5 homeownership costs that can spiral out of control

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Buying a new home is already an expensive enterprise, fraught with uncertainties. There are so many decisions to be made, documents to sign, and most of all, money to pay. But the cost of home ownership goes beyond the point of key collection. Here are five common costs that can balloon out of control, and our tips to avoid them.

1. Renovation budget

Don't sign with the first interior design firm you find. Compare reviews and quotations online before deciding which professional you're most comfortable to work with. It helps if you have a strong idea of what kind of design elements and materials you have in mind as well as the scope required, so that you do can get an accurate quotation. If you are willing to do some of the easier tasks yourself, like painting the walls, that could also help to bring down the renovation costs.

2. Furniture costs

Ads screaming interest-free credit card installments are tempting, especially when they help you to afford a particular piece of designer furniture. But getting into credit card debt can be very stressful. Instead, spend some time looking at alternatives, and you are likely to find find a similar design at a fraction of the price. Alternatively, prioritize your spending, like splurging on a designer sofa, but get a cheaper coffee table, or even getting other furniture second-hand.

3. Maintenance costs

Failure to account for maintenance can take a huge bite out of your savings. Wear and tear will definitely happen, so plan for it by setting aside some money every month that you can use for home repairs. Look to spending a bit more on good quality fixtures if you can afford it initially. For condo owners, the developers might not be able to disclose monthly maintenance fees when you buy it at launch, so do factor that in when calculating your monthly ownership outlay.

4. Bills, bills, bills

If you've lived with your parents most of your life like so many of us, your first bills when you move into your new home could shock you. To save on utilities, go for efficient appliances, especially when it comes to energy consuming appliances like washing machines, dryers, refrigerators and air-conditioners. Save money by only running full laundry loads, keeping air-conditioners on timers and turning off the lights when you leave a room. Energy efficient appliances might cost you more in the short term, but are worth it in the long run.

5. Mortgages

Many people often take the maximum limit they can afford for mortgages, simply because of the high costs of housing in Singapore. However, exercise a little prudence as well. Increases in interest rates could cost your monthly payments to increase by double digit percentages, so it might not always be prudent to go the the top of your in-principal approval. Of course, while we always think that salaries will rise, it might not increase as fast as the cost of housing or living. Leave yourself some wiggle room to prevent your monthly payments from over-burdening yourself financially. If you've owned your home for a few years, see if re-financing would help to reduce monthly payments.

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