The cost of owning a house (+ how to budget for it)

Article summary

• The costs of owning a house include utilities, taxes, and maintenance costs.
• Many of these costs can fluctuate according to certain factors, making it tricky to budget exactly.
• You can incorporate the cost of the home loan into your budget early on by getting prequalified

A house is one of the most powerful assets you’ll ever have, and a source of security for you and your family. So taking the step towards homeownership is an exciting prospect.

That’s why you’ll want to be informed, not just on what the process of what buying a house entails, but what it means to own one. Thankfully, we’ve provided an overview of what it costs to own a house, so you won’t be unprepared.

Note: Of course, the first cost you have to take into account is the cost of the home loan, which you can determine using our Bond Calculator. Simply fill in information on your income and we’ll tell you what home loan you’ll qualify for and how much it will cost you in monthly repayments.

The cost of owning a house: A summary

These are the costs you’ll need to take into account. We’ll discuss them in more detail below:

1. Repairs & maintenance.
2. Utilities.
3. Rates and taxes.
4. Home Insurance and Contents Insurance.
5. Home security.
6. Monthly home loan installments.
7. Contributions to the Body Corporate (only applies to sectional title properties).

1. Repairs & maintenance

• The older the home, the more of an issue this will be.
• It’s recommended to buy newer properties so that mechanisms such as the geyser are more accessible, and technology is easier to incorporate.
• That said, there is a profit to be made from buying old homes, improving them and selling them at a higher price.
• Either way, elements that will need to be maintained include the geyser, electricity, swimming pool, garden, and fences.
• The geyser is the one you’ll be most concerned with; it shouldn’t break down too often but when it does it can be complicated and expensive to replace. So check how accessible the geyser is when you buy a home.

2. Utilities

• You have to pay your local municipality for the use of water and electricity. The rates depend on how much you use.
• Any system that allows you to monitor your water and electricity use is helpful, as it makes it easier to budget. For example, with electricity, you can use a prepaid system, where you you pay for a certain amount of electricity in advance.

3. Taxes

• You pay your local municipality a monthly tax, which they use to maintain sewerage, roads, and refuse collection.

4. Home Insurance and Contents Insurance

• Most banks will require that you obtain Home Insurance as a condition of granting you a home loan.
• Home Insurance covers damage to the property.
• You pay a monthly premium which depends on the cost of the home loan.
• Note that Home Insurance does not cover the contents of your home. For that, you need Contents Insurance to cover the cost of theft.
• ooba Home Loans offers a range of insurance packages, including Home Insurance, Contents Insurance, and Vehicle Insurance. So you can obtain an insurance package at the same time as you apply for a home loan.

5. Security

• Security upgrades, such as alarm installation, electric fences, and CCTV cameras are vital to your peace of mind.
• You should consider paying a monthly or annual fee for Armed Response.

6. Monthly home loan installments

• You’ll need to pay these until you’ve completely paid off the home loan granted by your bank.
• In addition to the home loan installments, you pay interest rates.
• When you apply for a home loan, you can opt for either fixed or variable interest rates. The latter goes up or down according to fluctuations in the market, while the former does not. So the former makes it easier to budget, but the latter means the cost of your repayments may fall if the interest rate drops.

7. Body Corporate

• This applies if you buy a property on an estate (in other words, a sectional title property).
• You’ll have to pay monthly rates to the Body Corporate that governs the estate, which they use for maintenance and security.
• The Body Corporate fees usually cover taxes, rates, and utility fees.

Budget accordingly by getting prequalified.

Before applying for a home loan, you can get prequalified. The process determines what home loan you’re likely to qualify for.

This is vital information to have as you can incorporate the home loan cost into your budget early on in the process.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.