Your deposit is only part of the money you need

Lesson 3 Your deposit is only part of the money you need

Module 1 | Learning aim: Separate purchase money from money needed after moving.

Your purchase deposit is the cash you contribute towards the price. It is not the whole cost of getting the keys. Legal fees, searches, a survey, mortgage fees and moving costs may need separate money. Purchase tax depends on the transaction and your eligibility. Get an actual calculation rather than assuming every first time buyer pays nothing. [S14,S13]

Use three budget headings: money towards the price, money for the buying process, and money kept back for life after moving. A £250,000 purchase with a 5% deposit needs £12,500 towards the price. If you also allow an illustrative £4,000 for fees and moving and £5,000 as a reserve, your cash target is £21,500. Those allowances are teaching figures, not fee quotes or a recommended reserve for everyone.

Ask which charges arise before completion, whether they are refundable and what happens if the purchase falls through. A low deposit offer may reduce the first heading while leaving the others untouched. It can be useful, but it does not make surveys, removals or a broken appliance disappear.

Keep a record of the source of your money. You will be asked to evidence it. Avoid committing all your accessible savings before you understand the whole purchase.

Powwow Tip

Getting the keys with no money left can make a small problem feel enormous.

Your next step

Complete the upfront cash section of worksheet R2 with quotes or clearly labelled estimates.

Knowledge check: What three cash headings should you budget for?

Source references: S14,S13. Original teaching examples and Powwow Tips are Property Powwow guidance. See the source register for current guidance links.