First-time home buyers are frequently blindsided by the additional costs associated with property purchase, including stamp duty, legal fees, and survey costs, according to new research from The Mortgage Lender (TML).
The study revealed that 24% of UK homeowners were unaware that they would need to pay stamp duty before purchasing their first home. A further 21% admitted to not factoring these costs into their initial budgets.
Moreover, significant proportions of new homeowners failed to account for additional expenses such as solicitor’s fees, valuation fees, surveyor’s fees, and the cost of homebuyer surveys.
More concerning, a number of respondents were not even cognizant of the existence of certain costs like electronic transfer fees, indemnity insurance, and mortgage advice fees.
Among the expenses that first-time buyers either did not budget for or were not aware of, the most frequently overlooked included electronic transfer fees (35% unaware), indemnity insurance (37% unaware), and Land Transaction Tax in Scotland (37% unaware).
Such a lack of knowledge about these costs has led to significant hurdles in the homeownership journey for many.
According to the study, 14% of those who didn’t factor in additional costs ended up pausing their homeownership goals to reassess their financial capabilities.
Another 14% had to borrow money from their parents or grandparents to cover these unexpected expenses. Meanwhile, 11% had to resort to seeking a cheaper property, and 7% had to abandon their property search altogether as their affordability was stretched too thin.
Steve Griffiths, chief commercial officer at TML, said: “Buying your first property is a big life milestone as well as a huge financial commitment.
“But all too often, associated costs are either forgotten about or not factored into budgets, meaning many are hit with a financial shock when presented with the additional fees and charges they need to pay.”
