Jan 25, 2013

Budgeting for the First Move: Hidden Costs, Traps and Pitfalls to Avoid

When you buy your first home, it’s all about money. Money starts leaking out of your bank account in a seemingly unending stream, from fees to solicitors and estate agents to payments for surveys and mortgage appraisals. Even after you’ve moved in, you’re forever incurring new costs: first bills for utilities, connection fees for utilities, even final rent charges on your previous property.
Proper budgeting is the only way to survive the financial maelstrom that is the first few months of moving into and setting up home in your initial property. Follow the tips outlined below to navigate safely through the storm.

 1: Surveys
Before you actually go to the estate agents in Ipswich, or wherever you might happen to be, and start talking about buying a house, you might have a conception of the process in your head already. That conception probably involves paying someone to do a survey. Think again. You are likely to have to pay three people to do the same survey three times: so you need to budget three times as much for the survey as you thought.

The three surveys are done by the bank, to see if the property is safe to lend money on; by the law firm, to check that it may legally be sold; and by you, to provide relevant information before you agree to sign the contract. Prices vary according to the type of survey you have done – the most common, the Homebuyer’s Report, costs between £300 and £400 at the time of writing. From which it is clear that you will need to budget a minimum of £1k for surveys.

A full structural survey may be advised for older properties. The structural survey is provided at a bespoke price, which can be as much as £1k (on an average property) on its own.

Be aware that even a full survey will not reveal potentially serious problems, if they have been hidden behind ceilings and walls. You are advised to find a trusted tradesperson and take them with you when you view the property.

 2: Legal Fees
Legal fees are never-ending. You don’t just pay one legal fee and that’s it – you have to pay a range of fees associated with all sorts of things, from finding a copy of the deeds to the property to conducting a land registry survey. In essence, the total bill from your lawyers is a combination of the prices of the surveys and inquiries they have made, plus their fees for doing so.

Additionally, you will be charged a fee for completion on the property. You can’t complete until this fee is paid.

Legal charges vary hugely depending on what is actually required. You should be given a breakdown of all costs at the start of your engagement of a solicitor.

 3: Connection Fees
One of the most commonly overlooked costs, when you move into your first property, the connection fee is what you have to pay to get a phone line activated, or in some cases to get services re-started. It’s an additional fee to your monthly billing total, so you should budget for extra to get heating and light at the start of your occupancy.

 4: Crossover Costs
Your estate agents in Ipswich may provide you with a checklist to cover all the probable costs associated with your move. If they do, it is likely to note crossover costs as well. A crossover cost is money incurred as a result of your occupation of your previous property – a final rental payment, for example, is quite common where a person moves from rented accommodation into a place of his or her own.

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