Posts Tagged ‘Home Ownership Costs’

House Buying Advice – My Propertytoolbox Top Five

The Propertytoolbox Blog has been full of great stuff this year. I have my own personal favourites and I thought I would share them with you. These articles were ones that I thought had some really helpful and useful information – giving you some key knowledge that could help you to make good house buying decisions! And that is, after all, what we are all about here at Propertytoolbox.

My Propertytoolbox Top Five

1. Scrim and Sarking.

This 4 part series of articles was packed full of information on Scrim and Sarking (a common wall lining in NZ houses). We started with explaining what Scrim and Sarking is and how to identify it. Then we went on to discuss why you need to think about replacing Scrim & Sarking wall linings. This article was followed by one on re-gibbing and what that involves and then finally on to the cost of replacing Scrim and Sarking wall linings. The series had some fantastic photos too, this was my favourite photo of the year.

Layers Of Wallpaper On Scrim


2. The OCR

The OCR (Official Cash Rate) is an important part of your life when you have a mortgage – and it really helps to understand what it is about when you are deciding about fixing or floating your home loan. Our article ‘The OCR and Your Home Loan Interest Rate’ talks all about it – so have a read and maybe the OCR will not longer be a mystery!

3. Viewing a House – 10 Quick Checks

The advice in this article could save you a lot of time and energy! In it we list 10 quick visual checks you can do when you go to view a house. These few checks can give you some insight into things that you may have missed otherwise and may only come to light at future viewing or even in a building inspection as part of an offer.

4. Costs of Home Ownership

Sometimes only the full impact of the financial commitment of home ownership becomes clear when it is too late. This explains all, and may highlight things/costs you haven’t even thought of. It always pays to make any house buying decision fully informed so this article ‘House Maintenance Budget? Costs of Home Ownership’ is a must read.

5. Property Valuation

So you want a property valuer? How about a website that profiles your local property valuers allowing you to compare, choose and contact them? Propertyvaluationnz.co.nz does all that! Propertyvaluationnz.co.nz was launched by Propertytoolbox this year and I think it provides an awesome service for home buyers in NZ – find out more about it in the Blog article ‘Property Valuation NZ – Helping You Find a Property Valuer’.

So there you have my top five. Over the next few weeks we will be going over more of our ‘Best Bits’ from the Propertytoolbox Blog for this year. Do you want more great house buying information right now? Head straight to our house buying guide.

House Maintenance Budget? Costs of Home Ownership…

Before you buy a home you need to know the full cost - and we are not just talking about mortgage repayments here! Yes, the mortgage is the most obvious and high profile cost of home ownership and usually is by far the largest one. But don't forget about rates, insurances, water, repairs and maintenance!  So just how much is this all going to cost?

The mortgage is usually the first figure calculated - and often dictates what the house buying budget is for many people. The biggest thing to consider here is the potential effect of an interest rate change. Currently interest rates are low, this almost certainly means that in the future your mortgage repayments are going to be higher. A good way to see the effect a change in interest rate has on your mortgage repayment is to have a play with a mortgage calculator - put in a variety of interest rates and see the effects. Here are some statistics for average bank 2 year fixed home loan interest rates that give you some numbers to play with:

Current 2 year fixed home loan rate = 7.1%

Average home loan interest rate for last 5 years = 8.0%

Home loan interest rate mid 1998 = 10%

Home loan interest rate April 2008 = 9.6% 

Home loan interest rate May 2003 = 6.7% 

With costs such as rates, insurance, and water you will be able to find out the exact amount these will be for the first year at least. These will go up year on year, sometimes by an amount far exceeding inflation, so factor this in. If you budget for an increase of 10% every year for these bills you are unlikely to be caught short.

As a bare minimum you should allow $1,500 or better yet 0.3 - 0.5% of the value of your house per year for maintenance. This does vary widely depending on the age, size and condition of your house and the building materials used. You may not use all of this maintenance money one year, and then have major expenses the next! But it will average out over time. Maintenance cannot be avoided, so budget for it!

Something you may not have thought about is all those extra bits and pieces that you are going to need to buy for your new home - new furniture, new appliances, what about plants for the garden? And are you planning any renovations?

How much you want to spend on renovation and new things for your house and grounds is up to you, but there is no doubting you will want to spend money, so establish a budget.

So when you work out how much you can afford to pay for a house, remember to add on all those extra expenses! A good rule is to add another 20-30% to your mortgage repayments to cover rates, insurance, water, small improvements, new stuff, and repairs and maintenance.

Ultimately you will have to come up with the money for all these extra things from somewhere - so take this into account when you are working out how much you can afford in repayments.

This information is part of the Propertytoolbox mortgage & money guide - This guide contains heaps of good info about the money part of home buying. Read more here.