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Can you afford your first home? Beware of the hidden costs

Buying your first home is hugely exciting and it's probably the biggest financial decision you'll ever make. Before you start viewing potential buys, you need to get your head around the costs you'll have to cover once you've had an offer accepted. That way, you can be sure you don't end up buying a house you can't afford.

Stamp duty

Great news: from November 2017, first-time buyers of residential property pay less stamp duty land tax (SDLT), which could otherwise cost thousands, depending on the property's value. As a first-time buyer, you now pay nothing on the first £300,000. And for those lucky people whose first house costs more than that, you'll pay 5% on the amount above £300,000, capped at £500,000.

Mortgage fees

At the risk of stating the obvious, you need a deposit to get a mortgage, usually at least 5% of the property's value. There are other fees too, like a booking fee (around £99-£250), arrangement fee (up to £2,000) and valuation fee (around £150). When shopping around, check the fees that apply for each mortgage, especially early repayment charges, which can be steep.

Legal fees

Your solicitor will do the hard graft and deal with most of the paperwork whilst taking a fee of around £850-£1,500. The sale involves a lot more than just moving money from the buyer to the seller. They can run environmental searches and check if the property is affected by problems like old mining works, or even if there's a duty to pay money to a local church.

Survey

It's likely your mortgage provider will carry out a basic survey on the property and confirm its value. You might want to pay around £600 for a surveyor to conduct a more thorough one. If they flag any issues, you could use this as a bargaining tool and negotiate on the purchase price. If anything, paying for a more in-depth survey gives you the chance to find out about problems that could cost you more further down the line.

Renovations

As well as finding the cash to decorate your new home, you might need money for less glamorous reasons like new plumbing or wiring. Costs vary widely and will depend on the issue and type of property, so get an estimate before buying to help you budget. You should also check if your home is a listed building as this can affect the type of renovations or changes you're allowed to make.

Insurance

Mortgage providers insist you take out insurance on the property to protect their investment, and you're going to want to insure your contents, too. This will protect your belongings in the event of theft or damage by an incident such as a fire or flood.

Furnishings

Finally, don't forget to put some cash aside to buy furniture and items such as a bed, sofa, table and chairs. Even if you don't have expensive taste, furnishing a home isn't cheap – even small things like towels and bedding can soon add up.

These costs shouldn't put you off buying your first home, but it's a good idea to have them in mind before hitting the viewings circuit. Good luck in finding a home that's just right for you!

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