Home ownership is a fantastic goal and aspiration. Not only providing personal benefits, but also collective benefits to a community, as people take ownership and pride in their piece of dirt and become more invested in their neighbourhood.
Whilst much is written about the purchase process (including our own articles), we thought we would share some of the realities and responsibilities that come with the purchase of a house.
Think of it this way - home ownership after purchasing a home, is like marriage after the wedding day. While the wedding day is a momentous occasion, a day you make a life-long commitment, it is the days after that are truly important – the marriage itself. It is the same with home ownership, the day you purchase a house is cause for celebration, photos in front of the sold sign, and plenty of moving boxes. But once you move in, you are your house’s keeper - so let’s talk about some important elements of your role as a homeowner.
Maintenance – sounds like work doesn’t it? Well the reality is if you don’t maintain your property, it will be a lot more work in the long run and may end up costing you money too. Much like caring for and servicing your car, our houses are no different. They need maintenance to ensure it operates effectively, avoids damage and to hold (or increase) the property’s value.
Some simple steps to manage the maintenance of your home:
Assess Condition. When you purchase a home, you may have had a building report done. This provides an outline of issues with your property and areas which may need maintenance. Carry out an inspection of your property and identify key areas which need attention and their urgency or priority to get done.
Manage smaller tasks. From experience, it’s much better to do small and regular maintenance than leaving things to become a bigger task. If a small problem is left unattended, it can often become much more of a time and cost investment, and in some cases, beyond repair. Small tasks do not need to be a big cost and can often be substituted for your time rather than requiring contractors.
Spring clean. This is a concept most would be familiar with, normally associated with decluttering. But giving your house a spring clean is a great way to maintain your home. Water blast your exterior, cut hedges, paint touch ups, chimney sweeping, and cleaning out drains and gutters. These are all yearly maintenance tasks which aren’t urgent but will help with the longevity of your home.
Address critical tasks. If something requires urgent attention, don’t wait, get onto it straight away. This may include tasks which compromise the safety of living in it, or issues which may cause greater damage if not dealt with quickly (such as leaks).
The ongoing costs of owning a home is an area most will be familiar with - as it’s money coming out of your bank account every month. If you haven’t yet, we highly recommend working out the regular costs of home ownership to make sure this is managed and you don’t come up short. The key ongoing costs from our experience are:
Home loan repayments - In most situations this will be by far the majority and most visible of your monthly costs. Interest rates are currently at historical lows helping with affordability, so consider making the most of principle repayments during this time to take advantage.
Rates - All properties will be subject to paying rates to their local council. These vary between councils and what is included, but typically average around $2,500-3,000 per year.
Insurance premiums - House insurance can cover you for a wide range of unforeseen events. Pick insurance cover that suits your situation. The cost of this will vary based on location, excess, property type and value, among other things.
Trying to make allowances and plans for potential unknown situations that are out of your control may seem unnecessary and over the top. But we think there is value in doing this so you have your eyes open to potential scenarios. This doesn’t have to be a lengthy exercise, but one to be mindful of. The key things to think about which may (or may not) have an impact are:
The NZ Property Market - there is much research and many opinions on this topic. Whilst house values have trended positively in the long term, there are times and situations this may not occur. Whilst property is a great investment, be mindful that there is no guarantee that you will be able to sell your property at any time and make money from it - particularly within a shorter timeframe.
Your Personal Situation. This may be in the form of a change in work, health or lifestyle situation. Our priorities and lifestyle can change for many reasons.
Unexpected Costs. Whether house related or for our personal life, there may be reasons where unexpected one-off or regular costs come up.
So how to deal with risk as a homeowner? Whether you already own a home or are planning to buy, it’s prudent to run a simple stress test on your situation to see how you might handle changes and unforeseen situations and costs. The most common you may face being changes in your home loan interest rates, an unforeseen maintenance cost on your property, or on your personal income and budget. Whether it be a one-off or ongoing cost, it’s good to think about how you would respond and be able to handle a change.
Home ownership has similarities to other elements in our life. What we take responsibility of and invest into (our kids, our careers, our education, our wellbeing) is incredibly rewarding. While your role as homeowner will take time and money, it is also a privilege. And in return your property will provide you with a place to call your own, provide security, to make memories in and hopefully, contribute towards a stable financial future.
This blog was sponsored by Kiwibank. Whether you're taking your first step or next step on your property journey, Kiwibank's home loan experts are available to help you through the process.
Their Mobile Mortgage Managers can come to your choice of location and their Banking Consultants are available at your local Kiwibank branch. Call 0800 000 654 or visit kiwibank.co.nz/homeloan for more information.