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When I got married years ago it was a simple wedding at home and not…
It’s among the biggest decision of a person’s life – and it seems amazing they would only spend 33 minutes making it.
Recent research of 4,000 homeowners from Aviva insurance found that buyers now take a little more than half an hour in looking around a property, and often only one viewing, before making the decision to buy. The pressures of the market mean that purchasers are making hasty decisions, more quickly than in previous years – find out more in this Daily Mail article.
There is a sense of achievement in owning your first home, but with it comes a sense of responsibility. You’ll have freedom to furnish it as you want and no landlord can poke around, but financially the buck stops with you; that same landlord who would have arranged for the boiler to be fixed will not be there to hold your hand. As well as mortgage there are many other fees, costs and payments that will need to be made, some obvious, some less so – click here for more information.
The first, and most sizeable, is the deposit. The Council of Mortgage Lenders’ latest figures reveal that the average deposit for a first time buyer is £27,719. An average household saving 4.9% of their income would take 22 years to raise such an amount, a dispiriting and worrying statistic. The higher the deposit the wider the range of mortgage options available, so it would be better still if the saver could put a little more aside. Typically a lender will be looking for at least 5% of the mortgage as a bare minimum.
The lender will then arrange the mortgage and may expect an arrangement and/ or set-up fees. Some lenders charge them and some don’t and some will add them to the overall mortgage fee. They could cost a few hundred pounds or (low) thousands. While the fees may not seem significant in comparison to the deposit, they’re still worth thinking about – especially as you’ll pay interest on them if they’re lumped into the mortgage.
Mortgage lenders will want to know what they are getting for their outlay, and will survey the property. There are three levels and three scales of fee, ranging from a basic check that the property is worthy of the price to an in-depth, structural investigation. If it is an older property the latter may be advisable, which could cost several hundred pounds or more – but if it identifies critical damage to the roof, wall or foundations, it will be money well-spent. Structural Survey expands on the three choices here.
Legal costs, stamp duty (if applicable), telegraphic transfers and other fees will add up to several hundred pounds at least, while the move itself will cost money, for removal firms. And then there are the other costs, which you may not have paid as a renter: council tax, house insurance, utility bills and other new and annoying payments. You may wish, or need, to redecorate. And keep some money for repairs – leaky roofs and old boilers have a horrible habit of exposing themselves in the first couple of months.
These are the realities of buying a home, and they are not cheap. Preparing oneself mentally and financially, and then budgeting for a little more, might be the best tactic. For many, the feeling of being a homeowner is one that cannot be bought.