Consumers should budget for new house to avoid falling into debt

If you are planning to buy a house, you should also plan for additional

, and sometimes, unexpected expenses to avoid borrowing and falling into debt.

A report from money.co.uk shows that one fifth of home buyers fail to set realistic budgets for the purchase and personalisation of their property, which includes furnishing etc. In fact, people could be saddled with additional expenses to the tune of 30,600 or more than what they had planned for. The additional expenses can also include stamp duty.

The report shows that about 15 per cent of consumers take out personal loans in order to fund this shortfall, which goes without saying, can result in a long-term debt. Then again,

27 per cent use a credit card and 21 per cent extend their mortgages. All of these could lead to the need for debt management in the future.

Using credit cards to pay the extra cost may not be a wise option considering that this attracts a very high rate of interest, more than what the banks offer for unsecured loans. You should opt for this only if you are sure that you have a stable income now and in the future to pay it off.

As the saying goes, prevention is better than cure so the wisest thing to do when buying property is to budget for stamp duty and other extra costs that may arise. For this, you should ask the right questions so that you have all the information to plan your finances.

Richard Wilson at Ashley & Peck, a sales and letting agent, said: "Always shop around to make sure you are getting the best deal, such as obtaining a mortgage from an independent advisor who will have more choice than a bank in the high street."

However if you have already taken a loan for the additional expenses and are finding it difficult to pay it back, you can seek debt management advice on how to best deal with it. Given the uncertain economic conditions, it makes sense to plan ahead and plan right. Declaring bankruptcy is not the only option for dealing with bad debt and that you can seek free debt advice to know about various debt solutions such as an IVA (Individual Voluntary Arrangement) and debt management plans to help you out.

Consumers should budget for new house to avoid falling into debt

By: ClearStart

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