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Financial Implications of Home Ownership

Buying a home can be a stressful and sometimes difficult process that can bring a lot of new responsibilities you hadn’t even thought of. When talking about owning a house, the biggest concern seems to be the mortgage, but it certainly isn’t the only one.

While mortgage payments are a big part of the expense that goes into buying a house, it’s important that you stay aware of the other costs that come with having your own place.

In this guide, we’ll outline the main financial responsibilities that come with home ownership.

Council Tax

With the monthly mortgage also comes council tax. The tax is a levy on a property that the owner is required to pay. It is determined by a lot of factors, but mainly depends on the value of the property. Once calculated, it might seem like a lot but it could be divided into monthly payments over the year to help you budget your finances better.

Insurance

Once you have an idea of your monthly payments on mortgage and tax, it is time to think ahead and protect your investment. While insurance may seem like something you can live without, it is better to be safe than sorry. The cost depends on a number of things you need to consider. For instance, buying an old house can seem like you’re saving, but older electrical, heating and plumbing can raise insurance costs. Plus, if you live in a flood or earthquake zone, you will have to pay extra for hazard insurance. There is a variety of options and set insurance packages to choose from, so your assets are safe in case of unfortunate events.

Utilities

Utility costs are directly affected by the size of your home. While in a small flat you’re not paying much for bills, a bigger property requires more energy to heat or cool. From warming up the place during the long winter to the simple tasks of cooking and doing washing, utilities can be a significant cost if you have chosen a sizeable property.

Maintenance

Probably the best thing about renting a place is being able to pass any maintenance issues onto the landlord. Now that you have your own place, you are your own landlord. From minor problems like a loose doorknob to your kitchen sink leaking, it could really affect your finances if you’re not prepared. The simple solution of having some cash aside for emergencies can make repairs less of a headache and that way your budget will barely be affected.

The Bottom Line

Owning a home certainly carries a lot of perks like increasing your net worth and not having to worry about moving when your lease runs out. While there are a lot of things to have in mind when making a decision and a number of new responsibilities that come with purchasing a home, being prepared can save you a lot of headache.

And you?

Are you thinking about buying a home, but not sure how to approach the matter? Or perhaps you’d like to share your experience of owning a property? Whatever the matter, you can always give us a shout on Twitter.

If you want any further information or feel like you could use some support in handling your finances, don’t hesitate to get in touch with Pareto today.