Owning a house. That’s a major financial achievement. But with it also comes a lot of surprise expenses. After all, it doesn’t stop with your monthly loan repayments.
There are insurance fees and unexpected repairs. So having a plan can save you from financial stress. This guide will help you avoid these possible pitfalls. And you’ll get insights from mortgage brokers in Sydney. Those specialising in helping borrowers stay financially secure.
Common Surprises
Many buyers only look at the price of the home and their deposit when purchasing a property. But there are additional costs. So factor them into your budget carefully.
1. LMI
What happens if your deposit is lower than 20% of the property’s value? This means you may be required to pay LMI because of that. This insurance protects the lender. That is if you default on the loan.
How to Plan: Save a larger deposit. Or choose a loan product that waives LMI for low-risk borrowers.
2. Stamp Duty
This is a one-off government tax. It’s based on the purchase price of the property. The amount varies in NSW. Depending on whether you’re a first-time buyer. Or you’re upgrading your home.
How to Plan: Use a specialised calculator. You can estimate costs and include this in your savings goal.
3. Fees
Hiring a conveyancer or solicitor can be pricey. But they are essential for property transactions.
How to Plan: Obtain quotes early to understand how these costs fit into your budget.
Homeownership Expenses
Your purchase is just the beginning of many expenses. Ongoing ones that can impact your monthly budget.
1. Home and Contents Insurance
Home insurance covers your property structure. Contents insurance protects your belongings. These are essential to safeguard against risks. Like fire or theft. Even natural disasters.
How to Plan: Shop around for policies that offer comprehensive coverage at competitive rates. Paying annually may also reduce premiums.
2. Council Rates
Every property owner must pay council rates to cover services like waste collection, water, and public infrastructure. These fees vary based on location and property size.
How to Plan: Check with your local council for an estimate and include this in your annual budget.
3. Strata Fees (For Apartments or Units)
Is your home part of a strata scheme? Then you’ll need to pay regular strata fees for building maintenance. As well as shared facilities.
How to Plan: Review the strata report before purchasing to understand current and upcoming levies.
Dealing with Upkeep and Repairs
People often overlook upkeep when budgeting for their home. But it’s a significant and ongoing cost.
1. Routine Maintenance
Some tasks are essential to keeping your property in good condition. Like cleaning the gutters and servicing HVAC systems. As well as repainting.
How to Plan: Set aside a percentage of your home’s value annually for maintenance. This is typically 1-2%.
2. Emergency Repairs
Burst pipes. Roof leaks. Appliance failures. Unexpected issues like these can be costly.
How to Plan: Create an emergency fund specifically for home repairs. This helps you avoid dipping into other savings.
3. Renovations
While not unexpected, many homeowners eventually decide to upgrade their properties.
How to Plan: Get multiple quotes and prioritise projects to ensure they align with your financial capacity.
Why Ask the Brokers?
Say you’ve got a difficult task. What do you do? You seek expert help. And home ownership is no different. Mortgage brokers in Sydney can assist. Helping you better prepare for the financial responsibilities of owning a home. They offer guidance on loan products. They can also assist with budgeting. Lastly, they provide insights on minimising costs.
How They Help:
- Customised Advice: Brokers can recommend loan features like offset accounts or redraw facilities to help manage unexpected costs.
- Negotiation Power: They often secure better rates or terms that reduce your overall financial burden.
- Access to Lenders: Brokers have connections with various lenders, increasing your chances of finding a suitable product.
Preparing for Property Upkeep
Owning a home isn’t just about making repayments. You also need to do proper upkeep. This ensures your property retains its value. Preventing costly issues down the track.
1. Pest Control
Inspect your property regularly. Administer bug treatments when needed. This prevents termites and other pests from causing damage.
How to Plan: Schedule annual pest control services and factor these into your budget.
2. Energy Efficiency Upgrades
Improve your home’s energy conservation. This can reduce utility bills. It also increases your home’s resale value.
How to Plan: Consider installing solar panels. Upgrade insulation. Replace old appliances with more energy-conserving models.
3. Landscaping
Maintaining outdoor areas doesn’t come cheap. Larger properties can even require significant time and money.
How to Plan: Invest in low-maintenance plants and consider outsourcing major landscaping tasks periodically.
Tips for Staying Financially Prepared
Be more proactive. This is key to managing unexpected homeownership costs. Helping you stay on top of your finances at all times. Here are some practical steps to follow:
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- Build a Buffer
Ensure you have an emergency fund. It should be equivalent to three to six months of expenses. This provides a safety net for unexpected costs.
- Build a Buffer
- Automate Savings
Set up a dedicated account for property expenses and automate regular deposits. This ensures you’re consistently building a reserve. - Review Your Finances Annually
Assess your budget and loan terms regularly. As well as insurance policies. This ensures they remain aligned with your financial goals.
Choose a Trusted Partner
Managing property ownership can be complex. But that’s what we specialise in at AFMS Group. Navigating loan fees? Choosing insurance? Planning for unexpected expenses. Whatever you need, we can handle it. We provide tailored solutions matching your unique problems. Contact us today. Get expert advice and support from our team of mortgage brokers in Sydney.
