Hidden CostsCan Pump Up Your Property Price
Costs not identified whilst buying a property in the UK can incur extra costs of £30,000 to purchase price.
Added property buying costs-The cost of purchasing a property may be £30,600 more than people think asunforeseen costs kick in, it is claimed. A fifth of home buyers simply do not set themselves a budget that is tenable, this then leaves them with financial difficulties.The study discovered 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.
Furthermore, home buyers spend an average of just over £8,000 on their property in the first year after purchase, but 23% do not budget for these expenses. In total, those unforeseen extracosts could add up to £30,600 for more than a fifth of home buyers.
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 another £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 just a third, 35%, paying them off in 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. Households with debt piled upon debt are most likely to be at risk during tough economic times.
House buying and remodelling can be quite a rewarding and lucrative exercise, when done properly and to a budget. But hasty decisions on must have properties, fixtures or fittings will just result in financial turmoil.
The home buyer’s budget gap is symptomatic of a wider feature of the nation’s money management characterised by a tendency to react to circumstances rather than plan ahead.
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 a surprise considering the complexity 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.
It’s not just about putting money to one side, although that is obviously an important step with many mortgage lenders still looking for sizable deposits, it is also very important to have a clear picture of all the costs involved, rather than just looking at the purchase price.
Are you looking to buy or sell property? Why not get the ball rolling and find a top conveyancing solicitor today.
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