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Should you buy the biggest house you can?

>> Ownership costs

Mortgage repayments​

  • Particularly if you'd like to take out the maximum mortgage that you can, you should consider:

    • Will I still be able to afford my mortgage if interest rates increase?​

  • How much you pay every month towards your mortgage depends on the size of your mortgage, the number of years your mortgage was over, and the interest you're being charged on your mortgage

  • The interest is the factor that can vary (after you've taken out a mortgage)

  • Although you can choose to fix your mortgage for a period of time so that the interest you pay won't vary, you can't fix your mortgage for the entire length of your mortgage (eg for 25 years)

  • If you choose a variable mortgage, or when you come to the end of the fixed period of your mortgage, the interest you need to pay on your mortgage could change​​

  • If you can't afford mortgage payments, you might have to sell your home or risk having your home repossessed so you should consider this carefully​

Bills​

  • Particularly if you are moving into a bigger or more expensive home, you should consider:

    • Will I be able to pay the bills of this new home when I move in?

    • If bills increased in the future, would I still be able to pay them?

  • Bills tend to increase with the size and value of your home, and the bigger your bills, the more you will feel any change to them (eg if your energy bill goes up by 10%, this is a bigger increase in cash terms for a house paying £400 a month in energy bills vs a flat paying £100 a month - £40 vs £10 extra)

  • Energy bills depend on the energy efficiency of your home & its size, plus on the cost of energy itself which can vary

  • Council tax is based on house value bands within your area, and can vary by hundreds of pounds a month between different regions, so is worth checking before you buy

  • Insurance is very important for home owners & varies with size & value

    • Buildings insurance, which covers things like damage to your roof or walls, is required by most mortgage lenders for homes with freehold (generally houses rather than flats), and costs thousands of pounds a year​

    • Contents insurance covers the cost of possessions in the event of things like fire, floods or robberies, and is more important the more you own! This can cost you less than £5 a month from some providers

  • Ground rent tends to apply to properties with leasehold only (ie no freehold), which tend to be flats rather than houses. Whoever owns the freehold is responsible for maintaining things like the roof & communal areas of the whole building, and will charge home owners with leasehold ground rent for those things​

Repairs​

  • Particularly if you're buying your first home, you should consider:

    • Will I be able to afford the ongoing costs of repairs to this home?​

  • Owning your own home means having to call plumbers, electricians, builders etc & pay for new equipment like boilers or washing machines when they fail

  • Depending on the state of your property, repairs can cost hundreds to thousands of pounds a year

  • Look at your survey and the results of the searches the lawyer runs to understand what state the property is in and what scale of annual repair costs you should expect

Other ongoing costs​

  • If you are moving further away from work / friends / family / shops in order to buy your home, remember that this could lead to higher transport costs

  • If you are buying a leasehold property (generally flats), make sure to check when the lease expires. You will need to apply to renew the lease when less than about 100 years are left, which costs some money. Renewing the lease gets very expensive and has increasing restrictions the less time is left on the lease (from less than about 90 years left).

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