8 essential money tips when you’re buying a home

Melanie Wright – Virgin Money Living Mentor

by Melanie Wright | Independent Money Mentor

Award-winning freelance financial journalist

Buying a home is likely to be the biggest purchase you’ll ever make.

The good news is there are plenty of smart ways to deal with this expensive time in life. Here are my eight essential money tips to help you get through the process.

1. Shop around for your mortgage

Don’t just go to your bank for a mortgage. There are lots of different deals available and you could potentially save yourself thousands of pounds by hunting out the best mortgage to suit your needs. If in doubt, get advice from an independent mortgage broker who can crunch the sums for you and help you through the application process. Be aware that you may be charged for this service, so find out and agree any costs upfront. You can find an independent local adviser at unbiased.co.uk.

2. Check the lease carefully

If you’re buying a leasehold property, check how much longer the lease has to run. If it is nearing or less than 85 years, you could face having to pay thousands of pounds to extend it. If you don’t extend it, you could struggle to sell later on. You’ll also want to be fully aware of the conditions of the lease before you sign on the dotted line. The freeholder may charge ground rent, maintenance fees and have other conditions placed on the usage of the property. Seek legal advice through a conveyancer or solicitor to fully understand the contractual obligations of the lease.

3. Work out how much stamp duty you’ll have to pay

If the property you’re buying costs £125,000 or more you’ll have to pay stamp duty on it, and the amount you’ll have to pay depends on the value of the property. However if you’re a first time buyer, then you won’t be required to pay stamp duty on a property worth £300,000 or less. Work out how much you have to pay in advance, using the gov.uk stamp duty calculator, as it can add up to a hefty sum. 

4. Budget for ALL your other costs

It’s easy to lose track of all the bills you’ll have to cover when buying your home, but writing them down before you start will help you avoid any nasty financial shocks later down the line. It’s worth taking the time to shop around as you may be able to negotiate a lower price on some of these costs:

  • Conveyancing costs (your solicitor’s fees)
  • Removal costs
  • Valuation/ Survey costs
  • Mortgage arrangement fees
  • Broker fees

Check out the Money Advice Service checklist to help you plan for your moving costs.

5. Let energy suppliers know you’re moving

Don’t forget to tell your gas and electricity providers at your old property that you’re moving so they can close your accounts down, and take meter readings so you don’t end up paying for energy you didn’t use. 

When you get to your new home, find out which energy providers supplies gas and electricity and shop around to make sure you’re on the most competitive energy tariff possible.

6. Consider a lodger

If your finances are under pressure and you’re buying a property with a spare room, think about letting it out to help you cover your monthly bills. Under current rules, you can earn up to £7,500 tax-free each year from renting out one or more furnished rooms in your home. Make sure you vet any potential lodgers carefully first and you’ll need to consult your mortgage lender and insurer too. For more information on this option take a look at our article How renting out your spare room can help you save money on your mortgage.

7. Keep furniture costs down

If you’re strapped for cash, check out websites such as freegle and freecycle where people give away unwanted items for free, or visit local car boot sales for bargains.

8. Swot up on your DIY skills

You’ll need to call in the professionals if your electrics or plumbing needs sorting, but if it’s a bit of painting or tiling your new home needs, you can tackle this yourself to keep costs down. YouTube has loads of DIY videos to help – Ultimate Handyman is one of the best – or invest in a DIY manual to find tips and guidance.

Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.