Building up that all-important deposit to buy your first home will always be a challenge, but do you know the additional costs you need to think about? They can quickly add up and could mean you'll need to save far more than you initially thought, but unfortunately, far too few buyers are aware of the extra costs involved – and they could get a nasty shock as a result.
Research from Pegasus Personal Finance has found that 40.6% of first-time buyers (FTBs) haven't accounted for unexpected fees when taking the leap to homeownership, and these extra costs could take a serious toll on their finances. For example, CHAPS bank transfer fees were found to be the biggest shock, followed by search fees and mortgage set-up fees, with one in four new buyers surveyed being caught off-guard by these charges.
Others were surprised to hear about land registry fees (24.3%), and were unprepared for house renovations or repairs (25%), moving costs (24.6%) and the potential increase in utility bills or car insurance (20.6%), as well as stamp duty (16.7%) and solicitors' fees (14.7%). That's before we even get to things like home or life insurance, furniture, and interior décor, and perhaps most worryingly of all, 13.5% weren't aware about the interest costs on a mortgage or the possibility of them increasing.
Failing to budget for these kinds of costs can mean that new buyers have to find thousands of pounds that they weren't even expecting, with this kind of sum being hard to accumulate out of thin air – particularly after the deposit has been accounted for
"The results of this study showed some real eye-opening insights and displayed a lack of thorough understanding when it comes to the cost of buying a property," said Jonathan Le Roux of Pegasus Personal Finance.
"When buyers are working out their budget for a future home move, forgetting the significant costs associated with stamp duty, solicitors' fees or similar can really put a spanner in the works at the last minute.
"Our advice is to do your research and carefully list all the associated costs so you go into home ownership with your eyes wide open. It may be tedious, but completing this homework is essential to ensure everything going smoothly."
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