A lack of knowledge about additional costs when purchasing a new home has seen large numbers of first-time buyers ill-prepared to buy, according to research.
New research from The Mortgage Lender found that 24% of UK homeowners didn’t realise that they may have to pay stamp duty before buying their first home, with a further 21% saying they didn’t consider these costs in their budget.
Other payments that homeowners revealed they didn’t factor into their budget when buying their first home include solicitor’s fees, valuation fees, surveyor’s fees, and the cost of a homebuyer survey.
Worryingly, a number of homeowners revealed they weren’t even aware that costs such as electronic transfer fees, indemnity insurance, and mortgage advice fees even existed.
List of expenses first-time buyers didn’t factor into their budget or were not aware of:
|Cost||Didn’t factor it into budget||Wasn’t aware of this cost|
|Legal/ Solicitor’s fees||15%||11%|
|Electronic Transfer fee||30%||35%|
|Mortgage product fees||20%||22%|
|Mortgage Advice fees||23%||34%|
|Land Transaction Tax (Wales)||29%||24%|
|Land Transaction Tax (Scotland)||30%||37%|
Buying a home is one of the biggest financial commitments an individual can make, and while many understand they will need a deposit to purchase their first home, the research highlights that many people hit financial hurdles later on in the home-buying process by not factoring in other expenses that could prove costly.
Steve Griffiths, Chief Commercial Officer at TML comments: “Buying your first property is a big life milestone as well as a huge financial commitment. In addition to securing a mortgage and getting a deposit ready, there are an array of other associated costs involved with getting on the property ladder. But all too often these are either forgotten about or not factored into budgets, meaning many are hit with a financial shock when presented with the additional fees and charges they need to pay.
“What is clear is that there is evidently a knowledge gap when it comes to what’s involved with buying a house, with many learning the hard way when they’re either on or have already been through the home buying process.
"More than ever, this highlights the need for professional advice. Brokers are not only expertly equipped to support their clients in getting the best mortgage deal for them, but can also ensure that buyers are well prepared in knowing what their affordability is and understanding what other costs may come their way.”