How to Deal with Unexpected Costs after Buying a House

While the number of successful first-time mortgage applications reached an 11-year high in 2017, it remains exceptionally difficult for Brits to gain a footing on the property ladder.

There were 365,000 first-time buyers in the UK last year, which represents the highest number since 2006 and an increase 7.4% on the previous 12 months.

Still, one of the biggest challenges facing buyers is the sheer number of unexpected costs that arise from purchasing property.

We’ll look at some of these below while asking how you can deal with them effectively.

Home Inspections and Surveys

Prior to finalising a purchase, you’ll need to arrange for one or more property inspections and structural surveys. These are crucial if you’re to ensure the validity of the property in question and achieve true value for your money.

Despite this, the price of structural and similar surveys is often overlooked by buyers, with even basic condition reports costing an average of £400.

More detailed reports such as building and structural surveys can cost upwards of £550, while you’d also need to commission more than one visit in instances where you have structural work completed.

Ultimately, you’ll need to factor these costs into your overall budget, as while you can buy a home without these surveys this is not to be recommended.

The Total Cost of Borrowing

There’s no doubt that mortgages and even unsecured loan products have become more accessible since the Great Recession, with bad credit loans now available to people with a chequered or limited history.

Whenever a lender offers you money to complete a house purchase, you’ll need to factor in the total cost of borrowing including the applied rate of interest and associated fees.

These can include everything from administrative costs to a fee for the wire transfer of funds upon completion, and they can quickly accumulate during the acquisition process.

It’s good practice to identify any upfront fees before investing in real-estate, while also calculating the value of your mortgage, the total interest repayment and the potential fluctuation in variable rate products. Thankfully, you can use a mortgage affordability calculator to make that process easier on yourself. Using a calculator also makes it easier to make adjustments as needed, so you never have to worry about going over your budget with the numbers right in front of you.

Stamp Duty

On a similar note, some buyers may need to factor in the cost of stamp duty when buying a home. This is an often-understated cost, while the government has recently changed the guidelines surrounding when buyers are required to pay stamp duty.

In some instances, this can add as much as 7% to the cost of buying a home, and failing to factor this in can represent a huge oversight.

Stamp duty is effectively a government tax which is applied to all properties that cost £125,001 or above, with the rate payable depending on the total value of the home in question.

However, there’s some good news for first-time buyers here, with this demographic exempt from the tax on the first £300,000 for properties with a value of up to £500,000.

This has been a huge boon for buyers, particularly those who are looking to invest in property for the first time.

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