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First Time Buyers Costing Guide

First Time Buyers Costing Guide

First Time Buyers Costing Guide

Are you thinking of buying a home for the first time?

Today’s high property prices can make buying your first home difficult. Mosaic Mortgages have put together this guide to help you understand all the cost implications involved in buying a home.

One off costs – there are some initial one off costs which include:

  • A deposit – most first time buyer mortgages require a minimum deposit of 10% of the purchase price however there are now a small number of lenders that offer 5%. In reality though, in view of the higher credit score required & higher product rates charged with these lower deposits, statistics show that on average first time buyers will typically put down at least 15%. However to try and assist the many first time buyers without this level of deposit, the Government has launched the ‘Help to Buy’ scheme in conjunction with a number of lenders to further assist applicants with only 5% deposit. This makes 95% mortgages a little easier to obtain.
  • Stamp Duty Land Tax – Anyone buying a property with a purchase price in excess of £125,000 will need to pay stamp duty on a sliding scale of between 2 & 12% dependant on the purchase price. However, there are some exemptions for specified disadvantaged areas so check with your solicitor exactly what the cost will be or check here to see whether the postcode where you are buying falls into one of the designated areas.
Stamp Duty Calculator
  • Surveyors’ fees – In most cases you will need to pay for a basic valuation for mortgage lending purposes which allows the lender to ensure the property is worth the money you are paying for it and suitable for them to take as security. You must bear in mind that the report is for the lender’s sole purposes even though you are paying for it. The cost is dependent on the purchase price and up to £200,000 is usually in the region of £300. We would always recommend at least a ‘Homebuyers’ report which can be combined with the lender’s valuation & the fee for both can be up to £500. This ensures that you have a survey report addressed to yourselves and details any areas of concern with the property or work that needs to be undertaken. It may also suggest specialist reports to be undertaken such as Timber & Damp or Electrical Reports.
  • Lenders fees and charges – depending on your circumstances there may be some fees/charges associated with your mortgage product, for example some lenders will charge booking fees, application fees or arrangement fees. Some are payable on application, some can be added to or deducted from the mortgage on completion so speak to your mortgage advisor for more details on this. Section 8 of your mortgage key facts illustration should fully detail all associated lender’s costs.
  • Solicitors Fees & associated disbursements. The cost is dependent on the type of property being bought & the purchase price and for a freehold purchase up to £250,000 you would expect to pay £1000. Land Registry fees (included in this figure) vary –Use the Land Registry Fee Calculator to work out the fees due.
  • Removals/moving fees – don’t forget that once all the paperwork is complete and the house is yours, you will still need to pay any moving fees. You can keep these costs to a minimum by hiring a van and asking friends/family to help you. Or you can hire a removal firm but make sure you budget up to £500 depending on the amount to be moved and the distance.

Ongoing costs – be sure before going ahead with a property purchase that you can meet your ongoing financial obligations. Failure to do so could result in repossession of your home, bankruptcy and severe damaging to your credit history!

  • Mortgage repayments – your monthly mortgage payment will vary depending on amount borrowed and the mortgage term. If you don’t have much flexibility in your finances it is a good idea to get a fixed first time buyer mortgage so you know the amount you will be paying will not vary from month to month. Speak to your mortgage advisor for advice specific to your individual circumstances.
  • Council Tax – this will vary depending on area and property value. Contact the local council to find out how much your monthly payments will be.
  • Utility Bills – again these will vary depending on the size of property and your energy consumption. You will need to budget for electricity, water and gas (if applicable).
  • Insurance – once you have set yourself up in your new home it is important to protect your assets. You will need buildings (compulsory) and contents insurance (some flats/communal buildings will have a service fee which includes buildings insurance). It is also a good idea to consider mortgage payment protection should you be made redundant or be injured and unable to work and finally life cover (can also be combined with critical illness) to protect the roof over the heads of your loved ones if anything more serious were to happen to you.

Mosaic Mortgages are experts in first time buyer mortgages. Contact us for more information on the latest mortgage deals to suit your needs.

The author, Shaun Bielby has over 25 years experience in financial services and is a specialist mortgage and protection advisor with Mosaic Mortgages who are mortgage brokers that give independent mortgage advice to first time buyers, borrowers with an adverse or bad credit mortgage history or those looking to invest in buy to let.