Whether it is moving from your parents’ home into a home of your own, or from a rented apartment, it is important to calculate your new cost of living before taking a decision. You will not only need to make a down payment on your new home, but also account for the home loan EMIs every month. Most importantly, you must calculate all the other expenses that shifting into a new home entails to gauge overall affordability.
Here is a list of costs you need to consider to give yourself a reality check before thinking about becoming a homeowner.
Analyse your income and expenses:
Typically, your monthly income should be split as follows:
- 50% on essentials such as housing, food, utilities, transport, monthly debt payments
- 20% on extra debt payments, long-term savings, such as for retirement
- 30% on lifestyle expenses such as vacations, eating out, hobbies, etc
Keep this guide in mind and try to fit your monthly expenses within these limits. Now, see how these costs increase or decrease once you buy a new house.
Estimate the cost of utilities:
In your own home, expenses incurred towards utilities such as internet, phone, water, electricity and television will increase as you will not be sharing the costs with roommates or with family. Plan for these increased monthly expenses by studying the minimum plans offered by service providers and getting the best deal. You will also need to get yourself a new television or a router if you don’t already have one. So, factor in these costs as well.
Add home insurance and other charges like maintenance and car parking:
As a homeowner, you will need to protect your house from unknown damages and therefore home insurance is a must. Shop for the ideal option for you based on the value of your house. You will also need to factor in costs for domestic help, monthly maintenance charges payable to the society and fee for parking your car/bike.
Additional Read: Tips for Refinancing your Home Loan
Check the cost of new purchases:
With a new house, you will be inclined to upgrade the electronics as well. You may want to buy a new television, home theatre system and refrigerator. You may also want to buy more furniture suited to the layout of your new home. Don’t forget to add these costs to your calculation to get an accurate picture.
Keeping a check on these costs will tell you if you are capable of meeting the additional expenditure that comes with being a homeowner. Consider these four major categories, apart from your home loan EMIs, before embarking on the journey of home ownership.
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