COSTS OF HOME OWNERSHIP

If you are new to property ownership you may not realise that there are a number of additional expenses associated with your new home. We have listed the most common ones below to help you prepare:

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• Building Insurance

Your lender requires you to hold building insurance as a condition of your mortgage contract, and you would be crazy not to protect your largest asset.  If you own a property in a strata complex this is included as part of your strata levies.  Note you will require separate cover if you wish to insure your household contents.

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• Bank Fees

In addition to your regular mortgage repayment, you may have monthly or annual fees associated with your mortgage product.  This is generally the case when you opt for an offset account.

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• Council and Water Rates

Council rates vary from area to area and are linked to the Gross Rental Value (GRV) placed on your property by the Valuer General.  The result generally being the more expensive the property, the higher the council rates.  Council rates are billed annually but may be paid in quarterly instalments.  Water rates are also linked to the GRV of a property and are billed bi-monthly together with water use charges.  As a general guide for the Perth Metropolitan region, most council rates sit between $1,500 - $3,500 per year and water rates $800-$1,500 per year.

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• Strata Fees

If you have purchased a unit, villa or apartment you will likely be part of a strata scheme.  This requires all owners to contribute, in the form of strata levies, to insurance, complex management, upkeep of common areas, shared utilities, repairs and maintenance.  There may also be special levies from time to time to fund specific projects (e.g. repainting, large repair projects etc.) or a regular additional sinking fund contribution to cover these large expenses. 

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• Utilities

Similar to if you are renting a property, when you live in your own home you are responsible for all the gas and electricity charges.

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• Ongoing maintenance

There will always be regular general maintenance such as mowing lawns, fixing leaky taps and servicing appliances but as the owner you have to also be prepared for repairs and replacement/upgrades.  For example, if your hot water system stops working you are responsible for fixing or replacing it.

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Although home ownership comes with many benefits, it can be more expensive than one anticipates, so it is important to be prepared and a good idea to build up a cash buffer to cover any large bills or urgent repairs.