Taking out a mortgage and buying a home is one of those life defining moments, alongside experiences such as getting married or having a baby. The mortgage is initially the most daunting part about purchasing a property. However, this is only the tip of the iceberg when it comes to the overall expenditure of owning a property. For these reasons, it’s important to think long-term and account for all the costs that you’ll face at some point once you’re a homeowner.
If you rent, as I do, it can feel like money is slipping through my fingers in comparison to others who are saving to buy. However, the notion that buying is always cheaper than renting can be a misconception, argues Liz Davidson. This is another factor you should consider before taking the plunge and taking your first step onto the property ladder. Let’s take a look at the other aspects you want to think about when it comes to home-ownership.
Long gone are the days of calling up your landlord to come and fix the faulty washing machine, or to check out that leak in the ceiling. The appliances and infrastructure are now your responsibility, and with that comes the costs of replacing and repairing them. As we previously mentioned, it’s vital that you’re aware of any property defects from the very start. After all, you’ll be the one to pick up the expenses if you seal the deal on the home.
It’s also worth taking into account the lifespan of certain parts of your new home and the work that will need to be done in the future. For example, the National Association of Home Builders (USA) estimates that the average roof tiles last anywhere from 20 to 50 years. The average refrigerator lives for 13 years, and HVAC systems last somewhere around 15 to 20 years. On top of this, the future could have other big events in store for you, such as children or pets. If so, you’ll probably want to make adjustments to make sure your home is suitable for them as well.
Bills and taxes
Whether you rent or buy, you’ll be no stranger to paying utility bills each month. However, assuming that you make an upgrade when you buy a home, the cost of heating a house could be considerably more than what you were used to paying in a smaller apartment. As a homeowner, you’ll also be responsible for the HVAC system itself if any problems occur.
Another thing to note when you take out a mortgage is the interest rate. The housing market forecast for 2017 suggests interest rates will trend higher, according to Mark Greene. In addition, you’ll need think about property taxes. Of course these differ depending on the country you’re in, but as an example the average homeowner in the USA spends a hefty $2127 a year on this tax.
If you’re a car owner and your new home is in the centre of a town or city, it’s likely that your new property doesn’t have a drive. If so, you’ll need to make another decision as to whether you should buy or rent a parking space. Thankfully this doesn’t come with all the complications of buying a house, but it will be another expense to add to your overall budget.
If you’re lucky enough to have a garden, it may look nice at the start, but that lawn will need some looking after. Alternatively, perhaps your yard isn’t so beautiful to begin with and you’ll need to spruce up those flowerbeds a little. Either way, you’ll need to spend more cash on tools as well as plants. You’ll also need to work on your green thumb skills to ensure you can fully enjoy the garden on a sunny summer’s day!
Things out of your control
Depending on the climate of where you’re based, your new home may encounter problems such as floods, storms, or hurricanes. Taking out home insurance is another expenditure to add to your list, but will help you greatly should such an incident occur. Or have you thought about the possibility of needing to call pest control to deal with some very unwelcome visitors? It could be worth paying for some routine maintenance when you move in to avoid any mice taking up tenancy in your home further down the line.
All in all, buying a house involves a lot of expenses beyond the mortgage. However, it’s important to remember there are also many perks to owning your own home!