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Planning on buying a house? Here are the costs to budget for.

Posted on 11 October 2017
Planning on buying a house? Here are the costs to budget for.

Buying a house is the biggest financial decision that most people will make in their lifetimes. With the cost of a deposit, the ongoing monthly costs and a host of upfront fees to be paid, it’s worth knowing exactly what expenses you’re going to have to meet and how much they’re going to cost so you can budget effectively.

Identifying what costs you will have to pay and planning in advance on how you will meet them will make the whole process of buying a house run much more smoothly and will help you manage your finances better.

Upfront fees.

The biggest up front cost you will have to pay when buying a house is, of course, your deposit. When applying for a mortgage you will typically have to pay a deposit of between 5%-20% of the total value of the property you are planning on buying.

If you can afford to pay more than this as a deposit this is worth considering doing so because covering more of cost of the house up front will cut the cost of the mortgage in the longer, meaning your monthly repayments can be lower and you will pay less interest over the mortgage repayment term. Banks will also be more willing to lend to you with a bigger deposit as you will be seen as less risky to them.

There are a range of other up-front costs you will have to pay though when you decide to buy a house. These costs can include Stamp Duty Land Tax, valuation fees and legal fees.

Mortgage costs.

The biggest ongoing cost you will have to meet when buying a house will, of course, be your monthly mortgage repayments. When applying for a mortgage your bank will assess your ability to meet these repayments. The lender will also look at whether you will be able to continue paying should interest rates rise or your circumstances were to change in a way that affected your finances, such as having a new baby, losing a job or a death in the family.

Factor in all of these things when deciding how much you want to borrow and what type of mortgage product you would like to take. A fixed rate mortgage can offer more certainty and make it easier for you to budget, though they can mean paying a higher arrangement fee and you could miss out on a more competitive deal if the bank’s standard variable rate (SVR) falls below the fixed rate.

When you take out your mortgage, remember there will be other mortgage costs you will have to pay depending on whether you use a broker, your lender and which mortgage product you chose, including an arrangement fee, which could cost as much as £2000, a mortgage valuation fee and a booking fee.

Other ongoing costs.

As noted, your biggest single ongoing cost once you’ve bought your home will be your monthly mortgage repayments, but there are a range of other expenses that you will have to pay as well.

Your lender will require you to take out buildings insurance and contents and life insurance are also recommended to ensure that you are completely covered. If you’ve viewed the property and had a survey done before buying it then it’s unlikely you’re going to be faced with any major repair bills, unless you’ve bought a house with the intention of renovating, but you will have to get work done over time to deal with any problems that arise, preventative maintenance and improvements you might want to make.

There will also be some expenses involved in running your home including heating and electricity bills, internet, TV licence, etc.  

Lastly, you will have to pay rates. Rates are a property tax based on the capital or market value of homes used to fund local government services. How much you will have to pay in rates will depend on the value of your property, so it’s worth researching this before you have bought a house so that you can effectively budget for it.

Contact us.

With so much to do and so many costs to meet when buying a house, you need an estate agent who will make the process as easy as possible for you. So, if you’re looking for a new home, take a look at our website or visit us in one of our branches in Templepatrick or on the Lisburn Road in Belfast and find out how we can help you find the perfect home.