Buying a house is a significant investment. It is one of the most expensive purchases a person will make in their lifetime.
The cost of housing is slowly increasing. Recent figures show that the average house cost in the UK in 2022 comes at an eye-watering £278,000. Compared to the price of this year to last year, there is a noticeable £24,000 increase in house price averages. The location in the country will impact the cost of houses and the sizing. It is commonly known that a home in London is likely to be smaller in size and higher in price compared to a home further up North, which could be larger in size and lower in cost.
Aside from the house’s cost, many other financial factors are involved in buying a home. If you want to buy a house, here are the prices and what you should have prepared.
Covering The Deposit
Before diving into the house-hunting world, ensure that you have established a solid deposit. A deposit will cover the gap between the cost of the property and how much a lender is willing to offer you. The deposit you submit should be at least 5% of the property’s value. In some cases, it can go up to 10%. Creating a healthy deposit can work in your favour. It allows you to access a greater range of mortgage deal options. The sooner you start building a deposit, the better. Alongside this, you can explore other financial tools such as bridging loans. Bridging loans are a means to help you “bridge the gap” between selling your current property and securing your new home. Consider comparing bridging loan rates if you’re looking for a smoother property transition.
Paying Off Mortgage Loans
With a mortgage secured, you will have to pay back monthly instalments of what you agreed. Those able to put a larger deposit down will likely have less to pay back each month or will take less time to clear their debt. If you have a good credit score, you will probably be offered reasonable rates on mortgage repayments.
However, should you have a bad credit score, know this could impact the mortgage interest rates on your loan. Some lenders will see someone with a bad credit score as someone they believe is unlikely to repay the mortgage loan debt. If you are someone with a bad credit score, utilise the support of specialist lenders like Money Nest. They are experts in helping those with a bad credit score obtain a mortgage to get onto the property ladder.
Cost Of Inspection
After weeks, sometimes even months, of searching for your dream home, finding a place you can envision yourself living in can feel like a weight off your shoulders. After walking through the property, you might have noticed a few areas that could do with a bit of work. They could be minor issues that can be resolved during a weekend.
Before placing an offer on a property, ensure that you invest in a house inspection. A house inspection is a worthwhile investment to make during the house buying process. It can uncover any hidden issues you would not notice when walking around the property, such as problems with the roof. Any issue revealed could work in your favour. You could use them as leverage to reduce the house price if the homeowner is unwilling to resolve the issue. Alternatively, you could see if they would fix the problem before placing an offer. If neither works in your favour and you cannot afford to pay the repairments on top of the asking price, you can continue your search for your dream home.
Knowing if there are any potentially costly problems with a property can help you make an informed decision about placing an offer. You can decide if the house is worth the additional funds that need to be poured into it to make it your home. This includes taking into account any future home warranty plans or homeowners insurance coverage to take care of bigger issues. Someone like Simon Conn, Overseas Property Professional & Finance, could help and advise.
Price Of Moving
After placing an offer and getting accepted, paying for the legal fees and inspection costs, the time comes to move into your new home. Moving into a new home is exciting, stressful and also costly. It can be made cheaper with the help of friends and family offering to lend a hand in moving your belongings.
However, you will have to hire professional support if you need additional help. Depending on the date you decide to move, you might find the cost of hiring a removal team higher on some days than others. Naturally, school holidays, bank holidays and weekends are prime times for people to move. It allows them to have the most time off work without using too many of their holiday days. When gearing up to move, ensure that you have money to invest in professional support should you need it.
In Summary
It is never too early to start saving for a house. If you do not have any plans of moving out and into a place you can call your own any time soon, still start building your deposit. Time goes by quickly, and when you are ready to buy a house, you will have to examine your finances to see if you are in a position where you can begin searching.
If you are looking at buying a house, keep these hidden costs in mind to help ensure that you are financially ready to undergo this exciting chapter in your life.
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