Unforeseen Costs Jump Up Purchase Price

Unforeseen costs connected with buying a property in the UK can incur extra costs of £30,000 to purchase price.

Added property buying costs-The cost of buying a property may be £30,600 more than people think as unforeseen costs kick in, it is claimed. A fifth of home buyers fail to set realistic budgets when buying, and then suffer financial strain, according to recent research.The study found that 21% of home buyers paid more for their properties than they planned to, with that budget gap averaging out at almost £23,000 per buyer.

Furthermore, home buyers on average lay out over £8,000,just in the first year post purchase, but at least 23% do not budget for this extra outlay. In total, those unforeseen extra costs could add up to £30,600 for more than a fifth of home buyers.

For the average under budgeted buyer, 60% of the shortfall comes from long term savings, weakening the ability to cope with future rainy days.

That leaves a further £13,400, of which just over half, 63%, is funded using credit in the form of personal loans (15%), credit cards (27%) and extended mortgages (21%).  For quite a few, these are long term debts, with just a third, 35%, paying them off within the first year. One fifth of home purchasers pay these debts off in conjunction with their mortgage payments.

These figures indicate exactly how vital it is on careful planning and sticking closely to a budget, especially at the start of buying a property. It’s all too easy to overlook expenses and end up in a precarious financial position. Households with debt piled upon debt are most likely to be at risk during tough economic times.

House buying and renovation can be quite a rewarding and profitable exercise, when done properly and to a budget. But hasty decisions on must have properties, fixtures or fittings will just result in financial turmoil.

The home buyer’s budget gap is symptomatic of a broader feature of the nation’s money management characterised by a tendency to react to circumstances rather than plan ahead.

Managing your own finances efficiently can seem like an enormous task for some.  More than half of adults would like to be more financially astute and in control of their own financial destiny. That’s not a surprise considering the complexity of modern personal finance, with many people operating more than five products but left largely to their own devices when it comes to the tools and guidance needed to really make the most of them.

With house prices forecasted to stagnate and mortgage rates remaining relatively low, there are undoubtedly bargains to be had for property buyers who take the time to plan in advance.

It’s not just about putting money to one side, although that is obviously an important step with many mortgage lenders still looking for sizeable deposits, it is also very important to have a clear picture of all the costs involved, rather than just looking at the purchase price.