Owning a home can improve your portfolio by boosting your assets, but buying a home is also a costly endeavor. When you’re deciding on a maximum loan amount for a home you have to factor in all of the related costs. The problem for first-time homebuyers is that many of these costs are hidden.
If you don’t account for the hidden costs of owning a home below, you may need to find additional ways to pay for the added expenses so you don’t end up house poor.
At your rental house or flat, the landlord was a call away when anything went on the fritz. As long as you didn’t cause the problem you didn’t have to worry about the repair bill. But when you’re a homeowner those days are gone.
Upkeep both indoors and out are now your responsibility. The most cost-effective approach is to clean and maintain your home on a regular basis. Serious problems tend to occur when a house goes neglected for too long. If funds are tight you may want to carefully consider homes that are in need of repair.
HVAC System Maintenance and Repair
One of the most expensive aspects of a home is the HVAC system. Climate control is a must in many parts of the country so if the HVAC goes out it could be a major (and necessary) expense to fix.
Getting professional HVAC maintenance on an annual basis will help keep your system running more efficiently and stretch out the lifespan of the equipment. You’ll also catch problems before they become really costly.
Hopefully, your real estate agent pointed out the homeowner’s association (HOA) before you bought. HOAs are highly beneficial in maintaining the ambiance and integrity of the neighbourhood, but those benefits come at a price.
HOAs charge homeowners regular fees that may due monthly, quarterly, semi-annually or annually. Another thing to watch out for is penalty fees. If you fail to pay your HOA fees on time or break one of the HOA rules you could be fined. Paying HOA fees is extremely important. If you don’t a lien can be put on your property.
Stamp Duty Land Tax (Property Taxes)
If you thought the government collected enough in taxes already prepare to pay even more next tax season. All local tax districts charge a stamp duty land tax for homes that are over £125,000, which significantly adds to the government coffers. Currently, the U.K. collects more in property taxes than any other developed country.
In most cases, lenders recommend that home buyers lump their tax and insurance into the monthly payment so property taxes are automatically paid each month. If this is the case, all you have to do is look for a document from your lender at the beginning of the year that notes how much was paid in property taxes.
If you’ve been paying for renter’s insurance in the past you’re probably about to experience sticker shock. While you can get renter’s insurance for as low as £10 or so a month, homeowners insurance is about 10 times that amount. If you live in a coastal area or a location where damage is more likely to occur the monthly premium could be even higher.
And let’s not forget all of the additional insurance coverage. Flood insurance is going to be a separate expense that may be required by the lender. Mould coverage is also another type of insurance that you may want to consider.
A related part of home maintenance is protecting against destructive pests. Everything from rats to birds to termites can decide to use your home for food or shelter causing damage along the way. Monthly pest control treatments may not be necessary, but quarterly treatments that cover you each season are recommended.
One way to control the pests on your property is proper lawn care. If you live in an HOA, this is going to be a requirement for any part of the lawn that’s visible from the street. Those who have never owned a property with a yard will either need to invest in yard equipment or hire a professional to do the work for them. That will run you around £75-100 a month.