Around one in seven first time buyers are putting their plans on hold once they realise how many ‘hidden costs’ they face, new research shows.
The findings from The Mortgage Lender (TML) were that 24% of potential homeowners didn’t realise that they may have to pay Stamp Duty, with a further 21% saying they didn’t factor these costs into their budget.
TML, a specialist bank focusing on the self-employed and limited companies, quizzed 2,000 people about the cost of homebuying.
Other payments that first time buyers revealed they didn’t include in their budget include solicitors’ valuation and surveyors’ fees, and the cost of a homebuyer survey.
A number of homeowners revealed they weren’t even aware that costs such as electronic transfer fees, indemnity insurance, and mortgage advice even existed.
Many understand they will need a deposit to purchase their first home, but were hit by financial hurdles later on in the home buying process.
Some 14% of those who did not factor in additional costs said they had to put their homeownership plans on hold while they reassessed their budgets.
A further 14% revealed they had to borrow money from their parents or grandparents to cover the extra costs, while 11% took out a loan.
And 11% said they had to look for a cheaper property, with 7% stopping their property search completely as their affordability became too stretched.
Many are hit with a financial shock when presented with the additional fees and charges they need to pay.”
Steve Griffiths, CCO at TML, says: “In addition to securing a mortgage and getting a deposit ready, there is an array of other associated costs involved with getting on the property ladder.
“But all too often these are either forgotten about or not factored into budgets, meaning many are hit with a financial shock when presented with the additional fees and charges they need to pay.”