Unforeseen costs connected with buying a property in UK can add over 30,000 to purchase price.
Added property buying costs – The cost of buying a property may be 30,600 more than people think as unforeseen costs kick in, it is claimed. A fifth of home buyers fail to set realistic budgets when buying, and then suffer financial strain, according to recent research. The study found that 21% of home buyers paid more for their properties than they planned to, with that budget gap averaging out at almost 23,000 per buyer.
Additionally, in the first year after purchase buyers usually spend around 8,000 on their new property, but over 20 per cent don’t budget for this. In total, these costs that are so often overlooked could total 30,600.
For the average under budgeted buyer, 60% of the shortfall comes from long term savings, weakening the ability to cope with future rainy days.
That leaves a further 13,400, of which just over half, 63%, is funded using credit in the form of personal loans (15%), credit cards (27%) and extended mortgages (21%). For many, these are long term debts, with only a third, 35%, paying them off within the first year. One fifth of home buyers are currently paying off these debts on top of their monthly mortgage payments.
These figures indicate exactly how vital it is on careful planning and sticking closely to a budget, especially at the start of buying a property. It’s all too easy to overlook expenses and find themselves in a precarious financial position. New homeowners that are in deep debt cannot ride the storm of an economic downturn as well as those who are financially buoyant.
House buying and remodelling can be quite a rewarding and profitable exercise, when done properly and to a financial budget. Rapidly made decisions on must have properties, fixtures or fittings can leave you seriously out of pocket.
As a nation, our money management strategy is typically to react to circumstances rather than plan ahead – and this is perhaps why this budget gap is so large for homeowners.
Managing your own finances efficiently can seem like an enormous task for some. More than half of adults would like to be more financially astute and in control of their own financial destiny. That’s not really a surprise considering the intricacy of modern personal finance, with many people operating more than five products but left largely to their own devices when it comes to the tools and guidance needed to really make the most of them.
With house prices forecasted to plateau and mortgage rates remaining low (if you can get one!), there are undoubtedly bargains to be had for home buyers who take the time to plan in advance.
Although it’s always important to have funds put away, especially when mortgage lenders require such large deposits, don’t overlook the costs involved in purchasing property – make sure you look over everything in detail and not just the price of the property.
Homebuyers: beware!
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