NEW YEAR, NEW HOUSE, NEW BILLS
If you follow us here at Bounce or receive our regular newsletter, you would know that we bought a new home late last year and I’m pretty happy with it to say the least. Whilst it is far from perfect, it is definitely the basis for my dream house and over time I intend on making it just that.
For anyone who has a house, you will know that you spend at least every second weekend at Bunnings, and the true sign of becoming an adult is the fact that you kind of like it! Our new house has a pretty extensive garden that needs tending to, a pool, and a few bits and pieces around the double story house that needs upgrading at some stage. Some of the stuff can wait (like my walk in wardrobe) and other’s can’t, like fixing the fence to keep the dog in.
I often help clients with property purchases, especially their first homes because it can be quite the daunting process the first time around and there is so much more to the process than just how much you can borrow.
One thing that I think most people completely underestimate when it comes to home ownership, is the added expenses. The way interest rates are right now, sometimes the home loan is cheaper than rent, but don’t forget the other financial factors that go with home ownership.
The below are the common house expenses that people forget to budget for when buying a new home:
Maintenance: As above, there is always something minor here or there that needs to be done to a house. I set aside a minimum of $2,000 a year for general house maintenance so that I know I can fix the fence if I need to. If you don’t set aside money for this stuff, where does it come from in the budget?
Higher Insurance: If you have previously been renting in the past, you likely had contents insurance for all of your stuff, which is great. When you own the whole house however, you also need the building insured which is likely double what you were paying before with your contents insurance.
Rates and Water: You would have had the usual bills like electricity, gas etc but typically as a renter, rates and water are the responsibility of the owner. That is now you, so you need to be prepared to spend a few extra thousand a year on these type of expenses.
These are the 3 most common expenses people forget to budget for when buying a house. Generally, this is going to be an extra $5,000 pa minimum in expenses, or an average $100 per week, so if you haven’t accounted for them, you might have stretched yourself too thin.
When purchasing our new place, we had to completely redo our projected budget for the new expenses. When something major changes in your life, like buying a house or getting new job, it’s important to give the old budget an overhaul and make sure that you haven’t missed anything major.
Now, I just need to set aside a little bit of extra money to get that walk in wardrobe.
This post is from our resident Financial Planner Cara Brett, check out her details in the About Us section.
*The picture is definitely not our new house. I wish I was cool enough to have a bright green door!