Hidden housing cost warning - 10 things for first-time buyers to be aware of

Getting on the property ladder is the dream of many – but there are many financial pitfalls to avoid on the way. The MoneyMagpie team want to make sure you save money (it is, after all, part of our ‘make your life richer’ ethos!) so have created a list of possible traps to look out for when you’re buying your first home.

1. Check Your ISA Terms and Conditions

If you’re using a Help to Buy ISA or a Lifetime ISA to buy your first home, check the fine print. There are lots of restrictions on which properties you can use these ISA funds for, so it’s important you know which houses you can buy that allow you to access the funds.

Additionally, if you’ve been paying into a Help to Buy ISA, be aware that you have until December 2030 to claim the Government bonus. And you can only do so when buying a house – so make sure you’re planning to move a few months prior to that, to allow for the time it takes to do the paperwork.

2. Don’t Cheap Out on Solicitors

While it’s very tempting to use the cheapest online-only conveyancing solicitor for your house purchase to save some cash, think twice. These services can be slower, and use boilerplate contracts and reports without going over things with a fine toothed comb. They are also often only available by email, not phone, which can slow things down. Before you use a more expensive conveyancing solicitor, ask around for recommendations, too.

Ideally, use a local one that you can meet face-to-face, too.

3. Avoid Using the Estate Agent Referrals

On a similar note to not cheaping out on solicitors, don’t use the services the estate agent recommends, either. They will push their own internal services or those which they receive a commission on.

Shop around for your conveyancing solicitor, surveyor, and mortgage broker. Get quotes and find out what’s included with those quotes. Very occasionally, using the estate agent recommended service can work out cheaper – but don’t buy into any sales pressure such as ‘it means we can push the sale through faster’.

4. Don’t Skimp on Searches and Surveys

Even if you’ve fallen in love with a house, can afford it, and have had an offer accepted, don’t be tempted to skimp on your searches. There could be hidden costs or potentially very expensive pitfalls (sometimes quite literally, if your house is over an old mine!).

While searches can take time and cost money, it could save you thousands of pounds in the long term. An in-depth survey can spot hidden costs such as the need for a roof replacement, which the basic surveys won’t necessarily include.

5. Do the Sums on Shared Ownership

Shared ownership is very rarely the best way to buy a house. Usually, you’re better off staying in a rented home until you can afford a larger deposit. This is because, with shared ownership, you are responsible both for mortgage payments (which can go up when interest rates rocket) as well as rent.

Sometimes, shared ownership can make sense. But it’s important to really think about whether it is better to keep renting for a little longer or find another way to purchase a house such as a higher loan-to-value mortgage, before you go ahead with it.

6. Key Workers Should Look for Buying Schemes

If you’re a key worker, such as a nurse, doctor, social care worker, or teacher, you could be eligible for a key worker discount on a new build.

For key workers looking to buy their first home, many developers such as Barratts offer a deposit matching scheme or discounts for eligible people. This can be a way to buy an affordable home near to your workplace. So, when you’re looking for properties, research key worker schemes to find out if you’re eligible.

7. Don’t Take the First Removals Quote

Getting a removals quote can be a bit tedious, as you’ll usually have to write an itemised list of what needs moving. However, quotes can vary wildly and include different levels of service, so it’s important to shop around.

If you want to save money, you could consider hiring a Luton van yourself and doing the move on your own. However, bear in mind that moving yourself can take longer than you expect. So, it’s better to leave a few days of overlap between your rental tenancy ending and completing on your home. This will give you time to do the move and also lets you clean both properties in depth.

8. Don’t Be Afraid of Getting a Second Opinion

Whether you think your surveyor wasn’t thorough enough (or too thorough), or you have doubts about the property itself, ask for help. It could be making an appointment for another viewing with a trusted friend, or a chat with a different solicitor about a knotty topic.

Whatever the thing troubling you, remember you’re not doing this alone and you’re not the first to buy a house either! There are plenty of people you can ask for help and guidance, even if it’s simple reassurance that you’re doing the right thing.

Sometimes, a quick conversation can save you the heartache of buying a property that becomes a money pit, or that you feel uncomfortable in and need to move from faster than you planned.

9. Avoid Using the Bank’s Mortgage Broker

Much like you shouldn’t use the people your estate agent recommends to you, try to find an independent mortgage broker, too. You might be able to get an Agreement in Principle online from a bank in a few minutes, but it’s likely that a broker can find a better deal.

This is especially true for people who might have unconventional income. For example, the self-employed can struggle to get good mortgage rates as they’re seen as a risk. An independent broker will shop around all deals – including those not from high street banks – to make sure you’re getting the best terms possible.

10. Weigh Up Short and Long Term Goals

Finally, make sure now is the right time to buy a house. Your first home should be big enough for you to grow into if you’re planning a family, or in a good position for work and local schools if you already have children.

But if you’re someone who isn’t sure where they might be in three years’ time, a house can be a huge tie. It could be that now is the time to start saving for a larger deposit and putting off the house move for a bit, instead of getting a mortgage right now.

The worst thing you can do as a first-time buyer is jump into the purchase and then need to move a year or two later. It costs a lot to move house each time, with fees and stamp duty (which you don’t pay on houses up to £425,000 when it’s your first house – but will after that).

Budget for Home Improvements

Our final word on home buying tips is this: don’t forget the inside! Once you’ve moved, it’ll take a lot of time and effort to get the house just as you like it. From buying a new sofa to repainting the walls, the small (and big) items add up.

You could look at buying thrifted furniture and finding people up for skills swaps if you’re tight on your budget after buying your first home. It’s also worth keeping an eye out for seasonal deals and discounts at homeware and hardware stores to keep the savings going as you settle in to your first home.