Can I afford the upfront costs?
Moving house is expensive.
The cost of moving goes way beyond your initial deposit, with removal services and furnishing your new home really pushing the boundaries of your budget.
And we’re living in ‘Generation Rent’. According to new research, two in five tenants living in private rented property believe they'll never be able to buy their own home.
Having recently moved myself, I have fallen victim to the high costs of renting and moving in London.
Even though I budgeted in the deposit and the month up-front, I still found it difficult to make my money stretch through the month as additional costs kept eating away at my disposable funds.
So when it comes to moving, is it beneficial to take out a loan to cover the upfront costs and moving expenses?
How much does it cost to move?
In 2019, the average rent increased to £1694 in London and £997 for the rest of the UK. Finding an additional £1694 upfront can be a stretch for any paycheque.
Whilst the average costs associated with buying a house are going down, the average cost of renting is increasing - bringing the deposit amount up with it.
And even if you have that money saved and put aside, chances are there will be additional costs that crop up that you haven’t quite accounted for.
Depending on whether you’re buying or renting, take a look at some of the expenses you need to consider when budgeting for your move.
These are the fees you will incur when you want to secure a rented property.
- Your refundable holding deposit of one weeks rent per tenancy.
- Your first month’s rent.
- Your security deposit which will be a total of five weeks rent per tenancy where the rent is under £50,000 per year, or six weeks rent per tenancy where the rent is £50,000 or over per year.
- Part or full furnishing your new property
- Cleaning services for your previous property
- Removal van or moving support
How can I cover my moving expenses?
Assuming you’ve had time to plan your move and haven’t had to unexpectedly vacate your current property, you can save up to cover these calls over time.
There are other ways to cover the costs of moving including;
- Credit card
- Borrowing from family or friends
- A low-interest loan
Because even with an emergency fund, these expenses can quickly blow the budget. Many are left stuck living with their parents or with their exes because they cannot afford to cover all the upfront costs in one go.
What happens when I can’t afford my moving expenses?
My most recent renting experience was fraught with delays, so even though I had paid the original set amount of rent upfront (two weeks), once a new date had been given to me the estate agents requested a further two weeks to cover the full month.
I based my budget on the initial amount asked of me, which meant that when an extra two-weeks rent was required plus the train ticket I needed to buy to commute from my Mum's house during the delay, I was out of pocket.
Because I’ve been trying to clear my debts, I don’t have a credit card to cover these costs.
Luckily I have a parent who was able to help me out when I run out of money. But I’m acutely aware that I’m privileged in this way. It’s likely that most people in the same situation would have put this cost on the credit card.
With the average credit card purchase APR has risen to 24.7% and many people barely making the minimum payments rather than working to pay off their debts, putting unexpected moving expenses on a credit card will cost you more over time.
So, is it better to take out a loan to cover the upfront costs and moving expenses?
Should I take out a personal loan to cover my moving expenses?
When carefully considered low interest loan can be a beneficial way of covering these costs without the additional high interest rates and fees of a credit card.
With a Leap loan, you can pay off the upfront rental costs over time. There are no early repayment fees and we'll even look to reduce your overall rate if your debt has gone up by no more than 5% from your overall debt amount at the point of application.
The upfront costs of renting can make you feel trapped, but there are options.
Once we've checked that a loan repayment is affordable and within your budget by connecting through OpenBanking, you can borrow from £500 up to £15,000 starting from 3% interest - depending on your terms and requirements. Use the loan calculator to see how much it would cost you to borrow money for your moving expenses.
If you’ve already used your credit card to take the hit in a financial emergency, then refinancing with Leap could cost you less in interest, streamline your monthly repayments and help you pay off your debts in full.
Get a free personalised quote today - it won’t affect your credit score.
Can I afford to move?
Sometimes we don’t have a choice when it comes to moving. Sometimes we don’t have a family member who can help us out financially. Sometimes we just have to make things work.
In those situations, you know there will be a cost involved. But if you’re smart, do the research and find the best interest rates, you can minimise the costs.
Should you take out a loan to help cover moving expenses? If it’s the cheapest option available to you then yes, you should.