Estimating your monthly home loan repayments is a great way to gain an idea of how much you can afford for your next home. However, there are more expenses than your repayments.
You also need to factor in other costs, such as insurance and upkeep. Here is a closer look at the most common costs associated with owning a home.
Determine the Monthly Repayments
The most significant consideration for determining how much you can afford is the cost of the monthly repayments on your home loan. You can use a home loan repayment calculator to estimate this value and use it as your starting point for determining the cost of owning a new home.
Additional Fees, Charges, and Insurance
When you obtain a home loan, your monthly repayments are divided between the principal, interest, and various fees. Depending on the amount of your deposit, you may also need to pay lenders mortgage insurance (LMI). The amount that you pay may be added to your repayments or the total amount of the home loan.
Besides the insurance fee, there are fees associated with closing on a home. You may need to pay conveyancing and legal fees. The average cost of these legal fees is around $1800. A building inspection may also be required, which can cost approximately $600.
Other potential costs related to buying a home include mortgage registration and loan application fees. Mortgage registration varies between states. Visit here for information on NSW mortgage fees.
In Queensland, you may pay $180 for mortgage registration, while homeowners in Victoria pay $114.90. The loan application fees vary between lenders, with an average cost of about $500.
You Also Need to Cover Utility Rates
After you buy your home, the costs of owning a home continue to eat into your budget. Along with your home loan repayments, you will need to pay local utilities, such as the water rates. These rates are typically paid each quarter and vary depending on where your home is located.
Repairs, Maintenance, and Upkeep
You should also consider the costs of repairs, maintenance, and upkeep of your home. While many of these details may not require monthly payments, they can still impact the total cost of owning a home. Just like owning a vehicle, you need to occasionally spend money to keep your house from falling into disrepair.
The average homeowner spends about 1% of the value of their home on repairs and ongoing maintenance each year. For example, if your home is valued at $250,000, you may spend around $2,500 per year keeping your house in top shape. This equals about $208 per month.
Last Thoughts on Calculating the Cost of a New Home
Many lenders recommend that you avoid a home Latest Whatsapp Status loan that results in repayments that exceed 28 to 36 per cent of your gross income. If you make $4,000 per month, you should avoid repayments that exceed $1,120 to $1,440.
While you will have many more expenses than your monthly repayment, estimating these repayments is still a great place to start exploring the cost of owning a new home. Along with the other details discussed, you should use a home loan repayment calculator to estimate your repayments.