Are you moving house again and are frustrated with the moving costs involved? In this article, Personal Loans Now, provides practical tricks and tips to cut the cost of moving house and avoid the the trap of debt.
- Why moving house is causing debt problems
- Moving costs checklist to help you budget your move
- Alternatives to high-interest borrowing to pay for the cost of moving house
- Other ways to finance the cost of moving house
- How to minimise the removal costs
Cost of Moving House: How to Pay for It
In a recent survey carried out by the housing charity ‘Shelter’, it was found that 1 in 4 of those who were privately renting were getting into serious debt because of repeated house moves or ‘home hopping’. With the average price of a removal reaching £1,400, many were resorting to high-cost consumer credit borrowing. For example, credit cards, overdrafts, personal loans online or payday loans to finance the move.
More than 1 in 5 in this YouGov survey had been forced to move 3 or more times in the last 5 years. Some of the moving costs that people might face are; the cost of the removal van, paying rent on two properties for a short period, cleaning costs, buying new furniture and more…
These costs may trap new movers into debt and unable to pay off what they owed before they had to move again. If you find yourself in this situation, it can be very difficult to pay for the moving costs without taking out high-interest loans. Here is a house moving checklist that you can download to help you budget when moving home. These costs can all add up so make sure you include them in your budget:
You can also use a moving cost calculator to help you work out in advance how much moving house will cost you.
Alternatives to High-Interest Borrowing to Pay for the Moving Costs
Are you finding the cost of moving house still too expensive and looking to take out a short term loan? Here are some alternatives to high cost credit:
- Local Welfare Assistance
When the government abolished Community Care Grants & Crisis Loans 2013, they replaced it with the Local Welfare Assistance. This financial assistance is non-ring fenced. This means that councils can spend it as they wish. It’s worth applying to your local council to see if they’d give you some money to help with the cost of movig house.
When applying, there are two key things to bear in mind. The first is that there are only limited funds available and competition is fierce. There’s no guarantee your application will be successful. The second is that it can be a ‘postcode lottery’ since some local authorities are more generous than others.
- Social Budgeting Loans/Advances
If you receive benefits such as Income Support, Pension Credit, Income-based Jobseeker’s Allowance or Income-based Employment Support Allowance, you might be entitled to a budgeting loan. For recipients of Universal Credit, a similar scheme is called a budgeting advance.
These budgeting loans or advances allow you to borrow some money; the amount depends on your circumstances and your ability to make repayments. The main advantage of these loans is that they’re completely interest-free which is unlike other loans such as logbook loans.
You’re expected to pay the money back within 12 months (although in exceptional circumstances, you may be given an extension to 18 months). The money will be deducted automatically from your benefit repayments. You can’t apply for a further loan until you’ve paid the original one off.
To be eligible for these loans, you have to have been a recipient of benefits for at least 6 months. You can download the application form or can pick it up at your local JobCentre Plus. Demand for these loans is high. You should apply in plenty of time since you won’t receive a decision for about 12 working days.
- Short-Term Benefit Advances
If you’re a recipient of a means-tested benefit like Universal Credit, you might be entitled to a Short-Term Benefit Advance. Like the budgeting loans/advances, the sum advanced will be taken from your later benefit payments. Be aware they expect you to pay it back within 3-6 months. With less money coming in, you’ll have to be prepared to economise until this advance is paid off. You should contact your local JobCentre Plus for more details.
- Discretionary Housing Benefit and Moving House Costs
Although this benefit is intended to help out tenants with rent arrears, it can be given to help financially with deposits and moving costs in special cases. To be eligible, you must already qualify for Universal Credit and/or Housing Benefit. You should ask for more information from your JobCentre Plus. Apart from this assistance from local authorities and the government, where else can you turn if you desperately need help to cover the cost of moving house?
Other Ways to Finance the Moving Costs
There is a wide range of funds, trusts and charities in different areas to help people out financially. It’s a pity that so few possible recipients know about them. Although some are aimed at a particular group (for example, the disabled) or for a specific purpose such as to help fund further education opportunities, some are quite general and are open to anyone and so could be used to help pay for a house move or in need of a home improvement loan.
The best way to find out more is to go to turn2you, a national charity. You could enter some of your personal details such as your postcode and age and see what’s available in your area. Alternatively, you could do a search under a specific category such as stating unemployed. Many of these charities give loans to unemployed people. Because these are charitable funds, they wouldn’t affect you if you receive a means-tested benefit like Housing Benefit or Council Tax Benefit.
Get a Loan from the Credit Union
There are now over 500 credit unions in the UK, and you’re sure to find one in your area. Although they’re all run as non-profit-making cooperatives, each one is run slightly differently. Some might expect you to have a savings account with them for a certain period before they agree to a personal loan. However, it’s worth getting into the habit of putting a little money by every month even if you can only initially afford £10.
The main benefit of loans from credit unions is that there are no administrative or set-up fees like some banks. They won’t let you borrow more than you can afford to repay. By law, they aren’t allowed to charge more than 3% in interest. Many charge only 1%, which means they’re much more affordable than high-cost consumer credit like unsecured personal loans. Once you’re a member and apply for a loan, you’ll receive an answer within a week.
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Minimise Your Removal Costs
Apart from looking for alternatives to high-cost short-term credit, you should try to reduce the amount you spend on your house move. Let’s look at this in more detail.
- De-Clutter before the Move
The more home contents you have to pack and transport, the more you’ll pay. Before you move, it’s worth getting rid of things you no longer need. Think about putting them up for sale on an online auction site or going to a car boot sale. Not only will you reduce the amount you have to move but the money you make can go towards the removal costs.
- Compare Prices of Removal Companies
One of the main expenses of the move is paying for a professional removal firm. Always get quotes from at least three different companies. Make sure there are no hidden extras in the price they give you. Check the price with and without the packing costs and see if you can save money in this way.
Go to a local warehouse, factory or supermarket for boxes. However, make sure they’re robust enough not to rip but not so large that they’re difficult to lift when full of your belongings. When packing, use bedding and towels to protect fragile household items. Would you believe that there are peak times for house moves? The end of the week/month and the summer months tend to be more expensive. Try to arrange your move for mid-week if possible.
- Do-It-Yourself House Removals
It might be cheaper to hire a self-drive van and to do the move with the help of family and friends. Make sure that you give them plenty of advanced notice about the move. Also be honest about how much work will be involved. You should also make sure you provide a meal at the end of the day to show your appreciation.
When comparing a hire van to a removal firm, don’t forget to factor in the costs of petrol. Making more than one journey could add to your expenses. If your move is long-distance, this might not be a practical solution. Remember to ensure you have insurance in case of accidental breakage. If you do not have cover by your home contents policy, you can take out ‘in transit’ insurance.
Is there a solution to the Cost Of Moving House?
In the long-term, it is possible to solve the costly problem of ‘home hopping’. This is if landlords were more willing to offer longer-lasting tenancy agreements of at least three years. The Department for Communities & Local Government are in discussions with organisations representing landlords to make this possible. Until this happens, you should look for alternatives to high-interest borrowing like using low rate personal loans and find ways to cut down on the cost of moving house.