Before you spend more money than you’ve ever spent before, take a look at these top tips from MoneyMagpie to keep your home buying costs low
Buying your first property is not only one of the most exciting – and stressful – things you can do in your life, it’s also the most expensive!
Before you spend more money than you’ve ever spent before, take a look at MoneyMagpie’s top tips to keep your home buying costs low.
Stay under the Stamp Duty threshold
The current Stamp Duty Land Tax threshold (at time of writing) is £425,000. Then, it’s 5% over that. This means you have one chance to buy a property up to that value without paying for Stamp Duty, so make the most of it! These figures can be subject to change, especially following the recent General Election, so always make sure you check the current threshold on Gov.uk before you look at buying property.
Check your ISA terms before you look for property
If you’ve been paying diligently into your Help to Buy ISA for many years, make sure you use the funds by December 2030, otherwise you lose the Government bonus. Whether you’re using a Help to Buy ISA or Lifetime ISA, make sure you’re aware of the current restrictions on what kind of property you can buy, too. It would be awful to fall in love with a property only to realise you couldn’t use your savings for the deposit.
Look for local schemes to stay in your area
More and more areas are offering local-only buying schemes or restrictions. This happens in high tourist areas, to prevent overselling of Airbnb type holiday rentals, which typically inflate the price of property to a point where local families can’t afford to buy in the town they’ve grown up in.
A local-only restriction can mean you can get a property at a reasonable price because there is less competition than with other properties. It does mean you’ll be restricted to selling to local-only residents in the future, too.
Save for an extra year on your deposit
Sometimes, holding out for a little extra time (if you can) will significantly increase your prospects when it comes to buying a house. If you can afford to stay renting for another year or so, and saving into your deposit, then that could help reduce your mortgage and save you thousands of pounds in your lifetime.
The larger a deposit you can save, the smaller your mortgage needs to be. Or, alternatively, you can get a larger mortgage to take advantage of things like no Stamp Duty for first-time buyers, to buy a bigger house that means you won’t need to move as your life (and maybe family) expands.
Thrift your furniture
Don’t forget to budget for things you need once you’ve moved! However, the cost of furniture and appliances can quickly add up. Use apps like FreeCycle and NextDoor to find cheap or even free furniture in the local area.
This is also useful because it buys you time. Time to settle in to your new home, and really plan how you’d like it to look and function. There’s nothing worse than splurging on a fancy corner sofa only to realise a few months later that it dominates your small living room, for example. You could even upcycle the old furniture to make a profit!
Shop around for quotes
Always, always compare several quotes before you go with a service. This includes conveyancing solicitors, surveyors, and removals companies. Don’t use the services the estate agent recommends to you – unless you’ve done your research and it does work out the cheapest option. When it comes to financial advice such as your mortgage, always use an independent broker and not one tied to a bank or estate agent.
Remember to haggle
When you’ve found quotes, don’t be afraid to haggle! More than that, however, is to make sure you’re negotiating realistically on the property your offer is accepted on. Put in your initial offer, and then conduct an in-depth home survey.
The basic surveys are cheaper on the surface but won’t spot some potentially expensive hidden issues like roof replacements or basement damp issues. Use the survey to leverage your offer, on the basis that other potential buyers would find the same problems and haggle in the same way.
Look for discount schemes
Shared Ownership is the most common type of buyer scheme but often is not the most cost-efficient way to buy a house. This is because you’re paying on a mortage and rent, and it is also harder to sell the property later down the line.
However, there are some key worker home buying schemes as well as similar first-time buyer schemes run by developers building new homes. This might be a match scheme to add to your deposit value, or a discount on the overall property price. Research these schemes in the area you want to buy in before you look at properties to see if you could nab a discount.
Consider a lodger
If you want to stay put in the area for many years to come, it makes sense to buy a larger house than you want if you have plans to expand your family (or just want more space!). You can offset the costs of a larger mortgage by finding a home with a spare bedroom that you rent out to a lodger for the first few years.
In fact, you might find a large chunk of your mortgage payment met each month by doing this. If you’ve already lived in shared accommodation, sharing with someone won’t feel like such a hassle – and you’re in a strong position if you don’t get along, as lodgers have fewer renting rights than tenants on an assured tenancy.
The Rent a Room scheme lets you earn up to £7,500 tax free a year. If you put most of that towards paying off your mortgage, you could even consider increasing your mortgage payments to pay it off earlier, if the terms allow.
Do some searches yourself
Now, we are not saying to only do your own searches and not get a conveyancing solicitor! However, before you make an offer on a house there are some quick and easy searches you can do to decide if the location is a risk.
If you’re in England, the Flood Search tool will tell you the flood risk of the property and nearby area. The Coal Mining Map shows areas of coal mines, existing and previous, as well as shafts and other elements. If your property shows up on this map, it is a good idea to complete the CON29 search, or ask your solicitor to do so.
Budget, budget, budget
Our final tip is to work out your budget for buying a new house, including everything you need to get it started like kitchen appliances, and add at least ten per cent for a contingency.
If that figure seems out of reach, don’t panic. There are plenty of ways to save money as well as making extra cash on the side. Check out the MoneyMagpie website for lots of hints and tips!
