Why I started this blog…

blog

Now this is a post I should have done a while back but am finally getting round to it (better late than never!!).

We work our way through secondary school striving to get the best grades possible to get into the University and degree course of our choice. Once we get there we “graft” away aka: Continue reading

So you want to buy a house…

estate-agent-signs

In the UK we are a nation obsessed with home ownership. “Are you renting or buying?” is a question that relative strangers now feel comfortable asking each other when house hunting. So you’ve managed to save that all important deposit, but what else do you need to consider in your budget??? I remember watching a couple of First Time Buyers on a TV show a few years back. They had found their dream home with the help of the show’s presenters. Unfortunately the whole thing fell through as they forgot to include a key cost in their budget. To avoid that happening to you (or me) here’s a list of other things you need to consider when budgeting for the purchase of your first home.

What can you afford?

Now this should not be based on what the bank/building society has suggested you can borrow (Decision in Principle). I remember going through this process as part of my current house hunt and was staggered at what the bank would allow us to borrow. Needless to say we had no desire to take on that much debt (I think I’ve made my feelings on debt pretty clear). Just because you can doesn’t mean you should.

If you don’t already, draw up a budget with your current costs to establish a monthly figure you’d be comfortable paying. This should incorporate some slack as any increase in interest rates will impact your monthly repayments. Currently interest rates are at historical lows, with base rate now at 0.25%, so it would be unreasonable to expect mortgage repayments to remain at current levels over the typical term of 25 years.

Mortgage Fees

These fees relate to the booking and arrangement of the mortgage with the former ranging from £99 – £250 and the latter being anything up to £2000. Mortgages with lower deposits (e.g. 5%) will often also come with a higher lending charge or mortgage indemnity guarantee due to the additional risk taken on by the lender.

Legal Fees

You will need a solicitor or licenced conveyancer to carry out the legal work associated with your property purchase. The associated fees are typically £500-1500.

Surveyor fees

Buying a house is the biggest purchase most of us will make. Therefore you should have a survey done, prior to purchase, to understand any potential issues with the property. Basic surveys cost around £250, whilst full structural surveys can start from £600. Not a small amount but this could save purchasing a house with major issues and costly repairs.

Valuation fees

Some lenders will not charge for valuation. Nonetheless this fee relates to the mortgage provider’s assessment of how much the property is worth and can start around £150 but can be higher dependent upon the property value.

Building Insurance

Your mortgage agreement will often stipulate a requirement to obtain Building Insurance to protect your home against fire, flood, subsidence, etc. You may also want to take out Contents Insurance to cover your belongings and Life Insurance to pay off your mortgage should you pass away before the end of your repayment term.

Taxes (Stamp duty)

This was the forgotten cost that caused the couple on the TV show to lose out on the property purchase. They mistakenly thought that Stamp Duty, payable on the purchase of a property, could be paid using the mortgage. It cannot, so you will need additional funds to cover this if your property purchase is subject to this tax. The charges are levied as indicated below:

sdlt-rates

Moving costs

Personally this is one cost I’ve always managed to get down to the bare minimum (i.e. Van hire), thanks to the help of family members.  However if you plan to entrust this to a removal company you could be looking at costs from £300.

Home repairs

A new responsibility once you own a property. No more calls to the landlord requesting for things to be fixed – it’s now down to you! Maintenance and repairs costs are on average in excess of £5000 per annum, so definitely not a cost to be ignored!


Is buying the best thing for you right now?

This one is not so much a budgeting point but more about looking at the bigger picture. For example:

  • Do you need to be flexible in terms of location?

Renting provides greater flexibility when it comes to location with some tenancy agreements as short as six months. This provides the opportunity to try out a new area without major commitment and/or enables relocation with greater ease.

  • Do you want to deal with fluctuations in the housing market?

As a renter you are not exposed to the risks of negative equity, conversely you also do not benefit from any gains in house value.

  • Are you able to deal with the hassle of home repairs?

Your landlord is responsible for this if you rent your property, whilst homeowners are responsible for any maintenance required.

  • Are you ready to make the investment?

Rent is often referred to as “dead money” helping your landlord boost his/her wealth. With a repayment mortgage a proportion of the payment goes towards paying off your house. Once repayment is complete your home is yours and you will have no further mortgage payments. When it comes to rent there is no end to payments.

There have been long running arguments about whether renting or buying is better. What I would say is that it is important to assess your own personal situation when making this decision. It’s not a case of one is right and the other is wrong but which one is right for you at this time.

Are you currently in the process of looking for your first home? Do you have no interest in purchasing a property? What additional costs would you factor into the above list? Please comment and let me know, would love to hear from you.

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Financial Education – Why we all need it

financial-concept-education

My introduction to Financial Education came during university with a recommendation to read Robert Kiyosaki’s Rich Dad, Poor Dad by a fellow student. Despite the criticism that the brand may have faced over the years, this book really opened my eyes to the different approaches to money by the rich, poor and middle classes. If you haven’t read it, I definitely recommend. For my fellow UK folk although some of the items discussed may be specific to the US the principle of using your money as investment capital to generate income is universal.

So what’s currently the norm when it comes to how we use our money?

We exchange our time for money, in other words we go to a 9-5 (other shift patterns also available J) in exchange for a salary/wage. This earned money is then spent on things (rent/mortgage, bills, leisure); some of us will then save what’s left (if there is anything left). Continue reading

Get the most out of Your Time: My Time Management Tips

Time-management

By NasimAhmed96$ (Own work) CC BY-SA 4.0 http://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

For the past few weeks I have been in something of a reflective mood. Something I would say is typical during a period of change and challenges. Following on from last week’s post, I decided to share my tips to overcoming that classical excuse – “I don’t have enough time”. Yes we could all do with 100 hours in the day, especially if working full time and/or with a family to look after, but the reality is we have 24 hours in a day so let’s make the best use of them. Continue reading

Why do people give up on chasing their dreams?

Dream BigHappy Monday everyone! For most this is the dreaded day of the week but today comes after a phenomenal weekend of Athletics with Mo Farrah retaining his gold in the 10,000m, rounded off by the legendary Usain Bolt winning a third 100m Olympic gold in the early hours of this morning (UK time). The sun is also shining and we are experiencing proper summer temperatures today – a refreshing change.  So again I say to you all happy Monday.

I always find the Olympics inspiring – I love the stories of the daily early rises, relentless training schedules and commitment of the athletes. Some of these journeys started off as early as age 4, with Rio 2016 being the culmination of what began as a dream. This got me thinking what makes so many give up on chasing their dreams… Continue reading

10 Credit Score Myths Exposed

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Credit Score – NY Photographic

Hello, hope everybody had a fab weekend. For those in the UK I hope you made the most of the summer weather, here’s to hoping it will continue. Today’s post was inspired by a conversation with a close friend about credit and building your score. There seems to be so much confusion around credit scores, credit history, etc and what impacts them. So I have pulled together 10 credit score myths to help clear things up! Continue reading

Paying off Debt: Avalanche vs Snowball

Debt emergency 1

Last week I shared my journey paying off credit card debt, prior to the days of my personal finance wisdom🙂. Luckily I’d always had this discomfort with debt (particularly bad debt), which served as motivation to clear the balance and keep any debt to a minimum going forwards. I know that not everyone views debt this way. Some people happily use debt to fund things that they are unable to afford such as the designer clothes/shoes, tech gadgets and cars. Oftentimes debt is used as a method to tackle emergencies due to a lack of emergency funds. This is done under the assumption that income will continue indefinitely to cover these debts, which makes me think did the crash of 2008 and the associated job losses teach us nothing??? Continue reading