First Time Buyers Underestimate Cost Of Buying A Home

The Cost for First Time Buyers

New research suggests that first time buyers are unaware of costs associated with buying a home.

New research published by Pegasus Personal Finance has demonstrated that first time buys vastly underestimate the costs involved in buying a property. Over 40% of new buyers are not aware of all of the costs associated with purchasing a home, while 25% were shocked by the fees charged for bank transfers, searches and setting up a mortgage. In addition, almost a quarter of buyers were unaware of fees for land registry, 16.7%  were unfamiliar with stamp duty and 14.7% knew nothing of solicitors fees. This paints a picture of first-time buyers overwhelmed by charges and bureaucracy, putting themselves at financial risk.

10% of respondents also admitted they were not knowledgeable about interest rates, and an alarming 13.5% revealed that they had not prepared for a rise in interest rates. Of course, these are currently at a seven year low of 0.5%, but it is possible that these could climb unexpectedly. This therefore presents a great financial risk for those who are unprepared.

Bills were also an area in which the survey highlighted a lack of understanding. One in five had failed to account for the higher utility bills which result in moving to a bigger property, also being surprised when their insurance costs increased. In addition, nearly a quarter had underestimated the cost of removal services, while nearly 14% were surprised at the steep cost of furniture and decor.

Balgores Property Group in Essex raised the issue: “Unforeseen fees and costs can amount to £1,850 according to recent data from the Money Advice Service.  We have seen many first time buyers who have not budgeted for stamp duty and some of the other smaller costs like mortgage application fees and legal expenses. It can be a nightmare trying to work out all the costs when you are buying a property for the first time, but it so important that first time buyers crunch the numbers, or they could lose the house of their dreams.  Demand for property in Essex is soaring and so first time buyers need to be ready to buy, with mortgage approval and legals sorted.”

Going on to address the practicalities of dealing with fees, he said: “We can help first time buyers if they come in and see us.  We can give them a complete breakdown of all the moving costs, together with advice on mortgages and protection, as well as information on the running costs of the home they’re interested in.  We have a range of mortgage specialists that will find the best first time buyer mortgages and will be able to guide buyers through all the costs incurred when applying for a home loan.”

If you are a first time buyer, then it is essential that you research the costs that will be associated with your purchase. There are a range of online tools which enable you to estimate what your costs will be, such as the first time buyer checklist on

Martin Gibbon is the Director of Balgores Property, the leading Essex Estate Agents. Martin has been working in the industry since the mid 80’s. When he is not selling properties, Martin enjoys spending time with his wife and children, fishing and supporting West Ham.