Wednesday, May 2, 2007
Category:
Consolidation
It seems, according to new research from Yorkshire Bank Mortgages, that new homebuyers are likely to face a financially fraught first year.
Problems likely to crop up according to the research range from basic financial oversights to unexpected bills to new babies.
Expenses such as legal fees, stamp duty and even property surveys are a few of the things that almost half of new homeowners admit they forgot to factor in their expenses when moving home. Also, less than one in ten (8%) put money aside for moving costs.
Other problems were known to arise as well within the first year. Research has shown that one in three homeowners had to replace or repair a broken cooker and one in eight faced even larger bills when their boiler blew up. Adding to the expenses of surviving the first year in a new home, one in 10 women became pregnant soon after moving into their new home, according to Yorkshire Bank’s study.
One in three new home owners are totally unprepared for the large amounts of cash spent after first moving in. Within the first year of living in a property, 76% of homeowners splash out on both a new kitchen and a new bathroom, totaling an average cost of £6,500.
Gary Lumby, head of retail at Yorkshire Bank, said: “To help avoid the short-term financial hassles and the larger long-term expenses, it’s important for homebuyers to get their finances in order before they even start to look to move home.”
With a booming property market around most of Britain, first time buyers are finding it increasingly difficult to get onto the property ladder. More than one in six new homeowners admitted that they needed to borrow money from family and friends to cover the cost of a deposit.
Gary Lumby goes on to explain that: “First-time buyers particularly need to make sure they are aware of the full costs involved with buying their first home and don’t try to over stretch themselves in the first year. If interest rates go up again, they could be particularly hard hit if they face larger monthly outgoings and have no leeway.”
............................................................................................................................
Once they have moved house, homeowners should be encouraged to sort out all previous debt so as to ensure that they have enough money to make the first year in a new home pleasant. A solution to this could be to apply for a debt
consolidation loan. Made payable over a term to suit the borrower, from 5 to 25 years, a consolidation loan ties up all previous debt into one straightforward monthly payment. Homeowners should however remember that with a consolidation loan, borrowing over a longer term will increase overall interest charges.
