Tips for staying under budget when buying a new home
5 Tips For Staying Under Budget When Buying A New Home
You’re buying a new home, but how can you be sure you’re going to stay under budget? Truth is, there’s no sure fire way to make sure you won’t go over budget, but there are a few things you can do to keep the risk low. You can use your new house budget as a very effective quality control.
1. Set your budget. First things first. Always check how much you can afford. Bear in mind also that any movement upwards in interest rates means that the net cost will be significantly higher over time. Check a few interest rate scenarios at higher rates to see what the real costs will be. A good basic test scenario is a two or three percent above the current baseline price on variable home loans. If you can afford that, you’re probably OK with the current rates for quite a while. Also check out fixed rate scenarios. The average turnover for these mortgages is about 3-5 years, so you can make projections easily.
2. Hidden costs on new homes. If you’re buying a new build, check to see what is included in your purchase. Often there are a lot of necessary and costly add-ons, such as maintenance, renovations, etc, which can impact on your home insurance and create extra costs unexpectedly, and can seriously affect your budget. The general rule is “If it looks expensive, avoid it”, because these costs can blow out, particularly if there’s any building work involved.
3. Stay put. If you’re looking at buying a property, aim for a property you’ll be in for the next few years at least. This will lend your mind to more practical matters when it comes to choosing. It also keeps your budget stable, and allows you to plan ahead more thoroughly without any unknown factors in your expenses.
4. Research Government assistance schemes. Depending on which state you’re in, there are a few different ways the government can help you. First home buyer schemes are often good value as supportive finance for the domestic budget, and help reduce the impact of the many fees in buying a new home.
5. Luxuries last. Put the shopping list on hold. When you move in to your new place, keep it basic for a while until your finances settle down. You’ve just signed away a lot of money, so wait for a while until things settle down before buying that luxury recliner.
This is a good time to start figuring out what you need with your home and contents insurance, too. When moving in to new house, the tendency is to underestimate what you need, because you haven’t yet got all the things you’ll want for the new place. The contents element in the policy may be less than you’ll actually need. Give yourself some time to think about this situation, and get a quote so you’ve got some figures to work with.