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The cost of buying your own home
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Aug 28, 2005, 12:02
The cost of buying your own home
It is important to give careful thought to the costs and responsibilities of buying your own home. You will need to do some careful calculations to help you decide how much you can afford to spend on buying and running a home. You should also look carefully at house prices in the area you would like to live in. Prices can vary considerably from one area to the next. You may also want to contact a housing advice centre for guidance and there are a number of books and magazines about buying a home which you may wish to look at.
What are the initial costs of a shared ownership home?
You will have to pay for:
Survey
You may wish to have your own, independent survey which you must pay for.
Legal fees
You are advised to get a solicitor/licensed conveyancer to help you with buying your share. It is worth asking for an estimate before engaging a legal representative, as fees vary.
Deposit (if required)
Stamp duty
This is a form of tax on the transfer of property. You should check with your solicitor/licensed conveyancer whether stamp duty is payable at the time of your purchase. If stamp duty is payable, you can either pay duty on your share or on the full value of the property. Your solicitor/licensed conveyancer should be able to advise you on which option to take.
Mortgage indemnity insurance (if required)
Removal costs
You will need to consider the costs of removal. These can be quite large if you are moving several miles from the area in which you currently live.
What are the running costs?
Mortgage repayments
You may need to borrow all or part of the cost of your share from a building society or bank. You will normally get tax relief, currently on the interest you pay on the first ?0,000 of a mortgage. Your building society or bank will arrange this and calculate the monthly repayments accordingly. Repayments will vary as interest rates change.
Rent
The monthly rent will be a proportion of the total rent the property would fetch, calculated by the social landlord based on the proportion of the share you do not own. For example, if you own a 50% share you would pay 50% of the total rent. This rent will take into account the repayments you make as an owner-occupier, and your share of any insurance, maintenance and repairs. It will therefore be less than the normal rent you would pay if you were renting the whole property. The rent will usually be reviewed every year.
Council tax
You will have to pay the council tax to the local authority.
Repairs, insurance and service charges
If your home is a house, you will be responsible for all repairs and redecoration both internally and externally. The social landlord will insure the structure of your home and you will have to pay a small management charge to cover this and to help meet the costs of rent collection. If your home is a flat, you will be responsible for all repairs and redecoration internally. The social landlord will undertake to keep the building in which your flat is situated in good structural repair, to keep the structure insured and to keep any common parts, such as the staircase and corridors, decorated, cleaned and lighted. You will have to pay a share of those costs. This is called a service charge. The social landlord must tell you how the service charge is spent and you will be consulted before any major repair or maintenance work is put in hand. Any damage or defect should be reported to the social landlord immediately.
Heating and lighting bills and water rates
You are of course responsible for your own bills.
Fittings and furniture
You are responsible for supplying your own fittings and furniture and for the cost of insurance for the contents of your home.
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