FTBs surprised by first-year costs

Many people who take out a mortgage for the first time are surprised to find that the first year in their new home is a real financial strain.

According to Yorkshire Bank, a large number of first-time buyers (FTBs) fail to budget for a number of outgoings and soon find themselves living on very little money.

The bank claims that 44 per cent of FTBs completely forget to budget for legal fees, stamp duty and a property survey.

A further eight per cent do not put any cash aside for the cost of moving, while unexpected costs, such as damaged or broken appliances, are also not accounted for.

“It is too easy to quickly move on to thoughts of redecorating and building a new conservatory as soon as the offer is accepted, failing to factor in all the costs of a new home,” commented Gary Lumby, head of retail at Yorkshire Bank.

“Overlooking costs such as surveys and stamp duty is asking for trouble when, as our survey suggests, there are likely to be less predictable expenses as well.”

Yorkshire Bank’s research found that the majority of people do put money aside for redecorating when they move into a new home.

A total of 76 per cent of home owners fit a new kitchen and bathroom within the first year of moving into a property and this is another cost that FTBs must consider.

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Mortgage aimed at FTBs

As first-time buyers (FTBs) struggle to get onto the property ladder a number of lenders are now releasing mortgages aimed specifically at them.

Earlier this month Nationwide announced that it had a fixed-rate 25-year mortgage to offer and now the Co-operative Bank is throwing its hat into the ring.

The firm is offering FTBs a mortgage which is designed to make the first steps onto the property ladder a little bit easier.

It comes with one per cent cashback, which will be helpful in covering stamp duty and any other costs that FTBs may incur.

In addition, the mortgage has a fixed rate of 6.29 per cent for five years and a free basic valuation.

Research by Co-operative Bank shows that many FTBs are still finding it extremely difficult to get onto the property ladder with cost being the main factor.

It is in response to this that the bank has chosen to release its latest mortgage.

“As house prices have continued to rise it is important that the lifeblood of the market – first time buyers – are given extra help to gain that all important first footing on the ladder,” said John Barker, head of mortgages at Co-operative Bank.

“At the Co-operative Bank we believe that new innovative mortgage products such as this should be developed to help alleviate some of the extra worry for first time buyers.”

FTBs are urged to make sure that they are completely aware of all costs before they enter into a mortgage agreement.

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