4 things to be aware of when you become a home owner

As a renter, you may not have had to think about council rates or how to afford a new hot water system. But, as a homeowner, that responsibility — and expense — is yours to meet. 

While owning comes with many more responsibilities than renting, it also comes with a unique set of benefits that renters can't get. 

1. You're responsible for repairs and expenses, and you'll need to save for them

Whenever something broke or leaked in your rented home, you simply called your landlord or rental manager and they arranged for the repairs to happen. But, when you’re the owner, it's not so simple. You're financially responsible for your space and everything in it, and if something leaks, breaks, or needs repair, you'll foot the bill. 

When you go from renting to owning a home, it's important to keep a savings reserve for those possible repairs or maintenance call. After all, repairs can be costly. Installing a new hot water heater could cost as much as $2,500, while an air conditioner repair could cost as much as $1000.

Keeping a savings account with cash set aside for these expenses is an essential part of home-ownership.

2. Everything is a separate bill

At your rented home, you may have had some property related bills included with your rent, and paid for by your landlord, like water or body corporate levy. When you own your home, your expenses aren't all bundled together like they were while renting.

Bills for water, gas, electricity, internet, and more will all be your responsibility, and separate, when you own a home. Your mortgage might be cheaper than what you paid in rent, but there are a lot of other expenses to budget and pay each month, too.

Investigate the additional costs you'll pay in the area where you're looking to buy on top of your mortgage each month, and consider that in your monthly budgeting.

3. Council rates and land tax increases can mean sudden spikes in your expenses

When you buy a home, you're not only paying the mortgage — you're also responsible for council rates and in some instances, land taxes. Changes to these are normally based on your property’s value, and your local governments budget outlook.

Changes to your council rates could increase your quarterly expenses and in turn place extra demand on your cash-flow, especially if you have multiply bills due at the same time.

4. You have a chance to build equity you can use for a future home purchase

With renting, you don't gain any value that could help you out in the future. But, as a homeowner, you could have a head start on buying your next property when you move in the future. 

While owning doesn’t a guarantee you'll be able to build significant wealth, if you make money on your first home's sale, you could use that to help with your next home's purchase. How much you make — or if you make anything at all — depends on the situation ... but there's no chance you'll be able to do that when renting.  

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This article via BI does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.