One of the benefits for people renting a home is that keeping painting fresh, replacing a blown boiler, paying certain insurances and many other costs of maintaining a property are typically not the renter’s – they are the responsibility of the owner. But, unsurprisingly, for owners, these sorts of maintenance costs are part and parcel of buying a home.
A challenging aspect of many of these maintenance costs is that they might fall due once a year – or need to be paid ad hoc, when something goes wrong unexpectedly – meaning they can take even long-time owners by surprise. A Money Advice Service survey of new homeowners in the United Kingdom, released in February 2014, found more than half found day-to-day costs and maintenance bills higher than expected.
Work in the extras
Tip four in our Six tips for mortgagors highlights the challenge of paying for the extra costs of home ownership. It says: “In addition to paying the monthly mortgage, homeowners will need to budget for building insurance, maintenance and various taxes that renters often do not pay. Work the extras into finances before buying to ensure the costs can be met.”
A first step for home owners (or those aspiring to be) is to work home maintenance costs into your basic budget, accounting for both the regular and ad hoc costs. Building a buffer of savings to use when emergency strikes – an emergency fund – is also one of the essentials of having healthy personal finances.
Is it better to rent or buy?
It is worth weighing the pros and cons of renting and of buying and applying them to your own situation. This video outlines some of the factors.