Hidden costs to consider when buying a home
Buying a home is one of the most exciting adventures you’ll ever embark on. It’s easy to get caught up in saving for the deposit and figuring out your monthly mortgage payments, but don’t forget about the extra costs that can sneak up on you. Here’s a breakdown of some of those hidden expenses, so you can feel fully prepared for your move into your new home!
Settlement costs
In all the excitement of buying a home, it’s easy to overlook settlement costs. These include legal fees, lender fees, building inspections, and costs for LIM and title searches. You might also be responsible for a share of the local council and regional rates, depending on the timing of the purchase.
Plus, don't forget moving costs! Whether it’s the price of hiring a moving company or the cost of a professional clean, these can add up quickly, so setting aside a little extra in the budget for these fees will help make your move as smooth as possible.
Upkeep and repairs
Owning a home means looking after it – and that includes those unexpected fixes! From a leaking roof to a burst water pipe, or a chimney or heat pump clean before winter, maintenance is part of the package. A great tip is to set aside a small portion of your income for routine upkeep and also keep an emergency fund for any surprise repairs. It might not be glamorous, but it’s worth it!
Body corporate fees
If your new place is in an apartment building, townhouse or shared complex, then body corporate fees may be another expense to consider. These cover the maintenance of shared spaces, like gardens and communal areas and sometimes amenities like a pool or gym. It’s good to factor these fees into your budget early, as they can vary depending on the services provided.
Utilities
It might seem obvious, but for first-time home buyers, it’s worth noting that the size and location of your new home can impact your utility bills. For instance, if you’re moving to a larger home, you may see a bump in costs for electricity or gas – especially if you’re in a colder spot like Dunedin, where winter heating can add up. Make sure your budget includes an allowance for these seasonal costs, and consider checking the energy efficiency of your new place.
At Loan Market we deal with "Fast Connect" NZ's leading Utilities connection provider, they deal with most major providers in NZ and source our clients the best deals for power, gas, phone & internet. Reach out to us if you would like a free, no-obligation free review, as many of our clients have saved hundreds of dollars by doing so.
Rates
Likewise, you'll also have to start paying both local and regional rates. The cost of this depends on the location and size of your home. You can choose to pay in quarterly installments, or on a monthly or weekly payment plan. Rates can be easy to forget about when you are moving from a rental into your own home, so it's essential to make sure these are budgeted for!
Insurance
Home insurance is essential to protect your investment, and many banks will require it before approving your mortgage. Insurance premiums can vary widely, so take the time to shop around and find the coverage that best suits your needs.
At Loan Market we deal with NZ's largest Fire & General insurer, Tower - just sing out if you want a quote any time. And don’t forget other types of insurance, like income protection or mortgage protection. While insuring your house is important, insuring yourself is equally, if not more, important and we have an in-house specialist with our sister company Insurance Market, who can help to protect you. Just let us know if you would like a free, no-obligation review.
Being aware of these additional expenses helps you plan ahead and avoid unnecessary surprises. When you work with us, we work to negotiate cash backs as part of your lending, with some borrowers ending up with a few thousand dollars in cash backs. While this isn’t always guaranteed depending on your circumstances, this can also help to cover some of these unexpected expenses.
Remember, planning is key, so being aware of what might be coming up and when, is key to strong financial management as a homeowner. Get in touch if you’d like to discuss this further!