September 26, 2013

4 Additional Costs to Budget for when Buying a House

Buying a house is fraught with emotions, last minute panics and finally, the grand pay off. The house, the home, the next chapter in your life. Although, before you cross the threshold, put down the pen, step back from the dotted line and triple check your budget can stand up to these five unexpected expenses on the home ownership trail.

Association Fees

Buying a home or property is a foot-in-door to an exclusive association developed specifically for new and existing land owners (houses, properties, blocks of land – you’re all included), delivering support and a veritable repository of information, including rights charters and advice for landlords regarding tenants, maintenance and miscellaneous advice on things like strata fees, where applicable. Though Australian association membership is not mandatory and the charges are comparatively meagre when held up against the US and UK, the yearly cost is an unexpected hundred dollars or so down and out, prices varying from state to state.

Hidden Niggles

To the uninitiated, buying a home means paying a flat price (usually taken care of by existing capital, lenders interests – like a bank loan or Fox Symes home loans) and trundling away with the keys. If only it was that easy or clear cut. Purchasing property is tied up with hidden extras like agent fees and commissions, title and appraisal costs, lenders fees, moving costs, utility connections, water rates and maintenance. And you haven’t even moved in yet! Make sure you have the cash to cover these rarely named money funnels and cultivate an emergency savings fund to carry you through harder times.

Strata

While we’re touching on the topic of strata, Australian apartment and flat owners are subject to strata schemes, wherein they buy into a sort of residential democracy. A flat or apartment owner (called lot owners on technical papers) shares a responsibility and extension of rights to the surrounds and facilities. Meaning, you will own your apartment and associated airspace, including any balconies, but everything else (pools, gardens, car parks etc) is owned collectively by the body corporate. You, as a member of this body, will be financially responsible for part of the upkeep and maintenance of the building in general. How much? It depends on a list of variables.

Landlords and Tenants

Do you remember being a tenant? Who did you call when something went wrong? Broke? Over-flowed? Your landlord? Exactly. As a property owner, you will become responsible for the liveable maintenance of your property, making sure everything is in working order, responding to impromptu issues and  paying any tradesmen required for repairs, electrical work or plumbing problems. There is also a psychological price of ownership, as you manage relationships with tenants, bridging the divide between friendly figure and cost savvy landlord. Sometimes, there is a desirable simplicity in renting.

Don’t be discouraged by this list. If you’re in the position to buy a home and your budget is well in hand, your dreams of home ownership are beyond achievable. Be frugal, be patient and save where you can – it will all be worth it when you step foot inside for the first time.

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