Why you need to budget for more than the asking price when buying a new home

View PDF | Print View
by: bythesea
Total views: 14
Word Count: 460
Date: Thu, 14 Jul 2011 Time: 10:15 PM
0 comments

When deciding on what type of house you can afford, it can be tempting to really stretch your finances in order to land your dream home. Don't forget that there's more than simply the purchase price of the property to take into account when drawing up your budget, though; you'll need to have enough left by to cover a number other costs both during the purchase and going forward.

Solicitors' fees

You'll be using a solicitor to aid you in your purchase of the house, and they don't come cheap. It's worth comparing a few different options to see what kind of price you're likely to be looking at - some solicitors will charge a flat fee whereas others may require a certain percentage of the house price, so it's best to clarify that in advance.

Stamp duty

If you're a first time buyer then you currently don't have to pay any stamp duty on your purchase unless you're buying a home worth more than £250,000. If you've owned property previously, though, you'll pay duty when purchasing any house for over £125,000. Stamp duty charges range from 1% to 5% depending on the cost of the house, so this is a significant expense that you will have to plan ahead for.

Mortgage arrangement fee

If you're going to be taking out a mortgage on your new house then you'll be expected to pay an arrangement fee. The amount charged will depend on the type of mortgage you take out and the lender you go though, so be sure to do your research ahead of time.

Council tax

Each property in England is placed under a specific council tax valuation band depending on its value - the higher the band, the more you'll be paying in council tax. The specific amount you'll need to pay will depend on the area in which your property sits as each local council sets its own council tax rates. Again, it's worth looking into this before you commit to a house as it could make a significant difference to your annual outgoings.

General costs

It's important to keep in mind that your expenditure won't stop once you've got the keys to the new house in your hands. There are several ongoing costs to take into account when budgeting for buying a new home. Look into how much you're likely to spend annually on things like utility bills and house insurance and factor that in when making your decision. If the reality check means that you have to reign in your aspirations a little when it comes to the size of house you can afford then so be it; it's better to know the truth at the outset than find out six months in when the bills are piling high.

About the Author

If you're on the lookout for house insurance visit www.churchill.com for more information.