So, you found your dream house, made the initial deposit, spread the rest over some years, and are about to move in soon. Congratulations! But your financial obligations towards the house go beyond buying the property and paying the relevant legal fees. According to statistics, first-time home buyers exceeded 409,000 in a single year. It is, therefore, necessary to discuss hidden home ownership costs, to enable first-timers to gain better insight into their responsibilities. This will also allow you to plan your budget. Below are some hidden costs to be aware of.
How much you pay for property tax will depend on the actual cost of the house. Here is a simple breakdown. There’s a 3% property tax for a house that costs up to £125,000, 8% on properties ranging from £250,001 to £925,000 and 15% on properties that exceed £1,500,001
In general, the cheaper the house, the lower the property tax. In addition to this is the Stamp Duty Land Tax, which was reviewed in 2015. Fortunately, for residential properties, SDLT is restricted to homes that exceed £125,000. Property tax is backed by law and cannot be ignored. And while it is usually paid annually, there may be considerations where homeowners can pay twice a year to help break up the cost involved to suit their financial situation.
This type of insurance is actually for your own good. Considering that anything can happen at any time that may cause damage or loss of property, homeowners insurance can be a lifesaver or, in this case, a money saver. Whether your house is mortgaged or bought outright, homeowners insurance is a legal obligation you must fulfil. This type of insurance usually covers the building and everything within it. As a first-time homebuyer, it would be best to find out what your policy covers. You also have the option to buy additional policies to provide more financial cushioning.
It would be unfortunate to endure property damage only to realise at the last minute that your homeowners’ insurance does not provide coverage. Furthermore, because insurance companies are more concerned about how much they make, sometimes, you may encounter problems when claiming damages. In this case, it’s important to find a residential property damage attorney near you. As a first-time buyer, this strategy can save you money and the headache associated with issues of this nature.
Home maintenance costs
Ideally, 1% of your home’s total value is what you must budget for yearly maintenance costs. This means that if your house costs £400,000, a year’s maintenance would be £4000. This is only an estimation of how much you may spend annually. In reality, the cost may be higher or lower, depending on the cost of repairs and general maintenance. To be on the safer side, it may help to set money aside monthly for these maintenance costs. Preventive home maintenance can help you save even more.