyone and there grandmother new about Land Tax aka Stamp Duty except me because I didn’t even think much about this, I thought it was just about the lawyers and my deposit. This was a huge surprise to me when it came to my budgeting because I did not realise for the price of my house I would have to folk out £3000. That was a gut punch for me but thankfully I had saved enough that I did not need to reduce my deposit to cover this cost. As you are working out which houses are in your budget, make sure you also check the stamp duty that you need to pay for those houses.

Final Rent/bills for Previous Property

If like me you will be moving from a rented property to your own property then you need to make sure you budget for final rental prices from your previous property. For me my rent was just under £800 and also need to budget for the bills as well which came to around £500. These are all added costs that you need to account for, so I had put around £1500 to make sure I did not find myself with unexpected expenses.

Moving Costs + New House Purchases

This is something you definitely need to budget for, I was fortunate to have bought in the same area I have been living for that few years. This is not always the case for most people so you need to learn early on how much it costs to move from your current home to wherever you are planning to purchase your next property. Since I moved to a bigger property, there is loads that I need to purchase and I had set aside about £5k just for new furnishings and replacing old items from my rented property.

There are a few other expenses that you need to take into account when buying a new property but these mentioned in this post are the major ones that I had to make sure I had saved money for before. It is often said that if your deposit if £10k, save another £5k for associated costs.