Use your head, not your heart when buying a home

You’re gearing up to buy your first home. Your foot is reaching towards the property ladder and the keys to your own front door are almost clutched in your hand.

This is a very exciting time, but it’s also a time to be meticulous about setting your budget and sticking to it so your dream home doesn’t turn into a financial burden.

A survey by the Money Advice Service found three in four first-time buyers stretched themselves financially, while four in five would-be buyers said they would be willing to overspend.

Many simply fell in love with their dream home and couldn’t resist stretching a little too high to reach that tantalising first rung.

Find out what you can really afford with the Rightmove Mortgage Affordability Calculator.


The true cost of buying a home

Before you start writing the invitations to the house-warming, don’t forget that buying your first home is not just about the mortgage.

There are a whole load of other costs to think about before you get the keys.

Stamp duty (on homes above £125,000), removal costs and solicitor’s fees all need to be considered.

Few first-time buyers manage to plan properly for all of these costs, in fact most found the total price tag to be a hefty £1,300 more than they’d expected.


What about when you move in?

Beware of falling for that dream home if you don’t how you will pay for it after you’ve moved in.

Research shows many first-time buyers don’t budget for a whole range of running costs, from council tax to electricity bills.
And one in five of the new property owners in the Money Advice Service survey said this had left them facing financial difficulties.

Even if you’ve budgeted for the mortgage, council tax and utility bills, if the roof springs a leak or a rusty pipe bursts, it needs to be fixed.

Having your own home means you need to budget for decoration and new furniture, maintenance and repairs, service charges and ground rent, as well as travel costs – there’s quite a lot to remember, so it’ll pay to make your own checklist.

Having a financial buffer helps too – check out our money saving tips to help build up a contingency fund to cover you if an unexpected cost crops up.


What if the worst happens?

“Help! I’ve lost my job – what can I do?”

The best thing to do, like the Scouts, is be prepared.

None of us know what is around the corner, but there are a range of options available to provide a cushion if life throws an unexpected challenge at you.

Recent first-time buyers said they could cope for around six months before no longer being able to meet mortgage payments in the event of a job loss- not a long time if you’ve got a 25-year mortgage.

Protection cover, such as life insurance or income protection, is a safety net that new homeowners and anyone with dependents should consider.

These policies can help you keep up with your rent or mortgage payments and other outgoings if you are made redundant or you’re too sick to work for a short period of time. Find out more about the various types of insurance protection policies.

So, there’s lots to consider when buying a house, but with careful planning and calculating all the bills involved you can be confident you’re ready to cover the real cost of your dream home – and then you can put your feet up and relax.

All information accurate at time of publication

Money Advice Service

This article is provided by the Money Advice Service.

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