Once you have bought your home you will no longer pay rent but you will have other financial commitments, they are:
- Mortgage repayments - you will have to pay the mortgage company at the rate you agreed with them when you took out your mortgage.
- You will also have to pay the charges for any other loan you take out which is secured on the property - for example, for home improvements.
- Please note that although you may have been able to claim housing benefit as a tenant, as an owner-occupier you will not receive any housing benefit to help with your mortgage costs.
- If you do not make payments as required by the mortgage or loan company, they can take action to repossess your home. The council does not have to give you another tenancy if you lose your home in this way.
- Buildings and contents insurance - you will need to insure the contents of your home and if you live in a house you will also need buildings insurance. If you live in a flat you will be charged building insurance via the council.
- Life insurance and mortgage payment protection - your mortgage lender will probably insist that you take out life insurance and/or mortgage protection insurance to cover the cost of your mortgage.
- Service bills - You must continue to pay your council tax and your utility bills such as gas, electricity, telephone, water and sewerage.
- Repairing and decorating costs - You will be responsible for repairing and decorating your home. Things that the council might have done for you as a tenant - for example, replacing boilers, kitchen and bathroom fittings, repairing the electrical wiring or plumbing, will now be your responsibility.
- Maintenance of the freehold - If you live in a house you will own both the building and the land that your home is on. As a freeholder, you will be responsible for looking after both the inside and outside of your home, including any garden and fences sold with your home.
Service Charges
If you live in a flat and become a leaseholder, you will own your own home, but not the building or land that it is on. You are required to pay service charges for any services the council provides to the building or land.
When you are served the S125 notice you will also be given details regarding the service charges you will be required to pay.
This will also state any major works planned within five years and will detail your contribution. As a leaseholder you will be charged ground rent of £10 per year.
Remember, if you do not pay your service charges without good reason, the council may ask the court for a money judgement against you. This may affect your future ability to obtain credit.
