When buying a home the additional costs can be considerable and are often ignored. The following costs must be allowed for in the budget:
In some cases the deposit figure can be included in a mortgage, but this will not be possible when mortgage interest is repaid using Income Support Mortgage Interest payments. It is also often the case that mortgages that meet all, or nearly all, of the value of the property will have a higher interest rate.
It is highly unlikely that any mortgage or grant will cover any difference between the valuation figure of a property and the actual price paid.
Stamp Duty Land Tax (formerly Stamp Duty) is a Government tax payable on the total purchase price of the house. The zero rated house price threshold is £125,000. If the house is bought at a price over £125,000 but not exceeding £250,000 duty is charged at 1%, eg if the house price is £150,000, stamp duty will be £1500. For amounts over £250,000 but not more than £500,000 the rate is 3% and if the purchase price is more than £500,000 the rate is 4%.
A quote should be sought before any work is performed. It should be established at what point fees will be incurred i.e. will advertising and surveying costs need to be paid before settelement?
There will not necessarily be fees but there may be arrangement or booking fees for particularly good value mortgages. There may also be a Mortgage Indemnity Guarantee payment if the lender views the mortgage as high risk.
This should be a realistic cost, preferably decided in conjunction with a local authority or health board occupational therapist.
If there the new property will be bought before the existing property is sold, there will need to be 'bridging funds' to cover the cost of owning both properties. The cost of borrowing this money can be very high, particularly if there is no sale date guaranteed for the existing property. A sum will therefore need to be put aside to cover these interest charges.
Apart from moving existing furnishings and buying of any additional or new items, there can also be storage costs if the new property will not be ready to move into immediately the existing property is sold.
Buildings insurance will be a condition of any mortgage or grant. Contents insurance is often a small additional cost if taken out at the same time.
If the house is not brand new there will almost certainly be odd jobs that need to be completed around the house. The survey may have highlighted these. It is vital, particularly when buying using benefits, that some money is put aside to cover any known items or unforeseen breakdowns.
