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Are You Looking to Buy a House? Set Aside Money for These Expenses

If you are looking to buy a house, you will have to shop around first. Buying a house is very expensive. Even though you can get a mortgage, it is still costly. Most of the … Read More

If you are looking to buy a house, you will have to shop around first. Buying a house is very expensive. Even though you can get a mortgage, it is still costly. Most of the online lenders can lend you money about 95% value of your property. It means you have to arrange a 5% deposit.

Even though you are financially settled, you will have to save money for a lot of expenses. Most of the people think that when it comes to buying a house, they only need to arrange a deposit size.

When you take out a mortgage, you are to pay it off over an extended period along with interest. It means you will have to bear the burden of debt payments along with regular expenses.

What about associated expenses like maintenance and repair work? Have you wondered how you will pay for these expenses? You cannot prognosticate that your financial situation will be better based on your present scenario. Nothing is static and certain. This is why it is recommended to set aside money for various house related expenses. Take a look at them.

Down payment

As a first-time buyer, a down payment is the biggest expense. Even if your lender is ready to lend you money around 95% of the value of your property, setting aside 5% is not that easy. This becomes too complicated when you have already taken on debt like unsecured loans for bad credit.

Note that a lender will be ready to lend you 95% value of the property only when you have a good credit score. They will check your credit report to see how strong your financial condition is and how strongly you can keep up with repayments.

If you have a bad credit rating, you will have to arrange a down payment of about 20% of the value of your property. Even though your current credit report is excellent, you will try to set aside more money.

However, most of the lenders want you to arrange a 10% deposit to take out a mortgage even if you have a good credit rating. This is why you should target 10%. This will help you get the mortgage more conveniently.

If you can stash away for more than 10% of the value of the property, it will be much better because the mortgage value will be lower, and you will be able to save some money in interest.

Maintenance and repair cost

You all know that when you rent a system and your plumbing network breaks down, your landlord will be responsible for such expenses, but you will have to foot the bill if you own the house.

When you are planning for buying a house, you may not be able to consider these expenses. However, you can come up with maintenance expenses as soon as you buy your home.

Since you have to cover all these costs, a rule of thumb says that you should set them aside as soon as possible. You do not need to save a lot of money for maintenance and repair work.

You will have to save about 1 to 2% of the value of your house in repair work. You will have to spend much more if your home is too old. It is a good idea to bolster your emergency cushion as soon as you plan to buy a house.

 This emergency corpus will cover all of your unexpected expenses, including maintenance and repair. Note that you cannot sit back just because you have saved for a couple of months’ living cost.

This has to be ramped up unless you successfully buy your house. You cannot stop contributing to emergency cushion because you will likely dip into it to meet unexpected emergencies. For instance, you may have dipped into it to have your car repaired and for your regular expenses during a job loss.

Furniture

You may have to buy new furniture when you buy a house depending on its condition. You may need to replace the whole or part of it. Furniture is expensive undoubtedly. It can take a large chunk of your budget.

You can cut back on your furniture cost if you try to reuse any of the furniture you already have. Try to shop the furniture when there is no festive season. Otherwise, you will end up buying exorbitant furniture. Use online sites like eBay, where you can get furniture pieces at a discount.

As far as it is about décor, you can make some good and interesting out of waste. Use your creativity skills and embellish the corners of your house. You may also need to buy appliances for your home.

At the time of buying a house, ask the owner what appliances they are going to leave and what they will carry along with them. Some owners do not mind offering you appliances if you pay some money for them on top of the house price.

If you are looking to buy a house, remember you do not have to save money for the deposit size. You also need to save money for other expenses like maintenance and repair work, furniture, and appliances. Start saving money as soon as you plan to buy your house and stick to it.

Description: If you are a first-time house buyer, you will have to arrange money for maintenance and repair, furniture and appliances, along with the down payment.

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