Buying a house in the UK can be an expensive, and confusing process. With so many different agents, borrowers, and institutions involved, it can cost you a hefty sum of money. However, there are ways to reduce the cost of purchasing a home.
In this blog post, we will outline how much you should expect to pay as a first-time buyer in order to calculate your budget before moving forward with the purchase. It’s important to have an accurate idea of what you can afford when it comes to buying real estate.
If you’re on a tight budget then we recommend that you avoid paying more than 25% of your gross monthly income toward property costs. However, you can seek help from a professional Estate Agent Redditch like AP Morgan!
How to calculate your budget
Your budget will be based on the amount you can afford to spend on the whole process of buying a house. It is important to remember that you don’t have to buy a property for the full asking price.
You are allowed to negotiate with the seller, and it is recommended that you never make an offer that’s more than 10% below the asking price. This will allow you extra room to negotiate a discount on the final purchase price.
You will also need to factor in the cost of stamp duty, mortgage fees, and other miscellaneous costs that are incurred during the buying process.
Estimate likely monthly costs
House hunting can be an exhausting experience, especially if you’re searching for a property in a major city. You’re likely to spend a lot of time on the road looking at properties and talking to agents. It’s important to remember that the more time you spend on the hunt, the less likely you are to find a suitable property.
This means that you’ll be forced to take on another expense come tax time. If you’re on the hunt for a smaller property, then daily expenses might be lower, but you’ll need to factor in the cost of traveling around the UK.
Determine the average costs of living in the area where you’re searching for property. This will help you ensure that you’re not wasting time on the hunt, and can focus on the search with more energy.
Sum up your current debts and realistic monthly income
The process of house buying is a lot like the rest of your finances; it’s all about working out what you can afford to spend. The first step is to look at your current debts and take a realistic look at your monthly income.
The vast majority of mortgage lenders will only accept a loan of up to 75% of your income. In order to calculate your budget, we recommend that you take this percentage into account when making a monthly cash flow estimate.
We recommend that you spend no more than 30% of your monthly income on the costs associated with buying a home. This will give you some wiggle room to negotiate a discount on the final purchase price. If you’re on a tight budget, it’s important to keep in mind that you don’t have to buy a property for the full asking price.
Add some extras you’ll probably need to pay
When you’re looking to buy a property, you’ll need to factor in a hefty amount of costs. The first of these costs is stamp duty, which is intended to discourage investors from buying a property with the intention of renting it out. This means that stamp duty is high for first-time buyers.
In addition to stamp duty, you’ll need to pay a mortgage broker’s fee, legal fees, and a deposit. The amount that you need to put down as a deposit will vary based on the type of mortgage you’re using. It’s also important to factor in the cost of moving house.
This will vary depending on where you currently live and where you’re looking to move to, but it’s likely to be fairly expensive.
Sum up the likely final purchase price
While you can find the complete price of a property using a few online tools, this is rarely a helpful method. Typically, these tools only report the purchase price of the property and don’t include the costs associated with buying a house.
The best way to work out the final price of a property is to speak to several estate agents. Request a quote from a few different agents, and ask them what they think your property will ultimately cost to buy. It’s important to keep in mind that different agents will provide you with different estimates.
Be aware that the estimate that an agent gives you for the final purchase price is a very rough estimate. It’s likely to be off by a significant amount.
Take into account other costs that are more flexible
When it comes to looking at the final purchase price of a property, don’t forget to add in any costs that are more flexible. This will include factors such as repairs, maintenance, and renovation work that are likely to incur during the process of buying a new property.
In some cases, these costs might be covered by the seller. If they aren’t, it’s important to factor in the cost of out-of-pocket expenditure. Most mortgage lenders will expect you to have enough money in the bank to cover a large repair bill or a substantial renovation that you make to the property. At a minimum, you should have enough money in the bank to cover the following costs:
Final thoughts
Buying a property can be an exciting process, but it can also be expensive. The good news is that there are a few things you can do to lower the cost of buying a property and make sure that you’re not wasting time on the hunt. By keeping these tips in mind, you can buy a new home with less hassle and less money in your pocket.
