Unexpected costs can completely derail your plans for buying, building or renovating a home. So if you are thinking about owning your first home, there are many different factors that need to be considered.
One of the most important areas of unexpected costs is the financial commitment. You must ensure you can afford the expenses associated with home ownership.
A lot of people assume they can afford a home without considering all of the unexpected costs entailed. The sale price of the home is just the beginning. It’s after you’ve signed the sale documentation that expenses you may not have considered start to arise.
Some unexpected costs you may not have considered
Furniture and decorative items – It does not take a genius to work out that you are going to need to buy furniture for your new home.
Nevertheless, a lot of people underestimate just how much money they are going to need for this. It’s the little expenses that add up, from bathroom and kitchen bins to glassware and a kettle.
Insurance – You are also going to need to invest in building and contents insurance for your new home, ensuring you are protected should anything happen, for example, a fire or a theft.
This may cost you a bit of money, but it will save you thousands should something go wrong.
Maintenance and repairs – One of the biggest differences you will experience when owning a home is that you will be responsible for all of your maintenance and repairs. If something breaks, you need to fund it.
Therefore, you need to set aside an allowance for dishwasher repairs, blocked toilets, and such look. Establishing an emergency fund is essential, yet, hopefully, you shouldn’t need to dip into it straight away.
Moving costs – It is also important to make sure you incorporate moving expenses into your budget.
This includes the cost of hiring a removal van, as well as the cost of all of the packaging that is needed too. It may also include the hire of a skip bin for disposing of rubbish either from where you live now OR from where you are moving.
Closing costs – Depending on where you live, you may need to set aside between two and four per cent of your mortgage balance for closing costs. A lot of buyers try to negotiate a deal with the seller so that the closing costs are covered.
This is not required in countries such as Australia and New Zealand but very common in the USA and other countries.
Property inspection – A professional property inspection is essential for anyone buying a house. While you may think you will be able to spot any potential issues when looking around the house you are considering purchasing, a professional survey will ensure that all problems are picked up, i.e. those not visible to the untrained naked eye.
Again, this is the sort of expense that could save you unexpected costs in the long run.
So there you have it: some of the most unexpected costs associated with home ownership, which you need to take into account before purchasing a property. Putting together a thorough financial plan is imperative, as it will ensure you know exactly what you are going to need to fund, so that there are no nasty surprises along the way.