The True Cost of Home Ownership: Planning for Unanticipated Expenses

One of the biggest financial steps you can take in life is purchasing property. It can bring a big sense of accomplishment with it – rightly so – but it’s important to look past the initial property price and think about the other costs that come with it. If you don’t, they could come as a surprise later down the line and leave you in a tricky position. So, here’s what you need to know about the real costs of owning a home in the UK.

Upfront Expenses Beyond the Purchase Price

When putting in an offer on a property, you may go back and forth until reaching your best and final offer. This is something that a reputable estate agent should be able to guide you on, but before maxing out your budget, it’s important to think about the other elements of your purchase you’ll need to cover.

Stamp Duty Land Tax is something you’ll also need to pay if your property value exceeds a certain amount and whether you’re buying your first home, but this can reach several thousands. There are also your legal and conveyancing fees to consider, which should include important services like property searches and checking contracts. Finally, home survey costs can vary from hundreds to over £1,000 to check your possible future home for any issues that could set you back in the long run.

Financing and Mortgage-Related Costs

Mortgages are a great tool to invest in your own property, but they can also come with their own fees. Mortgage arrangement fees can range from £1,000 and above, or actually be £0 if you’re willing to have slightly higher repayments or interest rates. First-time buyers may find they also have to accept higher interest rates as they need to borrow more if their loan-to-value is at a greater percentage.

Ongoing Ownership Expenses

Once you’ve gone through the legal process of purchasing your new home, you’ll likely be very excited to be on the property ladder with a place to call your own. But you’ll also need to adjust your monthly budget to cover the costs of owning property. Make sure you know your council tax band so you can set aside the appropriate amount, and taking out home insurance is essential so you’re covered if anything happens. Because your home is your responsibility, it’s also worth setting aside a pot of money to cover maintenance costs – around 1-2% of your property’s value per year.

Additional Considerations and Hidden Costs

If you’re purchasing a flat, it’s also important to know how much your service charge and ground rent will be. These could be paid quarterly or monthly, and will likely rise and fall depending on the needs of the building. Given recent changes in fire safety, many flat buildings have required changes which means service charges have increased to accommodate.

By taking each of these costs into consideration, you can make a more informed choice around what you can afford for your new home – so you can have better peace of mind while being a happy homeowner.