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5 costs of buying a home you might not have considered

Buying a home can be a costly business, and while you may have budgeted for your deposit, stamp duty and solicitor’s fees, there may still be some hidden costs that could catch you out.

Here are five costs of buying a home that you might not have considered.

Mortgage arrangement fees

You may be all set with what you need to pay in terms of deposit and what the interest rate on your mortgage will be, but you may not have considered the arrangement fee attached to the product. This is the fee you pay your lender to set up your mortgage. Fees typically range from a couple of hundred pounds to a couple of thousand, although the average is around £1,000.

Some lenders will insist that the fee is paid upfront, which will be a considerable initial outlay when buying your home. Others will allow you to add the fee to your mortgage. However, while it may seem a useful way to avoid one of the many upfront costs, by adding the fee to your mortgage you will pay interest on it, so in the long run it will cost you more.

Money transfer fees

This may come as a surprise, but you will probably be subject to a money transfer or electronic transfer fee. This is the cost that lenders charge for transferring the mortgage money to your solicitor. This typically costs between £40 and £50.

Moving costs

There can be a lot of unexpected costs associated with your actual moving day. Firstly, unless you are planning to hire a van and do it all yourself, you will need to pay a removal company to do this for you. Prices usually range from £300 to £1,400, but it depends on how much you need to move and how far away you are moving to.

You may also need to pay for removal insurance, packing resources, such as boxes and tape, and maybe even storage if there is a gap between moving out of your current property and moving into your new home.

Also consider whether you’ll need extra childcare for the day or whether your pets will need to go into kennels or a cattery. These are some little extras that may not occur to you until you actually start planning the logistics of moving day, but they are worth budgeting for if possible.

Fixtures and fittings

You may be excited about spending that first night in your new home, but have you checked you’ll have curtains or blinds to pull shut at the end of the day? Fixtures and fittings are not always included in the price you have agreed to pay for the property, so make sure that you know what will be left behind by the previous owners – or if you are moving into a new build, what fixtures and fittings will be provided with the house.

Often, you can negotiate with the vendors to establish whether they will leave certain things in the house and then build this into the price you pay. But be aware that this may be an extra cost on top of the offer you originally had accepted for the house.

Insurance

In order to qualify for a mortgage, it’s likely that you’ll be required to have buildings insurance in place. This is something you may not have considered if you have previously been in a rental property.

Often, it works out cheaper to combine your buildings and contents insurance policies. Either way, this is an ongoing cost of homeownership, with building cover alone averaging around £80 a year.

It is also worth considering setting up a life insurance policy. Mortgage repayments are a big financial responsibility, so it could be a good idea to put some protection in place to make sure your family can pay off the mortgage if the worst should happen. 

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