Homebuyers failing to set realistic budgets for the purchase and ‘personalisation' of their new homes means that twenty one per cent of home buyers paid more for their properties than they planned to, with that budget gap averaging out at almost £23,000 per buyer, according to research conducted by money.co.uk.
In addition, homebuyers spend an average of just over £8,000 on their property in the first year after purchase, but 23 per cent do not budget for these expenses. In total, those unforeseen extra costs could add up to £30,600 for more than a fifth of homebuyers.
The money.co.uk study also assessed how those extra costs are covered. For the average under-budgeted buyer, 60 per cent of the shortfall comes from long-term savings, weakening the ability to cope with future ‘rainy days'.
That leaves a further £13,400, of which just over half (63 per cent) is funded using credit in the form of personal loans (15 per cent), credit cards (27 per cent) and extended mortgages (21 per cent). For many, these are long-term debts, with only a third (35 per cent) paying them off within the first year.
One fifth of homebuyers are currently paying off these debts on top of their monthly mortgage payments.
"These findings demonstrate why methodical planning and budgeting are such important first steps to buying a property,” said Chris Morling, MD of
money.co.uk.
“It is all too easy to overlook expenses and end up in a precarious financial position. Households with debt piled upon debt are most likely to be at risk during tough economic times."
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