First time buyer? What to budget for!! (General Comments)

Name: bkrajiv

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Product:	General Comments
Date:	05/10/04 (444 review reads)
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Hi all, I kind of am writing this piece after some serious thinking on whether I should buy my first property or not. What I am going to say may not be true for everyone but it definately requires some thought.

With the current house prices / interest rate structure it is too difficult for first time buyers to get on the property ladder. Nothing new huh? Yeah, but why do we still all try and save up for a measly 10-15% deposit?

Buying a house/flat etc is not a joke, I personally feel the following are things one needs to consider before taking the plunge.

1. Stamp duty on the property - depending on what the price is , it can be anything from 1% to a stagerring 3% ( I am assumming no first time buyer will pay more than £500k for their first property!)

2. Legal costs - budget for £1500

3. Valuation fees - can be of any range - £300 -£500

4. The all necessary deposit - If you take on a mortgage more than 5 times your salary - you are risking alot . i believe interest rates will peak at 5.25% by mid next year.

5. finally think of how much you want to spend on white goods, furniture, fixtures etc.

6. Not over yet! Now add on your current bills :
a) car insurance / travel cost per month / petrol / MOT etc should all be included
b) phone bills / mobile phones etc
c) food bill
d) I am single , I dont have children - If you do add on these costs.
e) entertainment costs - drinks / nights out / dineer out
f) medical/dental bills etc should aslo be budgeted for.

When used to budget my bills I always added on a 5% extra on top. I believe this is the sensible way of budgeting as then you have provided for any emergency cash you may require. Remember, if you have to borrow maoney so that you can afford to live in your own home - that is a bad investment!! An investment is meant to make you money not something you lose out on!

ALOT TO THINK ABOUT ISNT IT? On a serious note, once you do this and you haven't got any savings per month than DO NOT jump into it blindly!! If interest rates rise you will be seriously stuffed.

Golden rule of thumb : - Do Not do Something which you will regret later!!!!!

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