Hidden Costs in First Time Home Buying

Buying your first home is a big financial commitment. And while most people know they’ll need to think about the deposit and mortgage, there are plenty of other costs of buying a house that can quickly add up.

Legal fees, surveys, moving costs and other expenses can all affect how much you need to budget for. But some of the hidden costs of buying a home aren’t costs you’ll pay when you complete your purchase. They’re the financial pressures that can come with owning a home and keeping up with your commitments over the years.

This article takes a look at some of the less obvious costs and considerations to think about when buying your first home, helping you feel more prepared for the journey ahead.

The upfront costs when buying a house

The purchase price isn’t the only expense you’ll need to consider when buying your first home.

Depending on your circumstances, costs could include your deposit, mortgage fees, legal and conveyancing costs, property searches, surveys, moving expenses and potentially Stamp Duty or other property taxes.

It’s worth building these into your budget from the beginning, rather than focusing solely on how much you need for your deposit. Having a clearer picture of your overall house purchase costs can help you understand what you can realistically afford.

But once you’ve got the keys, there are still some costs to keep in mind as you settle into your new home.

The ongoing cost of owning your home

Your mortgage is likely to be one of your biggest monthly commitments, alongside the other regular costs that come with owning a home. You’ll also need to budget for household bills, council tax, general maintenance and potentially unexpected repairs.

Your financial circumstances can change too. For example, you might have a child, change jobs or see your household income change. You could also find yourself unable to work because of illness or injury.

Research conducted by HomeOwners Alliance in partnership with LifeSearch found that 63% of homeowners haven’t reviewed their household budget in the last year. It also found that 78% haven’t worked out how many months’ expenses they have in emergency savings.

For first-time buyers who may already have stretched their finances to get onto the property ladder, understanding what would happen if their circumstances changed can be just as important as budgeting for the initial purchase.

Considering critical illness cover

Income protection isn’t the only type of cover you may want to consider when buying your first home. Critical illness cover could also provide financial support if you’re diagnosed with one of the specific conditions covered by your policy.

It can provide a one-off lump sum that you could use towards your mortgage, household costs or other expenses, depending on the terms of your policy. This could give you some additional financial flexibility at a time when you need it most.

Protecting your mortgage

Although it’s not something anybody wants to think about, you may also want to look at what would happen to your mortgage if you were to pass away.

Mortgage protection insurance is a form of life insurance designed to help protect your home. It ensures that if you pass away during the policy term, a payout is made to help pay off some or all of your outstanding mortgage. This can give your loved ones the reassurance that they’ll be able to remain in their home without the added worry of mortgage payments.

For first-time buyers, this can form part of a wider protection plan, particularly if a partner or family member would otherwise need to manage the mortgage and household costs without your income.

Inheritance tax and putting a policy in trust

For some homeowners, it’s also worth thinking about inheritance tax as part of your wider financial planning. Inheritance tax is a tax that may be charged on the value of your estate - including your money, property and other assets - when you pass away.

Depending on the value of your estate and your circumstances, your life insurance could also be included when inheritance tax is calculated.

One option to consider is putting your life insurance policy in trust. This can change who legally owns the policy and how the money is paid when a claim is made. Putting your life insurance policy in trust can, in some circumstances, mean the payout isn’t included in your estate when inheritance tax is calculated, helping to potentially reduce the amount of inheritance tax that may be due on the policy payout.

Trusts can be complex, and what’s right for you will depend on your individual circumstances, so it can be helpful to speak to an adviser who can talk you through your options.

Looking beyond the costs of buying a house

When you’re buying your first home, it’s natural to focus on the fees for buying a house and getting your deposit together. But taking on a mortgage is also a good time to think about whether your protection still reflects your circumstances, as your needs may have changed.

The HomeOwners Alliance research found that only 20% of people with protection reviewed or took out cover when buying or remortgaging, while 40% of people who have or have previously considered protection have never reviewed their cover or reconsidered taking it out.

Buying a home is one of the biggest financial commitments most people will ever make. It's also one of the best times to review how resilient your finances would be if life didn't go to plan. Our advisers can help you understand your options and find cover that fits your circumstances, your mortgage and the people who matter most. Get in touch today to find out more.

 

All data has been taken from the 2026 HomeOwner Survey 10th Annual Report by HomeOwners Alliance.