Getting Your Budget Ready
It doesn’t matter whether you’re a first-timer or an old hand at the property game, you have to create a sensible budget for your transaction – and stay within it.
Buying a home is a huge investment, so compiling a detailed plan and an accompanying budget is the first thing you do – even before you’ve found your dream place.
A game of two halves
Your budget should be split into two sections – the costs of buying the place and then the costs of living in it, like the mortgage and maintenance costs.
Your upfront costs
The biggest upfront cost is your deposit – most deposits are between 5% and 20% of the purchase price, although the bigger your deposit, the better your mortgage deal will be. Some banks have reintroduced 100% mortgages – you don’t need a deposit – but you may still need help from guarantors for this.
Then there’s the stamp duty, the costs of any surveys you may need, and then your estate agent’s commission and legal fees.
Once you’ve actually bought the house, you’ll need anything up to £1,000 for a removal company, although many people do it all themselves.
Your mortgage payments
You will probably be paying these for a long time and they’ll most likely be your biggest monthly outlay. You might have to pay mortgage arrangement fees – anything up to £2,000, the valuation (at least £150) and maybe a booking fee (up to £250).
It’s best to speak to an independent mortgage broker before you settle on a product to make sure you get the best mortgage type and deal possible before you make this huge financial commitment.
Once you’re in, you have to maintain the place, heat it, protect it from damage, insure it and maybe even renovate it! Many homeowners spend £6,000 on redecorating and other improvements to a new home and even after that there’s the council tax, utilities, broadband, TV…
It seems endless, but there’s no point in going into a property purchase blindly – you need to know what you can afford as there’s no point buying a house you can’t afford to live in! Work out what you can afford and (just like granny used to say) cut your suit according to your cloth,
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