I am 25, I own five pets, I'm single, I'm mentally and chronically ill, I haven't inherited a chunk of money or won the lottery, and have a fairly average job. I'm also a homeowner.
You'd be forgiven for wondering how the hell I managed this. Well, I'm going to tell you. I'm nice like that. There's a lot involved in buying a house, and it really wouldn't fit into one post, so I'm splitting all this info into chunks. Today's instalment is all about what you need to save before you can start putting in offers!
What you may or may not know is that buying a house isn't as simple as saving a deposit and picking a place. There are other fees and considerations to budget in from the off. These will all vary based on the value of your home, what kind of building it is, whether you're eligible for any support from the government etc. They don't teach this stuff in schools, so you may never have come across these costs until you start looking to buy and they can be quite off-putting. Here is what you should be saving up for:
This is the biggest chunk of cash you will need to save, and is what people generally focus on when the start to think about buying a property. It will typically make up 10-20% or more of the value of the house, but you could get a mortgage with a 5% deposit if your annual income (or combined income if you're buying as a couple) is around a quarter of the remaining value of the property.
Cost: 5-20% of the value of the property (apparently the average for first-time buyers is £33,000)
Stamp duty has just been abolished for first-time buyers on properties under £300,000, which is great news! However if your property is likely to cost more than £300,000 you should bear this in mind.
Cost: 2-5% of the value of the property
You will have to hire a solicitor to take care of all the legal stuff (called "conveyancing"). The fees will vary a fair bit depending on whether you're buying a freehold or leasehold property (more on that later), where you live and which legal firm you choose. Typically you should expect to pay £850-£1,500 for your solicitor's fees. Your solicitor will also order searches, which you will have to pay for, so that's an additional £250-300. Searches are requests for information from your local council to make sure there's nothing going on that could negatively impact the future value of your home, like planning permission on nearly developments, environmental factors and local geography. You'll also have to factor in transfer fees (a fee for sending your deposit from your solicitor to the seller.)
Cost: Up to around £2,000 including searches and transfer fees
Surveys are optional, but I strongly recommend that you get them done. Surveys are carried out by an independent professional, who will appraise your home for its structural condition, and depending on the type of survey you plump for can check your future home for anything from minor damp to serious defects. If they find anything serious, it may mean you decide against buying the property you're interesting in. It's annoying, because you'll still have to pay for the survey and any conveyancing that's happened so far, but it's better to pay for this up front than to potentially spend thousands on fixing something when you've already bought the place. Your deposit is safe until you exchange on the property, so you can back out at any time up to that date.
Cost: Up to around £600
These, again, depend on what type of mortgage you get, and which provider you get it with. I was lucky and managed to get a mortgage without fees except for the valuation, and some providers will actually let you add the fees to your debt so you can repay it back with the rest of your mortgage.
Cost: Up to around £2,400 (arrangement fees up to £2,000, valuation around £150, booking fee of up to £250)
I very, very strongly recommend you use a mortgage advisor. Not only will they be able to talk you through the process and take care of some of the paperwork, they'll also be likely to get you a better deal then you can arrange with the bank yourself. My mortgage advisor even helped me get my finances tidied up a bit before I submitted my application. My mortgage advisor was
, and I couldn't speak more highly of him. He was a godsend, and I recommend him to anyone I know even considering buying a home. He even works on a commission from the mortgage lender, so I didn't pay him a penny, however other advisors may charge a fee. That said, a good one could save you thousands in interest in the long run, so they're more than worth the outlay.
Cost: Up to 1% of the property value (or possibly nothing!)
If you're buying a brand-new property then this might not be so important. However, if you're like me and you're open to buying a fixer-upper, you should save up the money to renovate in advance if you can. You might not know exactly what you want to do with the property until you get the keys (which was certainly the case with me!) but factor in how much you think it's going to cost you to do the place up, and then double it. Trust me. Whatever you think, it won't be enough.
Cost: From nothing, to thousands
Moving house is an expensive business, guys. Even if you self-hire a van to move yourself, you're still looking at about £40 or more a day, and you'll have to heft all your furniture and belongings about by yourself. There's also costs like boxes and tape which, believe me, stack up. It is possible to do it all on a budget, but it's still important to factor this in. You don't want to realise you can't afford it when the lease on your old place is about to expire.
Cost: As little as £80, as much as £2,000 for a 2-bedroom house
Unless you're currently living in a rented property that you've furnished yourself, you need to factor in buying furniture. You don't have to get everything right away, but something to sleep on, something to eat on and somewhere to keep your clothes are fairly basic needs if you don't want your house to be completely unliveable. Charity furniture shops, eBay and Facebook listings are your best friends here. You could get a bed, a small table and some chairs for under £200 if you're savvy.
The previous owners might leave stuff in the house, but they could equally take everything with them, including fridges, cookers, curtains, even lightbulbs and doorknobs. You'll get some paperwork telling you what they will and won't leave behind, and you might be able to buy their appliances off them (which I did - getting the fridge, cooker and washer-dryer for £50 total) so bear this in mind too.
There are government schemes which can will incentivise buying new build properties, especially for first-time buyers, so it's really worth looking into what schemes are available to you.
So... how much DO I need?
Assuming you're aiming for a 10% deposit on a house costing £300,000, your worst-case scenario is about £38,000 excluding renovations, new furniture and appliances and moving costs. This is a slightly scary-sounding, unachievable amount of money for most people. HOWEVER, my deposit, solicitor's fees, searches, surveys and mortgage fees came to under £8,000. That's still a lot of money, but I think we can all agree it's a bit more manageable.
Stay tuned for more guides to how to save money, how to choose a house, what to look for during a viewing, how to make an offer, how to get a mortgage, and what happens once you've had an offer accepted! I'll also be posting about the renovations I'm currently doing to my cheap property!
Buying a house is expensive, stressful, and scary, and quite honestly it isn't right for everyone. But if it's what you really want, it's not necessarily impossible.
My ugly little house <3