The report found that 40.6% of new homeowners don’t account for unexpected fees when taking the leap.
CHAPS bank transfer fees, search fees and mortgage set-up fees were the biggest shocks for first-time buyers - with 1 in 4 homeowners caught off-guard by the charges.
24.3% of those surveyed said they weren’t aware of land registry fees - while stamp duty and excessive solicitors’ fees scored 16.7% and 14.7% respectively.
Excluding stamp duty, unforeseen fees could amount to a sizeable £1850 bill - according to recent data from the Money Advice Service.
Property premiums
Post-purchase fees also hit new homeowners hard.
1 in 5 participants did not account for an increase in utility bills as a result of moving to a larger property, while the same number were surprised to see their car insurance costs increase. Optional but ultimately necessary home or life insurance policies also scored highly in the survey, taking 15.1% of the vote.
One surprising outcome of the study saw respondents reveal a lack of knowledge surrounding interest rates and the impact they can have on the combined cost of a mortgage. A notable 13.5% of homeowners, assumed to be those with variable rate mortgages, admitted they haven’t prepared for an increase in interest rates - should they unexpectedly climb from a seven year low of 0.5%.
Feathering the nest
Unforeseen housing renovations or repairs, such as installing a new heating system or tackling damp, accounted for a quarter of all hidden costs.
A substantial 24.6% of participants underestimated removal charges - while a staggering 13.9% of those surveyed viewed furniture and decor as a surprise expense.
According to Zoopla, the average house price in the UK is £221,000 - rising to over £574,000 in London - before any unexpected costs come into play.
Topline results:
CHAPS fees - 40.6%
Search fees - 27.5%
Mortgage set-up fees - 24.7%
Land registry fees - 24.3%
House renovations or repairs - 25%
Moving costs - 24.6%
Increase in utility bills/car insurance - 20.6%
Stamp duty - 16.7%
Home or life insurance - 15.1%
Solicitors fees - 14.7%
Furniture and decor - 13.9%
Interest on your mortgage - 13.5%
Other: 6.4%
Jonathan Le Roux, co-founder and director of Pegasus Personal Finance, said: “"The results of this study showed some real eye opening insights and surprisingly displayed a lack of thorough understanding when it comes to the cost of buying a property. When buyers are working out their budget for a future home move, forgetting the significant costs associated with stamp duty, solicitors fees or similar can really put a spanner in the works at the last minute.
Our advice is to do your research and carefully list all the associated costs so you go into home ownership with your eyes wide open. It may be tedious but completing this homework is essential to everything going smoothly"
