FTB Basics: building your home buying budget

 So, you're diving into the exhilarating world of saving up for your first home, and the spotlight is often fixated on the deposit. Everyone's talking about strategies to turbocharge your savings, ways to expedite your journey to that deposit goal. And rightfully so, since among all the expenses that accompany your very first home purchase, having your deposit is the most significant milestone on the journey towards home ownership.

Following the deposit, the spotlight shifts to solicitors' fees, a subject that often triggers an exasperated sigh. These can begin around £1,000. I wouldn't recommend you go with the cheapest, you really do get what you pay for with your legal team. And together with the legal fees, you will also have to pay for a slew of disbursements—which is basically a fancy way of saying the legal expenses for searches and checks which your solicitors conduct or commission on your behalf. Think of these as the essential detective work on the property that your lawyers will need.

But, sadly, that's not the end of the story just yet. There's more to budget for, beyond the deposit and legal fees. And so let me introduce you to the concept which I call your Home Buying Budget—a comprehensive tally of all the costs which you may need to cover in your home buying journey. This includes everything necessary to ensure you're making the right choice, securing the keys to your dream abode.

You might have guessed, there are other costs which are left out of most discussions about how much you need to save for your Home Buying Budget. This gap pertains to fees, like a mortgage broker fee (if payable) and mortgage product fees (if required upfront) as well as the expenses of various searches and reports you'll commission to aid your decision-making process. These are the costs that often go overlooked, yet their significance can't be overstated.

So, what kind of searches are we talking about? Well, at the forefront is the Home Buyers Report. In my opinion, this is a must-have for any property purchase, even if you're eyeing a brand-new home.

Beyond that, there's a constellation of other potential reports, often recommended within the Home Buyers Report itself or even by your legal team. These could involve drain surveys, roof assessments, damp inspections, tree evaluations—the list meanders. Now, I'm not suggesting you stash away a fortune to cover a predetermined roster of reports for every property. But it's common for First Time Buyers to feel flustered when these additional surveys or reports are recommended, especially if they hadn't factored in their costs.

Remember, as I've highlighted in a previous post (refer to "Buyer Beware Principle: The Basics When Buying Your Home"), the onus lies on you—the buyer—to assess if the home you're considering is in an acceptable state of repair. You need to be aware of current and potential future repairs, as post-purchase, you're responsible for all maintenance and repairs, even if you uncover an issue on move-in day.

That's where these reports come in handy. They're your secret advisors in deciphering exactly what you're acquiring and whether there are existing or potential issues you'll be inheriting. The joy of moving into your very own home should not be clouded by a sudden discovery that you need to replace the boiler or fix an unexpected leak in the roof.

Hence, allocate a bit more in your Home Buying Budget to accommodate additional surveys that might be recommended. You wouldn't want to find yourself torn between wanting more information on a substantial financial commitment and lacking the funds to cover the added cost.

This difference could sway you towards having a clearer picture of an issue, possibly prompting you to reconsider the purchase and explore alternatives (a narrow escape) or proceed, armed with the insights that might help you renegotiate the purchase price.

As I keep emphasizing, knowledge is power, especially in the realm of first-time home buying. The more you understand about your purchase, the fewer shocks you'll encounter upon moving in. Rather than wrestling with buyer's remorse, you'll revel in the excitement of dwelling in your new haven, equipped with insights about the prospective repairs that lie ahead—insights you can start budgeting for.

Empowering you with knowledge as you embark on your quest for your first home.