Advice from real estate agents on how to budget for the hidden costs of buying a home

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Buying a new home, especially a first one, is a huge commitment that involves a lot of time and money. It’s often not until you begin the home hunting process that you realize exactly what is needed to get on the property ladder.

Many potential buyers are unaware of or unprepared for the various hidden costs associated with buying a home. Making sure you have the funds to cover the less obvious costs can help make the process much smoother and avoid taking an unexpected chunk out of your bank balance.

Estate agents Ryder & Dutton, who cover several areas of Greater Manchester, have shared their expert advice on budgeting when buying a home.

READ MORE: Extravagant home in one of Greater Manchester’s most prestigious addresses on the market for £1.4m

Stamp duty

Stamp duty is a tax that you must legally pay when buying new housing, unless you are a first-time buyer.

Jake Rowson, Ryder & Dutton Sales Manager, said: “ The tax applies to properties valued at £125,000 and above, unless you are a first-time buyer, in which case the threshold is £300,000.

“How much you pay depends on the value of your property, but there are plenty of online calculators you can use to work out how much you’ll need to pay based on your situation and the house you’re buying.

“The cost is usually in the thousands, so make sure you know exactly how much you’ll have to pay and set it aside.”

Legal fees

When you buy a new home, a lawyer will handle all of the transfer of ownership for you.

“They will do all the necessary checks to make sure the property you are buying is sound, take care of the monetary transactions for you and establish and pay any stamp duty you owe. Budget between £1,000 and £2,000 to cover legal fees,” advised Jake.

Investigations

Investigating before buying a home is something many real estate agents recommend.

“Legally you are not required to order a survey, but I would always recommend paying for one as it will reveal any potential issues with your new home and could save you money on costly repairs in the long run. “, says Jake.

“Inquiries range from basic home condition reports which typically cost around £500, to full structural assessments which cost from £800.”

Estate agent fees

The commercial director explains: “If you are buying your first property, you don’t have to worry about paying these fees, but if you are also selling, make sure you take into account the fees of the estate agent.

“The cost is usually a percentage of the selling price of the property, so talk to your agent before signing an agreement with them to make sure you know exactly how much they will charge to sell your home.”

Damage insurance

This extra cost could prove to be very worthwhile in the long run, says Jake.

“Sometimes your attorney may suggest getting liability insurance, a policy that protects you against potential problems with the property that could cost you money in the future,” he explains.

“If, for example, you are buying an extended property and the seller cannot provide a building certificate, you can take out insurance to cover the costs incurred if your local authority pursues a future claim because you do not have the certificate.”

Mortgage and appraisal fees

Most mortgage providers charge mortgage appraisal and origination fees, so it’s a good idea to speak to a reputable mortgage adviser to find the best deals available.

“Assessment fees typically range from £150 to £250, and the application fee to take out a mortgage usually starts at around £500,” Jake said.

“You have the option of lowering these set-up costs by accepting slightly higher monthly payments over the life of the mortgage, but it’s usually more cost-effective to pay them upfront and avoid higher interest rates. .”

Moving expenses

Many people forget to consider the cost of moving your existing home.

“Moving companies charge different amounts depending on how much stuff you have and what kind of service you want,” Jake added.

“If you have a fair amount of furniture and belongings to move, budget at least £1,000 to cover moving costs. If you have no loads, a cheaper option is to hire a van for a day and to move your things yourself.”

Home insurance and improvements

Home insurance is a big purchase for your new home, and Jake says you should get it right away.

“Make sure you get home insurance before you move into your new property, to make sure you’re covered as soon as you get your keys,” he said.

“It usually starts at around £150 per year depending on the size and type of your home, but can reach around £500 per year for larger, older properties.

“Also set aside a bit for home improvements, because even if your new home looks move-in ready, you’ll usually need to make some minor home improvements to make it look like your own.” If you can, set aside at least £500 to cover initial home renovation costs. »

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