• Advantas Property Group

Key Financial Factors To Consider Before Buying a House

Updated: May 20



Purchasing a home is a significant financial decision, and it is likely to be your most important. After all, your home is a long-term investment in many respects.


You'll be investing a significant amount of money in the property, and its worth will fluctuate with the economy. In addition, unlike renting, owning a home allows you to accumulate wealth.


Purchasing a home is a good investment since it is a relatively safe location to store your money. Home values tend to rise over time. Since it has a significant impact on your finances, however, you need to evaluate these factors to safeguard your short- and long-term financial health:


5 Financial Factors To Consider Before Buying a House


1. Budget


Ask anyone who has gone through the home-buying process; they will likely tell you that it was more expensive than anticipated. It's generally a good idea to overestimate your costs.


Use a defined budget for your monthly mortgage and downpayment to avoid ambiguity. A realistic debt-to-income ratio is an excellent place to start. It can give you a better idea of how much you can spend on housing without living off peanuts for the next decade.


2. Maintenance Cost


Your monthly mortgage payment isn't the only expense you'll have while living in your new house; you'll also have to pay for maintenance as wear and tear is inevitable.


You'll need deep pockets to deal with such issues quickly, whether it's a leaking faucet, a flooded basement, a sump pump failure, or a blocked drain. While this may have a monthly or even weekly cost, homeowners insurance can result in higher charges for upkeep.


3. Council Cost


When purchasing a home, also consider the cost of council rates. Rates owed to the local council should be paid by the seller – usually until the end of the quarter. As the buyer, your portion is added to the purchase price. Before buying a house, double-check that these council costs are settled and cleared; otherwise, they will influence your budget.


4. Insurance and Taxes


Of course, you want to protect your property from disaster and catastrophic damage. But in turn, lenders and banks will want to protect themselves from your claims, which will have a significant cost impact.


Try to keep rates cheap, including insurance in your mortgage payment or your vehicle or life insurance. Property taxes can also be paid through the same escrow account as your mortgage payment, but should you default or stall on payments; you may owe a lump sum amount when the property taxes get assessed each year.


5. Down Payment Options


A down payment reduces your loan balance, mortgage rate, and mortgage insurance premium. This contributes hugely to making your monthly instalments lower.


However, down payments will cost you significantly more because of variable interest charges that do not add to the bottom line equity that goes into the home loan repayment. As such, look for alternative ways of financing to avoid extras like PMI (private mortgage insurance).


Planning To Buy a House in Baldivis? Contact Our Expert Real Estate Agent Team at Advantas Property


At Advantas, we know that saving and safeguarding assets such as real estate is only part of the story. We provide value to all clients by reducing risk and increasing property value. Contact Tony at 0407 655 429 or tony@advantasproperty.com.au for a well-thought-out investment strategy and rigorous day-to-day management.


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