10 Things You Need to Budget for When You Buy Your First Home

Ever booked a flight with a certain budget airline where the seemingly affordable ticket price balloons with all the little extra add-ons? Home buying can be a bit like that – it's not just about the property's agreed price tag; there's a slew of additional costs lurking beneath the surface, much like those unexpected charges for luggage, seat selection, and admin fees.

Let's unravel the parallels between budget airline add-ons and the extra expenses you might encounter in the journey to your first home. Grab yourself a cuppa and lets go through each of these 10 things you need to budget for in more detail.

1. Deposit: A crucial part of your home-buying budget, the deposit is your initial financial stake in the property and the one, you are probably aware of the most. Typically, it's a percentage of the property's purchase price. Traditionally, deposits range from 5% to 20% of the property's value.
2. Legal Fees: Solicitors or conveyancers are a must-have in the process, so no getting away from these fees. You'll also have to cover the legal fees for your mortgage lender which can add to the cost, especially if they choose different legal counsel. The fees will include conveyancing fees, searches, and Land Registry charges. Generally speaking these come in around £1,000 to £2,000, but if your transaction has some complexities, then it could cost a fair bit more.
3. Mortgage Costs: Factor in mortgage arrangement fees, valuation fees, and any other costs associated with securing your mortgage. Mortgage arrangement fees can vary but typically range from £1,000 to £2,000. Valuation fees might be around £300. Some lenders may cover valuation and legal fees as an incentive to win your business. And you could potentially get your arrangement fee added to the loan and some lenders offer products with no upfront fees.
4. Survey Costs: Investing in a Home Buyers Report is a smart move. It provides a comprehensive overview of the property's condition, helping you make informed decisions. A Home Buyers Report might cost between £400 and £1,000, depending on the property's size and condition and the level of report you commission.
5. Stamp Duty: Most FTBs are exempt from paying this cost except if the purchase price exceeds £425k, then its 5% on the portion of the price up to £625k. If the property price is above £625k then there's no FTB relief at all, so don't assume all first purchases are exempt. This tax is tiered, and rates change, so check the latest thresholds.
6. Moving Expenses: Don't forget the practicalities of physically moving your belongings. Budget for removal costs and any potential storage fees. Removal costs vary, but budgeting £500 to £1,000 is a good starting point. If you're happy to DIY your move, this could be done cheaper.
7. Insurance: Protect your investment with buildings and contents insurance. It's a small price to pay for peace of mind. Buildings and contents insurance might total £200 to £500 annually. If you're buying a Freehold, you'll need to cover both, if you're buying a Leasehold, the building insurance should be already in place and the costs included in the service charges.
8. Utilities and Council Tax: Account for initial setup costs and the first few months of these essential services. Initial setup costs can be around £200, and monthly payments may average £150 to £200. You can look at your local council's website to work out what your monthly council tax costs will be.
9. Maintenance Fund: Owning a property comes with responsibilities. Set aside funds for unexpected repairs or maintenance especially for urgent stuff that can crop up in the weeks after you move in. Have an emergency repair fund of at least £1k set aside to cover those urgent unexpected repairs.
10. Certificates: Whilst not mandatory, for your own peace of mind, you should consider getting a Gas Safety Certificate (if it has gas) and Electrical Installation Condition Report done to ensure your new home is safe and sound. The Gas Safety Certificate and EICR might cost £100 to £200 each.

Remember, every first-time buyer's journey is unique, and these points provide a solid foundation. Just like selecting add-ons when booking a flight with a budget airline, customise your budget to match your circumstances and priorities. But armed with these insights, you shouldn't end up getting caught short in the turbulence of home buying.

Empowering you with knowledge, one home buying step at a time! If you find navigating this exciting but intricate landscape a bit overwhelming, then our free workshop on 3 January 2024 between 19:00-20:30 sounds perfect to get you started on your journey in the new year!