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 show all too clearly just how important it is to budget carefully and realistically when buying property. It is very easy to neglect to account for some expenses and consequently end up in a difficult position financially, and homeowners who have debts will find it much harder to cope with fluctuations in the market that those who are more solvent.
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.
The home buyer’s budget gap is symptomatic of a broader feature of the nation’s money management characterised by a propensity to react to circumstances rather than plan ahead.
Many people struggle to manage their finances, and some see it as an insurmountable task, despite the fact that over half of adults would like to be more in control of their money. Given the complexity of modern personal finance it’s no surprise that people find it difficult to stay on top of, especially when many people operate more than five products but are left largely on their own when it comes to the guidance they need to really make the most of them.
With house prices predicted to stagnate and mortgage rates remaining relatively low, there are undoubtedly bargains to be had for home buyers who take the time to plan ahead.
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.
For more advice and guidance on purchasing a home, talk to a trusted conveyancing solicitor today.
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