Becoming a First Time Homeowner in 2022? Congratulations, this is a very exciting time for you. When it comes to working out how big a mortgage (or home) you can get, you’ll also want to factor in what you can actually afford in repayments, bills and expenses. Welcome to the world of financial responsibility.
To help, we’ve gathered 12 bills you may pay including your mortgage repayments.
1. Buildings Insurance
Building insurance is considered a must-have, as it covers the cost of repairing any damage to the structure of your property.
Mortgage lenders will require you to have a policy in place from the date that you sign your contract so that they can give you a home loan. The only time that this isn’t a necessity is if you are buying a leasehold property and, in that case, it should be included in the service charge.
Connect with an FCA Authorised mortgage and insurance expert for a free consultation to see how much you can save on your monthly payments.
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2. Mortgage repayments
New homeowners will need a mortgage to buy their home, and this will mean making monthly payments to the lender (a bank or building society). The amount that you pay each month will be considered by the amount that you have borrowed and the mortgage term.
If you have chosen a fixed-rate mortgage, which is when the “mortgage carries a constant interest rate from beginning to end”, therefore the payments will be the same from beginning to end. However, with a variable rate the amount you pay each month could vary.
You should also consider remortgaging at the end of the introductory period to avoid being transferred to a more expensive rate and land yourself a better deal.
3. Heating and electricity bills
Heating and electricity are essential when you are a homeowner. This is how you get to watch Netflix and take nice relaxing baths. Depending on your supplier, you should be able to choose to pay your heating and electric bills quarterly, monthly, or annually - sometimes even a pay-as-you-go option.
The deals you can get on these types of bills can vary, depending on the supplier. So, ensure that you keep an eye on your bills and if you see them increasing consider another supplier.
When you are viewing properties the energy performance certificate will help you gauge how energy efficient the property is. This will help you work out the price that the bills may be.
4. Water bills
This bill will vary depending on where you live and the availability of water in the area you chose to live in.
If your home is fitted with a water metre, the amount of water you use may affect your bills.
Unfortunately, you cannot switch water suppliers as they are allocated depending on where you live.
5. Contents insurance
This type of insurance is very important to some as it covers the cost of replacing your belongings if they are damaged, destroyed or stolen.
You can usually combine this insurance with building insurance which “covers the cost of repairing damage to the structure of your property”, although you can buy it separately too if you would like.
6. Council tax
Council tax is “a tax levied on households by local authorities in Britain, based on the estimated value of a property and the number of people living in it”.
Properties are based in bands ranging from A to H and the price you pay is determined by what band you are in. The seller should be able to tell you which band the property is in and from this you can see how much council tax you will pay.
7. TV, broadband and phone bills
Although these may seem small at just £20 or £30 per month, but, they can add up! It could be worth your while looking around for good deals from different suppliers to ensure you aren’t paying too much.
8. TV licence
A TV licence is what legally allows you to watch live TV on any channel either through your own TV or on a website/app. You will need a licence whether you use Freeview or a pay-tv service in your home and whether you watch BBC channels.
Since 2016, changes in the law have meant that you need a TV Licence to watch or download on-demand or catch-up programmes on BBC iPlayer too.
This bill can also be paid weekly, monthly, or annually.
9. Service charges and ground rent in flats
Depending on what property you are buying you will have service charges and group rent to pay monthly or weekly if you are buying a leasehold flat. These charges cover the management and maintenance of the building's communal areas and usually cost between £100-£200 a month.
Make sure your property solicitor looks over the lease very carefully before you buy a leasehold property, as some can contain punitive clauses and spiralling ground rents.
10. Home repairs and maintenance costs
If you have something in your home that needs to be repaired or want to change something you will need to be able to finance the cost, and these costs vary from one property to another.
It is worth setting money aside, so you are prepared if the time ever comes that something needs to be fixed.
11. Parking charges
Depending on the property that you buy you may need to budget for a residential parking permit.
These parking permits don't always guarantee a parking space, but they do enable you to park in resident-only parking bays within a certain distance of your home, and the cost of the permits may vary depending on the area that you live in.
12. Transport costs
How will you get to work? How much of a journey is it to see your friends and family? And how much will that cost monthly?
Public transport is a great way of commuting if you do not drive. So, if you don't plan on getting your driving licence, a car and then pay for fuel? It’s something to consider.
Is 2022 your year to become a first time homeowner? Mortgage Propeller are here to help and make that process as easy as it can be for you! So click here to get started today.