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I love to browse the property market and day dream my way around the expensive villas that are for sale in my town. Occasionally a dream property will pop up that almost seems within reach financially, if only we could pull a few strings and be able to make that monthly payment that the handy little calculator shows us at the bottom of the listing. Of course there is far more to consider than that one monthly bill. Sadly, buying a house is more than just a mortgage payment.
To bring myself, and anyone else who needs to hear it, back down to earth for a moment I’ve compiled a list of finances which are important…no, essential to consider when buying property. Yes, it makes me sound like a negative Nancy but it is so so important to be honest with yourself about every one of these points. Don’t let it dampen the enjoyment of the process. Just know that your bank balance and your sanity will thank you for it.
Let’s begin with your mortgage payment. It’s the most obvious expense when buying a home and it is most likely going to be largest. Often you hear the rule of thumb that you can borrow four or five times your household salary, but it isn’t necessarily as straightforward as that. The amount of deposit you have ready is also a big factor and it is always worth remembering that even if you could technically stretch your budget to make a payment, maxing out your available income isn’t always the best approach. The term of mortgage which you choose is also an important factor to consider.
In order to get an idea of what a house might cost you, there are some brilliant tools available to help you work out your likely monthly mortgage payment. Most online estate agents will offer a basic calculator at the bottom of each listing with their own determined rates. Mortgage Calculator have a great one which allows you to edit the interest rate and compare a full monthly payment to opting for interest only. They also show you the forecasted payments for your home; brilliant for opening your eyes to the amount you will pay towards a house over the life time of your mortgage.
Ultimately, your chosen bank will be the determining factor but every guidance available before you reach this stage is worth checking out.
The second thing that we can all count on paying, if you are UK based anyway, is council tax. What’s great is that this isn’t a guessing game. As soon as you know a property’s tax band a quick google will tell you exactly how much you would be required to pay each year. Naturally, larger houses with higher values sit in a higher tax band so if you are looking to size up considerably this bill could have a huge impact on your monthly outgoings. Amounts change from council to council too, so both size and location are worth baring in mind when you are house hunting.
If, like me, the oldest properties always have you swooning the most then the cost of utilities is definitely something to keep in mind. This is relevant to any home of course as electric, gas if you have it, broadband and other charges are standard to any home.
There can be a huge variation from one property to the next however. A Victorian villa with single glazed sash windows, tall ceilings and large open fireplaces is going to cost a lot more money to keep warm than a new build with smaller windows and double glazing. Likewise, a newer property is going to have more up to date electrics and a well serviced heating system, which could be lacking altogether in one which is older.
To the contrary, a fancy new underfloor heating system will take a long time to heat a space and can be very impractical, especially if it breaks, whilst a log burning fire will heat a room in minutes. The best thing to do is look into all these factors and if you are unsure about the impact, ask questions.
This point is close to my heart as I would absolutely love to have a huge garden in my future family home. A rolling green space for my children to play in. A spot to grow vegetables and room for Easter egg hunts and build dens. Fresh fruit which we can pick as the seasons change would make me so happy and a huge tree fit for a tree house would be the icing on the cake. The only problem with this? I don’t actually enjoy gardening.
Essentially, if I had a lot of outdoor space it would probably be necessary for me to hire someone to help with the maintenance. Whilst this could be done affordably, it is still an expense which I would need to factor in when looking at a property.
Decorating and DIY
Much like the cost of heating and garden maintenance, larger homes can only mean more decorating and more furniture too. Tall ceilings are likely to require you to hire a professional painter and decorator who has the equipment suitable for reaching every corner of the room, costing you a lot of money on jobs which you otherwise might do yourself.
Moving into a new home with one more living room than you’re used to will mean an outlay for new furniture. Alternatively, you have to compromise and leave some rooms empty for a while as you adjust to your new space and it becomes affordable for you to fill it.
Many people will take the approach of buying a “fixer-upper” which can be a great way to gain a lot more space or move to a better location without the huge price tag, but the fixing is always going to be costly in itself. Could you happily live in a home come building site for months or years as you find the time and money to transform it?
There will be many a home that passes each of us by due to it’s location, state of disrepair or over the top value. That’s OK. Window shopping is still always so much fun and one day you will find a property that fits your needs and your budget perfectly. Knowing that you have considered all of the boring but essential costs, you can buy with confidence. Happy house hunting!