The multimillion-dollar property with water views or luxury features might not be within your budget range, but it’s possible to find a home within your spending power that you’re content with. Doing a bit of research provides a solid foundation for developing realistic expectations from the start. Three of the things you should factor into your calculations for how much you can spend include the initial deposit, mortgage repayments and other post-purchase expenses.
How Much You Can Spend on a Home
- Deposit and Mortgage Repayments
If you’ll be borrowing to buy your house, how much you can pay for your ongoing mortgage repayments will be one of the key determinants of the amount you can spend on a home. You can use an online, home loan repayment calculator to help you with calculating mortgage repayments.
A repayment calculator helps you work out how much you can borrow and what you’ll need to pay each period to fulfil your obligations under a mortgage. It also factors in the amountyou’ll be putting down as a deposit.
- Cost of Purchase
You should also take the costs of purchasing a home into account as you work out how much you can afford to spend. These might include stamp duty, registration fees, title search, conveyancing or legal fees and loan approval fees.
It can be easy to forget post-purchase expenses in the excitement of buying a new home and moving in. Yet these expenses can affect whether you can meet your ongoing mortgage repayments. Good financial planning suggests that you should budget in advance for your post-purchase expenses.
- Utilities and grocery items –Household utility costs are those such as gas, electricity, water and telecommunications. These items can form a large proportion of your total household expenditure in each period. Food and groceries are another key item category to budget for in advance.
- Home maintenance –Those purchasing an older home might want to budget for home maintenance, repairs, or even renovation costs as they calculate how much they should be spending on a home purchase. These can include paint jobs, repairs for cracking walls, replacing insulations, updating old and worn fixtures or replacing other potential defects.
- Furniture and appliances –Your old furniture may not be suitable for your new property and you may be thinking of purchasing new furniture or appliances for your home. Sofas, dining tables, refrigerators and washing machines are everyday essentials in the home. Although these are one-off purchases, you should also budget for them in advance, as they can be relatively large expenditure items.
Finding a Home
So, working out how much you can spend on a home by taking into account the initial deposit, as well as post-purchase expenses is important,because it will help you realise other financial goals. And you’re less likely to end up with financial commitments that you can’t meet after you’ve finalised your home purchase and moved in.
Finding a home in the right pricing category should not be too difficult once you’ve worked out how much you can spend and settled on a budget. You can start researching properties online, and speak to real estate agents about recommending properties in your budget range.