According to new research the average cost of moving home was £5,000 more than expected for nearly 40% of those surveyed. Buyers paid £6,000 more, which is perhaps less surprising, while even renters overpaid by more than £3,000. The survey, commissioned by MoneySupermarket.com, also found that two-thirds of those caught out were forced to dig into their savings, while others used credit cards and their parents.
Why does this happen? What are the costs that are pushing movers into desperate habits? Do enough movers do their research through sites such as Money Advice Service beforehand? And perhaps more pertinently, is it worth moving at all if one discovers nasty financial surprises during the stressful process?
The largest cost of buying another home is the deposit. The bigger the amount you can put down, the more options you will have with regards to mortgage offers. The difference between putting down 25% of the value of the house and 30% could be huge in terms of the monthly amount one will pay and the interest on top – and potentially far greater than the difference in value of the two deposits.
The Telegraph reports that the average cost of house deposits has now reached £72,000, and this figure is somewhat inflated by rising equity for those who already own homes.
For a first time buyer a deposit of at least 5% will be needed, but in reality a mortgage with such a low deposit will be difficult to obtain, hence the actual average deposit value of 17%. Given that the Office for National Statistics reports the average cost of a starter home is now £211,000, a 17% deposit would equate to more than £35,000 – unviable for many young people.
On top of the deposit are the multitude of solicitor and conveyancing fees for pushing the move through, which could also include selling your old home. These usually work on a percentage basis, costing from 0.75% to 3.5% of your (selling) home value.
Surveys of the structure and suitability of the home will cost, but are particularly necessary for an older home. Legal fees, checking for issues, local plans or disputes, may also cost £2-300, while there is also the cost of moving furniture itself. This varies depending on the volume of furniture, the distances travelled and the timing of the move.
Stamp duty will apply if the home you are moving to costs more than £125,000, although changes to the system introduced earlier this year have seen 235,000 housebuyers save £1,000 in tax each, according to the Financial Times.
If you are moving to a larger home other costs will ensue. As well as a possible increase in monthly payments for the mortgage, you may have an increased council tax bill, higher utility costs to keep the rooms warm, and higher insurance costs. Don’t forget the home you’re leaving behind as well, which may need repairs and redecoration to catch the eye of a buyer in the first place.
The costs of moving home are not only financially burdensome, but also emotionally draining. The survey in the opening paragraph of this piece also found that moving home caused a fifth of people to compromise their career, and cause arguments with their partner.
Moves that take time, and seem constantly beset by logistical roadblocks and stuttering paperwork, can take their toll on wellbeing and wallet alike. Ask yourself if the home at the end will be worth it – for most people who are desperate to live in a new home and can prepare themselves psychologically for whatever the move throws at them, the answer is usually yes.